MAS Notice FAA-N20 — Requirements for the Remuneration Framework for Representatives and Supervisors (BSF) and ISA Unit¶

Back to MAS Notices

Previous Next

--- Page 1 --- Notice No: FAA-N20 Issue Date: 1 January 2016 Last revised on 29 December 2025* (Refer to endnote for history of amendments) NOTICE ON REQUIREMENTS FOR THE REMUNERATION FRAMEWORK FOR REPRESENTATIVES AND SUPERVISORS (“BALANCED SCORECARD FRAMEWORK”) AND INDEPENDENT SALES AUDIT UNIT CONTENTS 1 Introduction 1 2 Definitions 1 3 The independent sales audit unit (“ISA Unit”) 4 3.1 Persons comprising the ISA Unit 4 3.2 Requirements of ISA Unit in relation to the balanced scorecard 5 framework 4 Requirements of the balanced scorecard framework for 6 representatives of a financial adviser 4.1 Introduction 6 4.2 Non-sales key performance indicators (“non-sales KPIs”) 7 4.3 Specified variable income 7 4.4 Processes and methods for reviewing and assessing 8 representative’s performance in his provision of financial advisory services against non-sales KPIs 4.5 Classification of infractions: Category 1 infraction or Category 12 2 infraction 4.6 Grading table for representatives 14 4.7 Recovery of specified variable income which representative is 19 not entitled to in the calendar quarter 5 Requirements of the balanced scorecard framework for supervisors 20 of a financial adviser 5.1 Introduction 20 5.2 Specified variable income 20 5.3 Percentage of specified variable income which supervisor is 22 entitled to in a calendar quarter 5.4 Recovery of specified variable income which supervisor is not 22 entitled to in the calendar quarter 5.5 Grading table for supervisors 23

--- Page 2 --- 6 Avenue for appeal by representatives and supervisors 25 7 Record keeping 25 8 Maintenance of register 25 9 Provision of balanced scorecard performance record to 25 representatives and supervisors 10 Responsibilities of board and senior management 26 11 Submission of reports to the Monetary Authority of Singapore 26 12 Transitional arrangements for implementation of new reporting 27 formats 13 Annex 1 29 14 Annex 2 31 15 Annex 3 42

--- Page 3 --- 1 Notice No: FAA-N20 Issue Date: 1 January 2016 (Last revised on 29 December 2025*) NOTICE ON REQUIREMENTS FOR THE REMUNERATION FRAMEWORK FOR REPRESENTATIVES AND SUPERVISORS (“BALANCED SCORECARD FRAMEWORK”) AND INDEPENDENT SALES AUDIT UNIT 1 Introduction 1.1 This Notice is issued pursuant to sections 47, 48 and 67 of the Financial Advisers Act 2001 ("the Act"). [FAA-N20 (Amendment) 2025] 1.2 This Notice shall apply to all licensed financial advisers and exempt financial advisers, other than a financial adviser in respect of the activities, recommendations or transactions set out under regulation 34A of the Financial Advisers Regulations (“FAR”). 1.3 This Notice sets out the requirements in relation to the design and operation of the balanced scorecard framework, and the independent sales audit unit (“ISA Unit”), which licensed financial advisers and exempt financial advisers shall put in place in their remuneration structures for their representatives and supervisors. 2 Definitions 2.1 For the purposes of this Notice, unless the context otherwise requires – “balanced scorecard grade” means the grade assigned to a representative or supervisor under the Representatives’ Grading Table or the Supervisors’ Grading Table; “board” means the board of directors of a financial adviser; “commodity” has the same meaning as in section 2(1) of the Securities and Futures Act 2001; [FAA-N20 (Amendment) 2025] “dual currency investment” has the same meaning as in regulation 2 of the Financial Advisers (Structured Deposits – Prescribed Investment Product and Exemption) Regulations;

