Following the fiasco of the failure of the Lehman Minibonds and DBS High Notes 5, Monetary Authority of Singapore (MAS) will be tightening the rules and implement tougher laws to protect consumers. All new investment products will have a 3–4 pages of summary sheet called “Product Highlight Sheet” that answers 12 tough questions that investors may have. These will include minimum investment amount, fees and charges, the worst case scenario and how the investment can be exited. The financial advisors are expected to go through the summary sheet with the investor in detailed too.
MAS will also require financial institution to categorize the “complex” investment product. Complex investment products will be defined as any product that has derivatives embedded in it. These products are in general more difficult to understand. Therefore, financial institution is supposed to provide comprehensive advice and to determine if the person is suitable for such product.
Lastly, bank tellers will not be allowed to refer the customers to the wealth/relationship manager to advise on the investment product. The bank will have to stop giving referral fee to the bank teller to curb such rampant practice previously.