Under the current Financial Advisers Act (FAA), financial adviser representatives of independent financial advisory firms had to obtain individual licenses from MAS.
A new adviser wanting to enter the business therefore will need to submit an application to MAS for their screening and approval.
On the other hand, those who are employed from banks or insurance companies were exempt from this licensing requirement. However, the banks and insurance companies were still required to do their own necessary reference checks on any new applicants.
This had led to an uneven playing field as the approval process for a new license from MAS can take anywhere from a few weeks to more than six months. There is also the possibility of inconsistent reference checks done by the banks or insurance companies.
Many had expected MAS to narrow this discrepancy. One way is by requiring the representatives of banks or insurance companies to have some kind of individual license or require them to go through the same MAS screening.
It was reported in yesterday’s Sunday Times that MAS has instead decided to do away with the licensing requirement for financial adviser representatives. Instead, an online registrar called the Register of Representatives will be setup for companies to register the names of their representatives. This capturing of data will only take 7 to 14 days and all the information will be available to the public.
The public will be able to check a representative’s employment history for the past three years, any records of disciplinary actions and the regulated advisory activities that he is allowed to engage in.
All companies will now be required to do their own reference checks with previous employers, credit agencies and the police.
Note that while the individuals do not need to be licensed individually, the companies that employ them will still need to be licensed by MAS and fulfill all the necessary licensing requirements.
Looks like I will be able to save on the couple of hundred dollars that I pay to MAS every year for the licensing fee.
But are we taking one step backwards?