--- Page 4 --- Notice on Requirements for the Remuneration Framework for Representatives and Supervisors (“Balanced Scorecard Framework”) and Independent Sales Audit Unit 2 [FAA-N20 (Amendment) 2025] “exempt financial adviser” means a person exempt from holding a financial adviser’s licence under section 20(1)(a), (b), (c), (d) or (e) of the Act; [FAA-N20 (Amendment) 2025] “financial adviser” means a licensed financial adviser or an exempt financial adviser; “infraction” in relation to a representative, means a failure by the representative to meet any of the non-sales key performance indicators; “measurement quarter” means any calendar quarter where a representative’s performance is measured against the non-sales key performance indicators; “non-sales key performance indicators” or “non-sales KPIs”, in relation to a representative, means the principles set out in Annex 1 to this Notice that the representative has to meet; “percentage of total specified variable income” means the percentage of specified variable income determined based on the formula set out in footnote 1 of the Supervisors’ Grading Table; “post-transaction” refers to the period of time after – (a) in the case of a life policy – (i) the policy is issued; (ii) the policy takes effect; or (iii) the cover has commenced, whichever is the latest; and (b) in the case of an investment product other than a life policy, a client’s application for a transaction has been accepted by a product manufacturer; “Representatives’ Grading Table” refers to the table set out in paragraph 4.6.1 for grading a representative under the balanced scorecard framework; “sampled transaction” means a transaction which has been sampled by the ISA Unit to fulfil the requirements of the minimum sampling size set out in paragraph 4.4.2.5;

--- Page 5 --- Notice on Requirements for the Remuneration Framework for Representatives and Supervisors (“Balanced Scorecard Framework”) and Independent Sales Audit Unit 3 “selected representative” means a representative who has been assigned a balanced scorecard grade B or worse under the balanced scorecard framework consecutively for two calendar quarters immediately preceding the measurement quarter; “specified variable income” – (a) in relation to a representative, means the proportion of variable income of the representative referred to in paragraph 4.3.1 which is measured against the non-sales key performance indicators; and (b) in relation to a supervisor, means the proportion of variable income of the supervisor referred to in paragraph 5.2.1 which is measured against the performance of the representatives of the supervisor under the balanced scorecard framework; “structured notes” has the same meaning as in section 240AA(5) of the Securities and Futures Act 2001; [FAA-N20 (Amendment) 2025] “Supervisors’ Grading Table” refers to the table set out in paragraph 5.5.1 for grading a supervisor under the balanced scorecard framework; “transaction” means any purchase of an investment product by a client, and includes, in the case of any life policy, any increases in the sum assured involving the injection of new funds or any addition of riders to the life policy, but does not include the purchase leg of any switch of funds for an investment- linked policy or a collective investment scheme, which is free of charge or where no additional charge for the switch is borne by the client; “variable income” in relation to – (a) a representative, means the amount of remuneration paid or payable to the representative, whether on a periodic basis or otherwise, which varies and is directly dependent, wholly or partly, on any or all of the following – (i) the number or value of investment products in relation to which financial advisory services are provided by the representative to clients; (ii) the number or value of agreements, transactions or arrangements relating to any investment product, entered into by clients to whom the representative provided any financial advisory service;

--- Page 6 --- Notice on Requirements for the Remuneration Framework for Representatives and Supervisors (“Balanced Scorecard Framework”) and Independent Sales Audit Unit 4 (iii) the total amount of consideration, paid by clients to whom the representative provided any financial advisory service for investment products; or (iv) the total amount of premiums paid or payable under life policies, paid by clients to whom the representative provided any financial advisory service; and (b) a supervisor, means the amount of remuneration paid or payable to the supervisor, whether on a periodic basis or otherwise, which varies and is directly dependent, wholly or partly, on any or all of the following – (i) the number or value of investment products, in relation to which financial advisory services are provided by a representative, who is under the supervision or management of the supervisor or any other person whom the supervisor manages or supervises, to clients; (ii) the number or value of agreements, transactions or arrangements relating to any investment product, entered into by clients to whom a representative, who is under the supervision or management of the supervisor or any other person whom the supervisor manages or supervises, provided financial advisory services; (iii) the total amount of consideration, paid by clients to whom a representative, who is under the supervision or management of the supervisor or any other person whom the supervisor manages or supervises, provided financial advisory services for investment products; or (iv) the total amount of premiums paid or payable under life policies, paid by clients to whom a representative, who is under the supervision or management of the supervisor or any other person whom the supervisor manages or supervises, provided financial advisory services. 2.2 The expressions used in this Notice shall, except where expressly defined in this Notice or where the context otherwise requires, have the same respective meanings as in the Act, the FAR, the Notice on Recommendations on Investment Products (FAA- N16), the Notice on Information to Clients and Product Information Disclosure (FAA- N03), and the Guidelines on Switching of Designated Investment Products (FAA-G10). 3 The ISA Unit 3.1 Persons comprising the ISA Unit 3.1.1 A financial adviser shall have an ISA Unit comprising persons who –

