Market Matters Understanding Financial Regulations Donald Soo is the Technical Manager and Senior Financial Planner of financial advisory firm Professional Investment Advisory Services Pte Ltd.   Recognising the need for better financial advice, the Monetary Authority of Singapore (MAS) enacted the Financial Advisers Act (FAA) in 2001, whereby financial advisers have to disclose all fees and commissions. It applies to Financial Adviser firms and Exempt Financial Advisers like banks and insurance companies. For insurance-related products, this is disclosed in the Benefit Illustration quotation. Most policyholders are unaware that the information is placed in the Distribution Costs - this may include commissions and cost of benefits. With investments, most advisers will receive part of the Front End Load and the ongoing fee. The commissions and fees should be disclosed to the investor in writing. The same extends to advisers working for the banks and insurance companies. Remember it’s not wrong that advisers get paid for the work they do. Just make sure you understand how the adviser gets paid. Fees Vs Commissions Good advisers will give clients an option to pay for their services via fees, and rebate any commissions to clients. However, clients are likely to prefer a $1,000 fee paid as a commission via the fund manager or investments. There is a belief that an independent adviser will provide the best impartial advice. However, if a Financial Adviser can access most financial products in the market and disclose their fees and commissions, it is likely to provide good advice. The most important thing that public must understand is that good advice should meet their goals and objectives, not their cost expectations. Complaints and Your Rights In Singapore, if investors have any complaints, they can approach the Financial Planning Association of Singapore (FPAS), which has a complaints procedure to handle complaints against its members. Good Financial Adviser firms have internal procedures to handle issues without resorting to industry bodies. If people have complaints about the way their financial affairs have been handled or how they have been advised, the following steps should be taken: 1 See the financial adviser or planner. 2 If the issue cannot be resolved, make a formal complaint to the adviser's firm or institution. 3 Contact industry bodies like the Life Insurance Association of Singapore or FPAS. If the adviser is a member, these bodies will help you sort out the complaint. 4 The final option is to pursue legal proceedings, if the matter is still not resolved. In most developed markets, few complaints end up in court, as nobody likes to deal with the complexities and costs of court proceedings.