Financial Advisers Act (FAA) — Chapter 110¶

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The Financial Advisers Act (Cap. 110) is the primary legislation governing the provision of financial advisory services in Singapore. Enacted in 2001 and administered by the Monetary Authority of Singapore (MAS), the FAA establishes a comprehensive regulatory framework for licensing, conduct, and supervision of financial advisers and their representatives.

The FAA works in conjunction with the Financial Advisers Regulations (FAR) and various MAS Notices, Guidelines, and Circulars to form the complete regulatory regime for financial advisory activities in Singapore.

Purpose and Objectives¶

The FAA serves several core regulatory objectives:

Consumer protection — Ensure that consumers of financial advisory services receive competent, honest, and fair advice through licensing requirements and conduct standards.
Market integrity — Maintain public confidence in the financial advisory industry by setting professional standards and enforcing accountability.
Regulatory oversight — Provide MAS with supervisory and enforcement powers to monitor compliance and take action against misconduct.
Transparency — Require disclosure of material information, remuneration structures, and potential conflicts of interest so consumers can make informed decisions.

Scope of Application¶

Who Is Covered¶

The FAA applies to any person who carries on a business of providing financial advisory services in Singapore, including:

Licensed financial advisers (LFAs)
Exempt financial advisers (EFAs), such as banks, insurance companies, and holders of a capital markets services licence, who are exempt from licensing but still subject to specified conduct requirements
Representatives of financial advisers who provide advisory services on behalf of their principals

What Activities Are Covered¶

The FAA regulates the provision of financial advisory services, which are defined under Section 2 as:

Advising others concerning any investment product, either directly or through publications or writings
Issuing or promulgating analyses or reports concerning any investment product
Marketing of any collective investment scheme (CIS)
Arranging of any contract of insurance in respect of life policies

Territorial Scope¶

The FAA applies to financial advisory services provided in Singapore or to persons in Singapore. Cross-border advisory activities directed at Singapore-based clients may also fall within scope, subject to MAS's regulatory reach.

Key Definitions (Section 2)¶

Financial Adviser¶

A person who carries on a business of providing any financial advisory service. This includes both natural persons and corporate entities. A financial adviser must be licensed under Part II unless specifically exempted.

Financial Advisory Service¶

Defined broadly to include: - Advising others (whether directly or through publications) concerning any investment product - Issuing or promulgating research analyses or reports concerning any investment product - Marketing of any collective investment scheme - Arranging of any contract of insurance in respect of life policies

Investment Product¶

Includes: - Securities as defined in the Securities and Futures Act (SFA) — shares, debentures, units in CIS - Life policies as defined in the Insurance Act — life insurance, investment-linked policies, annuities - Futures contracts as defined in the SFA - Any other product that MAS may prescribe

Life Policy¶

As defined under the Insurance Act (Cap. 142), a life policy includes: - Whole life insurance policies - Term life insurance policies - Endowment policies - Investment-linked policies (ILPs) - Annuities

Securities¶

As defined in the SFA (Cap. 289), securities include: - Shares and debentures of a corporation - Units in a collective investment scheme (unit trusts, mutual funds) - Government securities - Rights or options in respect of the above

Representative¶

A person, by whatever name called, in the direct employment of, or acting for, or by arrangement with, a financial adviser, who performs on behalf of the financial adviser any financial advisory service. Representatives must meet competency requirements under the Guidelines on Fit and Proper Criteria.

Appointed Representative¶

A representative who has been duly appointed by a licensed or exempt financial adviser and notified to MAS. The appointment must be made before the representative commences providing financial advisory services.

Provisional Representative¶

A representative granted a 3-month provisional appointment under Section 23B, typically for individuals relocating to Singapore who have at least 3 years of relevant experience overseas. They must pass the relevant CMFAS examinations within the provisional period.

Temporary Representative¶

A representative granted a temporary appointment under Section 23C for a maximum of 6 months (extendable up to 24 months in total). This is for overseas employees temporarily deployed to Singapore who have at least 5 years of relevant experience.

Structure of the FAA¶

The FAA is organized into the following parts:

Part	Title	Sections	Description
I	Preliminary	1-2	Short title, definitions, interpretation
II	Licensing of Financial Advisers	3-22	Licensing requirements, application, conditions, exemptions, revocation
III	Conduct of Business	23-36	Conduct requirements, disclosure, suitability, conflicts, client agreements
IV	Representatives	23A-23G	Appointment, notification, examination, provisional and temporary reps
V	Offences and Penalties	37-58	Offences, civil liability, enforcement, penalties
VI	Inspection and Investigation	59-72	MAS powers of inspection, investigation, production of records
VII	Appeals	73-76	Appeals against MAS decisions to the Minister
VIII	Miscellaneous	77-104	Regulations, transitional provisions, savings

Relationship with Other Legislation¶

Securities and Futures Act (SFA, Cap. 289)¶

The SFA governs capital markets activities and overlaps with the FAA where financial advisory services involve securities or futures. Holders of a capital markets services licence under the SFA are generally exempt from FAA licensing (as exempt financial advisers) but remain subject to FAA conduct requirements through MAS Notices.

Insurance Act (Cap. 142)¶

The Insurance Act governs the insurance industry. Insurance brokers and direct insurers are exempt from FAA licensing but subject to specified FAA conduct provisions when providing financial advisory services involving life policies.

MAS Notices and Guidelines¶

Key subsidiary instruments include: - MAS Notice FAA-N16 — Recommendations on investment products (suitability requirements) - MAS Notice FAA-N20 — Disclosure requirements - MAS Notice FAA-G16 — Guidelines on Fair Dealing - Guidelines on Fit and Proper Criteria — Competency and integrity standards for representatives - Guidelines on CMFAS Examinations — Examination requirements for representatives

Practical Implications for Financial Institutions¶

Licensing Decision¶

Financial institutions must determine whether they require an FAA licence or qualify for an exemption. Banks, insurance companies, and SFA licence holders typically qualify as exempt financial advisers but must still comply with applicable conduct requirements.

Representative Management¶

All representatives providing financial advisory services must be: - Assessed for fitness and propriety (Fit and Proper criteria) - Notified to MAS via the Representative Notification Framework (RNF) - Compliant with CMFAS examination requirements - Subject to ongoing supervision and compliance monitoring

Compliance Framework¶

Financial advisers must establish and maintain: - Internal compliance policies and procedures - Training and competency frameworks for representatives - Conflicts of interest management - Client suitability assessment processes - Record-keeping and reporting systems - Complaint handling procedures

Recent Amendments¶

The FAA has been amended several times since its enactment, including significant changes through: - Financial Advisers (Amendment) Act 2015 — Enhanced representative framework, introduced balanced scorecard requirements - Omnibus Financial Legislation amendments — Aligned definitions and powers across financial sector legislation - MAS regulatory reviews — Ongoing refinement of conduct requirements through subsidiary legislation and guidelines