--- Page 7 --- Notice on Requirements for the Remuneration Framework for Representatives and Supervisors (“Balanced Scorecard Framework”) and Independent Sales Audit Unit 5 (a) are independent of the financial advisory services unit of the financial adviser; (b) do not directly or indirectly supervise or manage the conduct and performance of any representative or class of representatives of the financial adviser; and (c) are competent in reviewing and assessing the quality of the financial advisory services provided by the representatives of the financial adviser, against the non-sales KPIs, and determining if infractions have been committed by the representatives. 3.1.2 A financial adviser may – (a) utilise its compliance or risk management function to carry out the responsibilities of the ISA Unit; or (b) outsource the responsibilities of the ISA Unit to a third party provider, if and only if – (i) its compliance or risk management function or the third party provider, as the case may be, satisfies paragraph 3.1.1; and (ii) the financial adviser ensures that its compliance or risk management function, or the third party provider, as the case may be, complies with the requirements of this Notice which applies to the ISA Unit. 3.2 Requirements of ISA Unit in relation to the balanced scorecard framework 3.2.1 A financial adviser shall ensure that the ISA Unit carries out the post- transaction checks set out in paragraph 4.4.1, and samples transactions in accordance with the sampling methodology in paragraph 4.4.2. 3.2.2 A financial adviser shall require the ISA Unit to submit reports on its audit of the quality of financial advisory services provided in every calendar quarter by the representatives of the financial adviser, to either – (a) the board and chief executive officer of the financial adviser; or (b) a business function or unit of the financial adviser, which is independent from the financial advisory services unit of the financial adviser, by the end of two calendar quarters immediately subsequent to the measurement quarter, or such longer period as the Authority may approve. [FAA-N20 (Amendment) 2020]

--- Page 8 --- Notice on Requirements for the Remuneration Framework for Representatives and Supervisors (“Balanced Scorecard Framework”) and Independent Sales Audit Unit 6 4 Requirements of the balanced scorecard framework for representatives of a financial adviser 4.1 Introduction 4.1.1 Subject to paragraph 4.3.2, a financial adviser shall for each of its representatives, other than – (a) a representative who is exempt from the application of the balanced scorecard framework under regulation 34A of the FAR; or (b) a representative who ceases to provide financial advisory services during the relevant calendar quarter and where the financial adviser has assessed and documented its assessment in writing that it is not possible for the financial adviser to comply with sub-paragraphs (i) to (vii) in respect of that representative, satisfy all of the following requirements by the end of every calendar quarter immediately subsequent to a measurement quarter: (i) require the ISA Unit to review and assess the quality of financial advisory services provided by the representative in respect of his sampled transactions, in accordance with paragraphs 4.4.1 and 4.4.2; (ii) review and assess findings of mystery shopping exercises, if any, and substantiated complaints, if any, in relation to the performance of representatives, against the non-sales KPIs in accordance with paragraphs 4.4.3 and 4.4.4 respectively; (iii) ensure that the ISA Unit classifies any infraction committed by the representative, in accordance with paragraph 4.5; (iv) determine the percentage or number of cases with one or more infractions, set out in the Representatives’ Grading Table; (v) assign the balanced scorecard grade to the representative under the Representatives’ Grading Table, which corresponds with the percentage or number of cases with one or more infractions referred to in sub-paragraph (iv); (vi) if applicable, determine the percentage of specified variable income which the representative is entitled to under the Representatives’ Grading Table, which corresponds with the percentage or number of cases with one or more infractions referred to in sub-paragraph (iv); and (vii) if applicable, determine the effective percentage of specified variable income which the representative is entitled to in accordance with paragraph 4.6.3.

