MAS issues revised notices and guidelines to enhance pre- and post-transaction safeguards for retail clients

29 April 2025

On 28 March 2025, the Monetary Authority of Singapore (“MAS”) issued revised versions of the following notices and guidelines to enhance pre- and post-transaction safeguards for retail clients:

  • Notice FAA-N16 on Notice on Recommendations on Investment Products (“FAA-N16”)
  • Notice FAA-N20 on Notice on Requirements for the Remuneration Framework for Representatives and Supervisors (“Balanced Scorecard Framework”) and Independent Sales Audit Unit (“FAA-N20”)
  • Guidelines on the Remuneration Framework for Representatives and Supervisors (“Balanced Scorecard Framework”), and Reference Checks (“FAA-G14”)

The revised notices and guidelines will come into effect on 29 December 2025.

MAS had sought feedback on a version of the amendments in a consultation paper published on 31 July 2024. MAS’ response to the feedback received (“Response”) was published on 28 March 2025 together with the revised versions of the applicable notices and guidelines. MAS considered the feedback received and incorporated them where feasible.

FAA-N16

MAS has amended FAA-N16 to:

  • introduce requirements on pre-transaction checks (i.e. documentation reviews and call-backs) by financial advisory (“FA”) firms by moving the relevant paragraphs of FAA-G14 to FAA-N16;
  • introduce the requirements for representatives to (i) check for and document a client’s selected client (“SC”) status; and (ii) make a formal declaration that the assessment of whether a client is an SC has been duly performed;
  • introduce the requirement for a trusted individual (“TI”) to be present when investment recommendations are made to SCs, and the criteria to qualify as a TI;
  • mandate the types of information that should be covered during a client call-back; and
  • introduce the requirements for FA firms to audio record pre-transaction call-backs to SCs and clients of selected representatives, and to provide a copy of the audio recording to clients upon clients’ request.

In the Response, MAS said that, following feedback, it will exclude dealers which provide execution-related advice from the proposed requirements to enhance pre- and post-transaction safeguards for retail clients. Notwithstanding this, all dealers should ensure that they implement processes to deliver fair dealing outcomes for their clients. MAS will also be publicly consulting on a set of enhancements to the complex products regime in the coming months, which may include proposals relating to transaction safeguards for selected clients and have implications on transactions that are performed based on execution-related advice.

MAS agrees with feedback that it would not be practical for a financial adviser to ascertain a client’s SC status “before starting any sales and advisory process” (as originally proposed) and will instead require a client’s SC status to be ascertained “as part of the know your client process”.

MAS had sought views on two possible approaches to conduct call-backs: a prescriptive approach and a principles-based approach. Given that most respondents preferred the principles-based approach, or flexibility to choose among the approaches, FAA-N16 will set out a principles-based approach, with further guidance provided in the FAQs.

FAA-N20

MAS has updated the scope of post-transaction checks to be performed by the independent sales audit (“ISA”) unit in FAA-N20.

In the Response, MAS said that it agrees with feedback that the post-transaction client survey may be deemed to have been completed if (i) the pre-transaction call-backs had been conducted by an independent party; and (ii) the questions of the client survey had been incorporated into the pre-transaction call-backs.

FAA-G14

MAS has amended FAA-G14 to:

  • remove the existing guidance on pre-transaction checks as these have been moved to FAA-N16; and
  • update the guidance on documentation reviews, which are performed as part of the post-transaction checks.

Following feedback, MAS has included another question under the pre-transaction call-back requirements, such that in the case where the SC had opted for a TI to be present, the supervisor conducting the pre-transaction call-back will have to ask if the TI was indeed present during the sales and advisory process.

MAS also acknowledged the feedback that for recorded call-backs, it is not a requirement to offer the SC the option of having a TI. MAS has removed the corresponding expectation for the ISA unit to check if this option was offered to the SC for a recorded call-back from Annex 1 of revised FAA-G14.

Reference materials

The Response and applicable notices, guidelines, and FAQs are available on the MAS website www.mas.gov.sg.