Financial institutions have to relook commission-based model, freebies strategies under guidelines
By SIOW LI SEN 4 April 2009
Financial institutions (FIs) will have to rethink their commission-based structures and freebies strategies to customers under new tough fair dealing guidelines.
And to make sure customers’ complaints are dealt with promptly, the chairman and chief executives of FIs must get personally involved, the Monetary Authority of Singapore said yesterday.
FIs will be assessed on five customer outcomes under guidelines to promote fair dealing, MAS said.
The five outcomes are to ensure that customers have confidence when they deal with FIs and that they are sold suitable products with after-sales services by properly trained staff.
And when service falls short, FIs must handle complaints in an independent, effective and prompt manner, MAS said.
‘There is a deliberate focus on outcomes in the guidelines as customers are concerned about their experiences when dealing with FIs, and whether the investment products and services they buy provide real value,’ it said.
‘The five fair dealing outcomes provide clear benchmarks for MAS and the industry to assess the success of financial institutions in promoting good market conduct practices.
‘MAS will consider FIs’ ability or failure to observe the guidelines in assessing whether they continue to be fit and proper to conduct regulated activities.’
Customers’ complaints about mis-selling of investment products have not stopped since last September following the collapse of Lehman Brothers.
MAS said that the boards and senior managers of FIs should review their overall business model to ensure it is consistent in dealing fairly with customers.
‘In particular, the FI should review any business model that relies primarily on commissions and short-term product sales targets,’ it said.
MAS has also taken a stand on aggressive sales strategies that offer gifts and rebates to customers. ‘The FI should not unduly influence the financial decisions of customers by offering gifts or rebates,’ it said.
To ensure a culture of fair dealing is embedded and that no one is unaware, MAS said that when appropriate, complaints should be escalated to board and senior management level.
It has suggested that all serious complaints be discussed at monthly management meetings involving an FI’s chief executive and all heads of department.
‘To underscore the importance of dealing fairly with customers, the chairman of the FI should read all customer complaints addressed to him,’ MAS suggested.
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MAS issues new fair dealing rules for FIs
Financial institutions have to relook commission-based model, freebies strategies under guidelines
By SIOW LI SEN
4 April 2009
Financial institutions (FIs) will have to rethink their commission-based structures and freebies strategies to customers under new tough fair dealing guidelines.
And to make sure customers’ complaints are dealt with promptly, the chairman and chief executives of FIs must get personally involved, the Monetary Authority of Singapore said yesterday.
FIs will be assessed on five customer outcomes under guidelines to promote fair dealing, MAS said.
The five outcomes are to ensure that customers have confidence when they deal with FIs and that they are sold suitable products with after-sales services by properly trained staff.
And when service falls short, FIs must handle complaints in an independent, effective and prompt manner, MAS said.
‘There is a deliberate focus on outcomes in the guidelines as customers are concerned about their experiences when dealing with FIs, and whether the investment products and services they buy provide real value,’ it said.
‘The five fair dealing outcomes provide clear benchmarks for MAS and the industry to assess the success of financial institutions in promoting good market conduct practices.
‘MAS will consider FIs’ ability or failure to observe the guidelines in assessing whether they continue to be fit and proper to conduct regulated activities.’
Customers’ complaints about mis-selling of investment products have not stopped since last September following the collapse of Lehman Brothers.
MAS said that the boards and senior managers of FIs should review their overall business model to ensure it is consistent in dealing fairly with customers.
‘In particular, the FI should review any business model that relies primarily on commissions and short-term product sales targets,’ it said.
MAS has also taken a stand on aggressive sales strategies that offer gifts and rebates to customers. ‘The FI should not unduly influence the financial decisions of customers by offering gifts or rebates,’ it said.
To ensure a culture of fair dealing is embedded and that no one is unaware, MAS said that when appropriate, complaints should be escalated to board and senior management level.
It has suggested that all serious complaints be discussed at monthly management meetings involving an FI’s chief executive and all heads of department.
‘To underscore the importance of dealing fairly with customers, the chairman of the FI should read all customer complaints addressed to him,’ MAS suggested.
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