--- Page 9 --- Notice on Requirements for the Remuneration Framework for Representatives and Supervisors (“Balanced Scorecard Framework”) and Independent Sales Audit Unit 7 4.2 Non-sales key performance indicators 4.2.1 Every financial adviser shall incorporate the non-sales KPIs into its balanced scorecard framework. 4.2.2 In addition to the non-sales KPIs, a financial adviser may incorporate other key performance indicators in its balanced scorecard framework to meet its specific business objectives. However, the financial adviser shall not measure the specified variable income of a representative against such other key performance indicators. 4.3 Specified variable income 4.3.1 Subject to paragraph 4.3.3, in a calendar quarter, where a financial adviser remunerates a representative for his provision of financial advisory services by way of – (a) variable income only, the financial adviser shall measure only 60% of the variable income provided or to be provided to the representative in the calendar quarter against the non-sales KPIs; or (b) a fixed salary and a variable income component, the financial adviser shall measure all of the variable income provided or to be provided to the representative in the calendar quarter against the non-sales KPIs. 4.3.2 Where a financial adviser does not remunerate a representative for his provision of financial advisory services by way of any variable income in a calendar quarter, the financial adviser shall comply with paragraph 4.1.1(i) to (v), and factor the balanced scorecard grade assigned to the representative in the representative’s appraisal, including the representative’s remuneration and promotion reviews (if any). 4.3.3 Where any specified variable income of a representative has been measured against the non-sales KPIs for any calendar quarter, the financial adviser shall not measure the specified variable income against the non-sales KPIs in any other calendar quarter. For example, in relation to the calendar quarter of April to June 2016, if a representative has arranged a life policy on behalf of a client in June 2016 and in respect of this transaction, he is entitled to receive S$1,500 of the specified variable income under the balanced scorecard framework but he will only be paid S$1,000 in June 2016 and S$500 in June 2017; the financial adviser must not measure the deferred payment of S$500 in June 2017 against the non-sales KPIs in the calendar quarter of April to June 2017.

--- Page 10 --- Notice on Requirements for the Remuneration Framework for Representatives and Supervisors (“Balanced Scorecard Framework”) and Independent Sales Audit Unit 8 4.4 Processes and methods for reviewing and assessing representative’s performance in his provision of financial advisory services against non- sales KPIs 4.4.1 Post-transaction checks by the ISA Unit 4.4.1.1 The ISA Unit must carry out and complete the following checks (“post- transaction checks”) on the sampled transactions in order to review and assess the quality of financial advisory services provided by a representative, by the end of the calendar quarter immediately subsequent to the measurement quarter1– (a) in respect of sampled transactions which are rollovers of any dual currency investment or structured note relating to equities or commodities, the ISA Unit must review all call-logs of conversations held with clients of every sampled transaction; (b) in respect of other sampled transactions – (i) Documentation review: The ISA Unit must review all documentation required under FAA-N16, including the documentation required for compliance with the sections “Needs Analysis” and “Know Your Client”, and where applicable, the recording of the client call-back or summary document mentioned in paragraph 41T of FAA-N16, of every sampled transaction; and (ii) Client survey: The ISA Unit must conduct client surveys on every sampled transaction. [FAA-N20 (Amendment) 2025] 4.4.1.2 The ISA Unit should also refer to the Guidelines on the Remuneration Framework for Representatives and Supervisors (“Balanced Scorecard Framework”), and Reference Checks (FAA-G14) on the expectations of the Authority on post- transaction checks. In addition, the ISA Unit must take into consideration all relevant facts and circumstances in relation to the sampled transactions in assessing the quality of the financial advisory services provided by the representative, and determining if the non-sales KPIs are met by the representative, in each calendar quarter. [FAA-N20 (Amendment) 2025] 4.4.2 Sampling methodology of the ISA Unit and sampled transactions 4.4.2.1 The ISA Unit is to carry out up to three rounds of post-transaction checks for 1 For example, in relation to the transactions effected in the calendar quarter of 1 January to 31 March 2016, the ISA Unit must carry out and complete the post-transaction checks on every sampled transaction by no later than the end of June 2016.

