MAS proposals a step forward in ‘democratising’ investing, ‘strikes right balance’: observers: Opinion
Source: Business Times
Article Date: 03 Jul 2025
Author: Ranamita Chakraborty
The move is seen as a response to industry feedback, aiming to reduce complexity and broaden retail investor access to a wider range of financial products.
The Monetary Authority of Singapore’s (MAS) proposals to strengthen product highlights sheet (PHS) requirements and streamline the framework for complex products signal a major shift in the local investment landscape, say market observers.
The move is seen as a response to industry feedback, aiming to reduce complexity and broaden retail investor access to a wider range of financial products.
MAS launched a public consultation on Tuesday (Jul 1) and is seeking feedback until Sep 1.
“Our proposals seek to address key feedback that retail investors would like a more reader-friendly document that helps them identify the most relevant and crucial information for investment products; and that there is room to streamline the investing process for complex products to be more disclosure and information-based,” a MAS spokesperson told The Business Times.
Luke Lim, managing director of PhillipCapital and chairman at Securities Association of Singapore (SAS), said these changes could “democratise investing by giving retail investors broader access to a wider range of investment products”.
He added that remisiers and financial advisers would, in turn, be better positioned to help clients build smarter, more resilient portfolios. They can continue advancing financial literacy to ensure that investors use such products responsibly and with long-term goals in mind.
Broad industry support
The proposals have received broad support from industry groups such as SAS and the Securities Investors Association (Singapore), or Sias.
Members from both associations have urged MAS to review the framework with the aim of creating a “seamless investment journey for retail investors, on a caveat emptor basis” while maintaining safeguards for vulnerable investors, said Melinda Sam, chief executive officer at SAS.
She added that SAS members support MAS’ proposal for a disclosure-based framework, noting that “over the years, retail investors have matured and are more savvy with their investments”.
Similarly, Sias president David Gerald sees the new streamlined framework for complex products “striking the right balance (by) introducing sufficient safeguards to help investors understand the risks, while preserving their autonomy to choose products that suit their investment goals”.
However, he added that Sias supports maintaining the requirement for vulnerable investors to obtain licensed financial advice before purchasing complex products.
Other industry observers, including corporate lawyers such as Robson Lee, partner at Kennedys Law, echo this view.
Lee stressed the importance of investors without sufficient knowledge or experience in complex products seeking licensed financial advice before investing.
“Notwithstanding the proposed requirement to prominently highlight the risks involved in complex products, investors who have any difficulty in comprehending the terms and conditions of any product should seek proper professional advice before making any such investment,” he said.
Helping make “informed decisions”
To improve investor understanding, MAS is proposing that complex products be clearly marked with a prominent red label to prompt investors to seek advice when necessary – a move fully supported by Lee, who emphasises the importance of clearly flagging such products.
He also highlighted the proposed requirement to present key risks upfront on the first page of the PHS, and said that this will help retail investors make “informed decisions” before investing.
PhillipCapital’s Lim agreed and pointed out that financial warnings should guide investors.
“Simple language and clear examples help investors understand the real risks, so that they can make informed choices,” he said.
This is where a question-and-answer format on the PHS could be beneficial.
SAS’ Sam said it offers better visibility and understanding of the product. Along with a simplified product knowledge assessment, these proposals have been widely welcomed.
“This came from investors’ feedback as they wanted to know more about the product features and risks,” she added.
Other proposed changes include requiring a PHS for investment-linked policies (ILPs), which were previously exempt.
Industry observers noted that ILPs are complex, multi-layered products susceptible to market volatility and global uncertainties, making this update a sensible step.
“Investors should also be fully aware of fund management fees that are payable in relation to such products,” added Lee.
No compulsory financial advice needed for most retail investors under proposed MAS changes
Retail investors may soon be able to invest in products that are deemed complex without seeking the now-mandatory financial advice, even where they may not have the relevant qualifications, experience or knowledge in investing.
But safeguards would still be in place for those who need the protection.
Under the proposals, information on the products will be put more clearly, and guidance will be offered when transacting in complex products. Most investors would need to take a product knowledge assessment (PKA) to test their understanding of such products.
