MAS Stops Licensing of Financial Representatives

According to a report in the Sunday Times, the Monetary Authority of Singapore has done away with the licensing of the representatives of financial advisory firms. It will set up a Register of Representatives instead, which will allow consumers to do online checks on individual representatives.

Of course, this being Singapore, one inevitably finds the government-dependence syndrome popping up in the views expressed, such as:

"The move has worried some consumer groups and finance industry watchers, who fear that it could lead to an erosion of professional standards, particularly within the smaller financial advisory firms."

"Although the onus has always been on firms to ensure their representatives are fit and proper, some feel that consumers felt more 'secure' knowing that representatives were subjected to MAS screening during the licensing process."

Apart from the government's ability to check on an individual applicant's criminal record more efficiently than the private sector, it has no advantage in terms of assessing his/her qualifications and/or experience. Furthermore, the financial knowledge requirements for getting a license under the previous regime were so low that they were, in my view, quite pointless as far as a regulatory regime is concerned. Self-regulation and market competition would appear to me to be just as effective here.

In terms of how this will affect consumers, I believe that the impact will be minimal. This change does not alter the fact that when choosing financial advisers, one has to still do one's homework and exercise due care. For the average working adult, one should note that apart from insurance and estate planning, several weeks of sustained effort in the study of investing would in most cases allow one to come up to par with the knowledge of the average financial adviser. Thus, the search for a good adviser who can add value to one's thinking can be a challenge at times. One should not outsource the work of thinking about financial planning strategies entirely to an adviser. Financial planning has to be a collaborative process.