The Monetary Authority of Singapore (MAS), in a recently released information paper, urges private banks to improve the design and effectiveness of control processes in the areas of investment suitability, and pricing controls and disclosures.
In the paper, the financial overseer highlights the inspection observations and supervisory expectations that relevant financial institutions should benchmark themselves against.
The paper also underscores the need for private banks to implement good culture and conduct to build trust with clients, which will strengthen the firms and help them achieve sustainable growth.
It notes that the way in which private banks in Singapore conduct their sales and advisory activities directly influence their clients’ and the public’s perception of, and trust in, the private banking and wealth management sector.
To engender confidence and trust, which are critical to the long-term success of the wealth management sector in the city-state, the paper urges, private banks to place their clients’ interests at the heart of their sales and advisory activities.
In the 28-page report, the MAS says, it expects financial institutions operating in the private banking industry in Singapore to uphold high standards of market conduct and transparency in their dealings with clients.
This means, among other things, taking due care to provide financial advice and recommendations that suit clients’ circumstances and financial needs, and being transparent about fees and charges.
The MAS paper conducted thematic inspections on the sales and advisory practices of selected financial institutions operating in the private banking industry during 2018 and 2019. The inspections focused on four core issues - governance, investment suitability, pricing controls and disclosures, and culture and conduct.
Singapore, a major global private banking and wealth management centre, is widely regarded as leading the field in Asia due to many factors, most notably its sound financial regulation and strong rule of law.
In the paper, the regulator also notes that Singapore’s private banks have taken, or are taking, remedial actions to improve their governance framework and management oversight of these issues.
The authority states that it will continue to engage the private banking industry to promote best practices and maintain high standards to ensure that the interests of their clients are safeguarded.