The targeted safeguards proposed for more vulnerable investors – the Monetary Authority of Singapore (MAS) calls them “selected clients” – include, for example, a mandatory financial advisory process before they can purchase complex products. They could also have a trusted individual present during the financial advisory process, and a call-back to confirm the investment decision before proceeding.
These are some of the changes that MAS has proposed in a consultation paper released on Jul 1, which attempts to strike a balance between giving retail investors autonomy and putting in place safeguards for those who need them.
MAS also gathered feedback from the Equities Market Review Group and its regulatory workstream ahead of this consultation, a spokesperson told The Business Times.
“While this review is part of MAS’ ongoing review efforts, it is also in line with the Equities Market Review Group’s broad objective to improve the vibrancy of our equities market through streamlining regulations and empowering investors in their investment journey,” added the spokesperson.
Feedback sought on proposals
The central bank will be seeking feedback over the next two months on ways to improve the way information is presented in the product highlight sheet (PHS) and to streamline the framework for complex products.
A PHS is a document outlining the key features and risks for investors for certain investment products. It complements the main offer document, and helps users understand key product information.
Meanwhile, the existing complex-product framework classifies capital market products as “complex” or “non-complex”, and requires distributors to assess an investor’s knowledge and experience. Investors deemed lacking must now complete a learning module or receive mandatory advice.
In a statement, MAS said the proposals aim to “strengthen the effectiveness of a disclosure-based regime for investors to make informed choices on their own, while requiring an appropriate level of intervention for consumers who need more assistance”.
The proposals come at a time when investors are becoming more self-directed when making investments with the digitalisation of financial services. However, some investors who are less technologically or financially savvy would still benefit from seeking professional advice.
MAS invites views and suggestions from interested parties on the proposals. They may submit their comments through the FormSG link by Sep 1.
After the consultation, MAS will refine the proposals as needed and issue a separate consultation on the draft amendments. A six-month transition period is planned once the changes take effect.
PHS enhancements
MAS is proposing revised PHS templates that present key product information more clearly. For instance, essential product features are to be highlighted on the first page to draw investors’ attention upfront.
A new “question and answer” format is being proposed to better engage users on important considerations.
Complex products will be clearly marked with a “red” label to prompt investors to seek advice where necessary.
Investment-linked policies (ILPs), previously exempt, will now require a PHS under the proposed enhancements.
MAS is also seeking to standardise PHS requirements for various investment products. It plans to host mandatory PHS templates on its website, thus making future updates possible.
It also proposes removing page limits for PHSes based on the use of diagrams.
Under the proposed format incorporating diagrams where appropriate, PHSes for asset-backed securities, structured notes, collective investment schemes (excluding Reits), and ILP sub-funds are proposed to be capped at eight pages.
Fit for purpose
These proposed changes follow MAS’ periodic review of the complex-product framework to ensure it remains fit for purpose amid evolving market conditions and the increasingly diverse investment needs of Singapore’s retail investors.
MAS said: “With clearer complex product labelling and investor-friendly PHS disclosures, investors will be in a good position to make considered, informed investment decisions.”
In its consultation paper, it cited an example of a “non-selected” client, a 40-year-old software engineer with no trading experience, who would receive a risk warning before proceeding with an investment in a complex product. Such a client who acknowledges the risks may proceed without financial advice.
A “selected” client could be an 80-year-old retiree with limited proficiency in English, who would have to undergo a full advisory process with added safeguards before completing the transaction.
“Timely changes”
Industry observers welcomed the proposals, with the Securities Investors Association (Singapore), or Sias, calling the changes “timely and necessary, given the evolving investment habits of investors”.
Sias also supports the proposal to introduce a clearer, more reader-friendly PHS, especially for complex investment products. President David Gerald lauded the use of a “red” label to clearly flag a product as “complex”, and the reorganisation of content to present key risks upfront.
Noting that investors today are increasingly savvy, he said that many do their own research, make independent investment decisions, and even trade complex products online, both in Singapore and overseas.
“The new streamlined framework for complex products strikes the right balance – introducing sufficient safeguards to help investors understand the risks, while preserving their autonomy to choose products that suit their investment goals.”
However, he cautioned that investors active in overseas markets may not realise that they face the same product risks but are without the protection of Singapore’s regulations or recourse through Sias if disputes arise.
Source: The Business Times © SPH Media Limited. Permission required for reproduction.
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