Financial Advisers Act and Ethical Conduct Practice Flashcards

A comprehensive set of vocabulary-style flashcards covering the Monetary Authority of Singapore missions, the Financial Advisers Act, market conduct, and ethical standards within the financial services industry.

Monetary Authority of Singapore (MAS) Mission

To promote and sustain economic growth and to promote a sound and progressive financial services sector.

Reasonable Basis

The required standard for making recommendations on investment products to clients under the Financial Advisers Act.

Misleading Statement

A statement made by a representative who omits to disclose a matter that is material to the statements provided during the sale process.

Prohibition Order

An order issued by the Monetary Authority of Singapore barring a person from engaging in any or all financial services regulated under the Financial Advisers Act.

Customer Knowledge Assessment (CKA)

A procedure a financial adviser must conduct when advising a customer on an unlisted specified investment product (SIP).

General Disclosure Principles

Under FAA-Notice No. 3, information disclosed to customers must be clear, adequate, and objective.

Independent Sales Audit (ISA) Unit

A unit under the Balanced Scorecard Framework in Notice FAA-N20 responsible for auditing sales transactions.

Category 1 Infraction

A category of misconduct that impinges on the fitness and propriety of a representative.

Minimum Supplementary CPD Hours

The requirement of $15$ hours of Continuing Professional Development for new representatives arranging life insurance contracts.

Corruption, Drug Trafficking and Other Serious Crimes Act (CDSA)

Singapore legislation that criminalizes corruption, drug trafficking, and other serious offences.

Network Perimeter Defence

A cyber hygiene practice intended to restrict all unauthorized network traffic.

Form F1

The specific form used to report suspicious activities and incidents of fraud to the relevant authority.

ILP Sub-fund Redemption Period

For bond and money market investment-linked policy sub-funds, redemption proceeds should be paid out within $T + 4$ business days.

High-Water Mark Method

A permissible arrangement for the calculation of performance fees for investment-linked policy sub-funds.

Audit Certificate Request

A policyholder has the right to request this from the insurer within $5$ years from the date of maturity of an ILP sub-fund.

CEO Minimum Managerial Experience

An applicant for the role of Chief Executive Officer of a financial adviser corporation must have a minimum of $3$ years of experience in a managerial capacity.

Principle-based Approach

The approach adopted by Guideline No. FAA-G05 regarding circumstances under which financial advisers may use the term 'independent'.

Front-end Monitoring

A procedure such as requiring a customer declaration that they have been advised by their representative regarding the switching of products.

Fair Dealing Outcomes

There are $5$ specific outcomes set out under Guidelines No. FSG-G04 to achieve fair outcomes for clients.

ASEAN Capital Market Professional Mobility Framework

A framework involving participating countries such as Thailand.

CIS Borrowing Limit

A collective investment scheme (CIS) may borrow on a temporary basis to meet redemptions up to a maximum of $10\%$ of its net asset value.

Wash Sale

A market misconduct involving share trading conducted without a change in the beneficial ownership.

Insider Trading

The act of sharing non-public trade information with others, such as a spouse, to gain an unfair advantage in the market.

CareShield Life Monthly Benefit

An eligible member will receive a monthly benefit for life, assuming they do not recover from severe disability.

CPF Ordinary Account (OA) Minimum for Investment

A member must have a minimum balance of S$20,000 in their OA before they can begin investing part of it.

Portfolio Drift

Natural shifts in the market that change the asset allocation within a portfolio, usually addressed through rebalancing.

Soliciting a 'Provisional Representative'

A status granted for a validity period of up to $3$ months while the individual obtains necessary qualifications.

Integrity

Defined as acting according to the same principles in every situation and being consistent in truth-telling.

Churning

The unethical practice of persuading customers to terminate existing insurance policies to buy new products with no real benefit to the customer.

Solvency Ratio

A financial calculation used to determine how much of a customer's total assets truly belongs to them.

Emergency Funds

The basic financial planning guide recommends having $3\text{ to }6$ months' worth of expenses set aside.