Reed Smith Client Alerts

The Monetary Authority of Singapore (MAS) has published two consultation papers on additional regulations for the prospecting and marketing of financial products. The consultations are open until 30 June 2023 and propose new controls that financial institutions (FIs) must implement in the digital and physical realm. The MAS intends to implement the proposals with a transition period of around six to nine months after further public consultations on the legal implementation of the proposals.

Currently, prospecting and marketing of financial products are regulated by the 2016 MAS Guidelines on Standards of Conduct for Marketing and Distribution Activities (2016 Guidelines), the Financial Advisers Regulations as well as the Securities and Futures (Licensing and Conduct of Business) Regulations. The proposed regulations come after the MAS banned the advertising of cryptocurrency to the general public in 2022 via the Guidelines on Provision of Digital Payment Token Services to the Public.

Authors: Bryan Tan Hagen Rooke Jun Qi Chin Eng Han Goh (Resource Law LLC), Nicholas Tok (Resource Law LLC)

Digital prospecting and marketing activities

The MAS is proposing to implement Guidelines on Standards of Conduct for Digital Prospecting and Marketing Activities (Digital Guidelines) to address the additional risks digital media advertisements pose compared to print media. These additional risks include omitting key information due to word/character limits, publishing misleading advertisements that do not substantiate claims, publishing advertisements anonymously using pseudonyms that are difficult for retail investors to verify and prospecting using inappropriate platforms like online dating apps.

Implementing Digital Guidelines

To combat these additional risks, the Digital Guidelines hold the board and senior management of FIs accountable for ensuring safeguards are in place for digital prospecting and marketing activities. The proposed safeguards are:

  • Selecting appropriate digital media for prospecting and marketing financial products and services;
  • Assessing specificities and limitations of digital media, and addressing risks associated with its use, including by providing important and prominent disclosures;
  • Providing clear guidance and proper training to FI representatives on appropriate digital prospecting and marketing practices;
  • Monitoring digital prospecting and marketing activities conducted by FI representatives and third-party service providers; and
  • Taking appropriate disciplinary actions against FI representatives and supervisors for malpractices, and deterring errant conduct relating to digital prospecting and marketing.