--- Page 11 --- Notice on Requirements for the Remuneration Framework for Representatives and Supervisors (“Balanced Scorecard Framework”) and Independent Sales Audit Unit 9 each representative for every calendar quarter. 4.4.2.2 Subject to paragraphs 4.4.2.3 and 4.4.2.4, the ISA Unit has to determine the population for sampling using either of the following methods – (a) Historical average transaction count method: based on the quarterly average transaction count of each representative – (i) over the past 12 months immediately preceding the measurement quarter; or (ii) where a representative has provided financial advisory services for less than 12 months, over the past number of months immediately preceding the measurement quarter which the representative provided financial advisory services, (b) Actual transaction count method: based on the actual number of transactions effected in a measurement quarter. 4.4.2.3 A financial adviser shall apply the actual transaction count method in determining the population for sampling for any – (a) new representative who has provided financial advisory service for less than 3 months; or (b) existing representative who has not effected any transactions in the past 12 months or less, immediately preceding the measurement quarter. 4.4.2.4 A financial adviser shall ensure that the ISA Unit applies the same method in determining the population for sampling across all representatives and from quarter to quarter. If the financial adviser intends to vary the method used in determining the population for sampling, it shall notify the Authority, in writing, of the reason for the change, at least seven days prior to effecting the change. 4.4.2.5 In respect of each round of post-transaction checks referred to in paragraph 4.4.2.1, the ISA Unit has to sample – (a) the respective minimum sample sizes of all transactions which have been effected in the measurement quarter, set out in paragraph 4.4.2.6; or (b) a minimum of one transaction which has been effected in the measurement quarter, whichever is the higher, unless there are no transactions effected in the measurement quarter.

--- Page 12 --- Notice on Requirements for the Remuneration Framework for Representatives and Supervisors (“Balanced Scorecard Framework”) and Independent Sales Audit Unit 10 4.4.2.6 In any measurement quarter – (a) First round of post-transaction checks - (i) in relation to a selected representative, the ISA Unit has to sample a minimum of 10% of the population for sampling; (ii) in relation to a representative who only provides financial advisory services in relation to the rollovers of any dual currency investment or structured note relating to equities or commodities, or such other product as the Authority may approve on an exceptional basis, the ISA Unit has to sample a minimum of 2% of the population for sampling; and (iii) in relation to any other representative, the ISA Unit has to sample a minimum of 5% of the population for sampling; (b) Second round of post-transaction checks - Where the ISA Unit has discovered that any representative (including a selected representative) has committed one or more cases2 with infraction (regardless of the categorisation of the infraction set out in paragraphs 4.5.1 to 4.5.4) in the first round of post-transaction checks, the ISA Unit has to – (i) in relation to a representative who only provides financial advisory services in relation to the rollovers of any dual currency investment or structured note relating to equities or commodities, or such other product as the Authority may approve on an exceptional basis – (A) conduct a second round of post-transaction checks by sampling a minimum of an additional 5% of the population for sampling; and (B) sample transactions which are distinct from all sampled transactions in paragraph (a)(ii); (ii) in relation to any other representative including a selected representative – (A) conduct a second round of post-transaction checks by sampling a minimum of an additional 10% of the population for sampling; and (B) sample transactions which are distinct from all sampled transactions in paragraph (a)(i) or (iii) (as the case may be); and (c) Third round of post-transaction checks - Where the ISA Unit has 2 Please refer to footnote 2 of the Representatives’ Grading Table set out in paragraph 4.6.1.

--- Page 13 --- Notice on Requirements for the Remuneration Framework for Representatives and Supervisors (“Balanced Scorecard Framework”) and Independent Sales Audit Unit 11 discovered that any representative (including a selected representative) has committed one or more cases with infraction (regardless of the categorisation of the infraction set out in paragraphs 4.5.1 to 4.5.4) in the second round of post-transaction checks, the ISA Unit has to – (i) in relation to a representative who only provides financial advisory services in relation to the rollovers of any dual currency investment or structured note relating to equities or commodities, or such other product as the Authority may approve on an exceptional basis – (A) conduct a third round of post-transaction checks by sampling a minimum of an additional 10% of the population for sampling; and (B) sample transactions which are distinct from all sampled transactions in paragraphs (a)(ii) and (b)(i)(A); (ii) in relation to any other representative including a selected representative – (A) conduct a third round of post-transaction checks by sampling a minimum of an additional 20% of the population for sampling; and (B) sample transactions which are distinct from all the sampled transactions in paragraphs (a)(i) or (iii) (as the case may be) and paragraph (b)(ii)(A). 4.4.2.7 A financial adviser shall not count any rider that is purchased together with any life policy as a separate transaction from the life policy for purposes of the post- transaction checks. 4.4.3 Findings from mystery shopping exercises 4.4.3.1 Where a financial adviser conducts any mystery shopping exercise on or after 1 January 2016, or receives any information in relation to the findings of any mystery shopping exercise conducted by the Authority or any industry association on or after 1 January 2016, the financial adviser shall review and assess the findings of its mystery shopping exercise or the information received from the Authority or industry association, in relation to the quality of financial advisory services provided by its representatives, against the non-sales KPIs, so as to determine – (a) whether the findings of the mystery shopping exercise are substantiated; and (b) based on such findings, whether its representatives have committed any infraction in the calendar quarter.

--- Page 14 --- Notice on Requirements for the Remuneration Framework for Representatives and Supervisors (“Balanced Scorecard Framework”) and Independent Sales Audit Unit 12 4.4.3.2 A financial adviser shall factor any infraction committed by a representative and discovered in the circumstances set out in paragraph 4.4.3.1, into his performance under the balanced scorecard framework in the calendar quarter in which the review and assessment of the findings was completed3. 4.4.4 Substantiated complaints 4.4.4.1 A financial adviser shall investigate every complaint lodged against a representative arising from any incident that occurs on or after 1 January 2016. Where a financial adviser is satisfied that a complaint against a representative is substantiated, the financial adviser shall review and assess the substantiated complaint in relation to the quality of financial advisory services provided by the representative, against the non-sales KPIs, so as to determine whether the representative has committed any infraction in the calendar quarter. 4.4.4.2 A financial adviser shall factor any infraction committed by a representative arising from any complaint into his performance under the balanced scorecard framework in the calendar quarter which the complaint was substantiated. For the avoidance of doubt, the financial adviser shall assess whether paragraph 4.6.3 applies when determining the amount of variable income which the representative is entitled to in the calendar quarter. 4.5 Classification of infractions: Category 1 infraction or Category 2 infraction 4.5.1 A financial adviser shall ensure that the ISA Unit classifies every infraction committed by a representative as a Category 1 infraction or Category 2 infraction, by assessing the facts and circumstances (including any aggravating or mitigating factors) of the infraction. 4.5.2 A financial adviser should have regard to the examples of Category 1 infractions set out in the Guidelines on the Remuneration Framework for Representatives and Supervisors (“Balanced Scorecard Framework”), and Reference Checks (FAA-G14). [FAA-N20 (Amendment) 2025] 3 For example, if the financial adviser conducts a mystery shopping exercise in February 2016 and completes the review and assessment of the mystery shopping findings in July 2016, any infraction committed by the representative will have to be factored into his performance under the balanced scorecard framework in the calendar quarter of 1 July 2016 to 30 September 2016.

--- Page 15 --- Notice on Requirements for the Remuneration Framework for Representatives and Supervisors (“Balanced Scorecard Framework”) and Independent Sales Audit Unit 13 4.5.3 Category 1 infraction 4.5.3.1 In relation to an infraction arising from a sampled transaction of a client, a finding from a mystery shopping exercise, or a substantiated complaint, a financial adviser shall ensure that the ISA Unit classifies an infraction as a Category 1 infraction if the ISA Unit determines that in relation to the quality of the financial advisory services provided by a representative to the client, the infraction – (a) has a material impact on the interests of the client; or (b) impinges on the fitness and propriety of the representative. 4.5.3.2 The Authority considers the following circumstances as having a material impact on the interests of a client or impinging on the fitness and propriety of the representative in relation to the quality of the financial advisory services provided (as the case may be) – (a) where the representative recommends an investment product or class of investment products that is clearly unsuitable for a client, based on the information provided by the client to the representative during the fact-find process; (b) where the representative recommends that a client switches from one designated investment product to another designated investment product and the switch to the other designated investment product is unnecessary and wholly or partly for the representative’s benefit; (c) where the representative fails to provide or explain information, or both, as the case may be, on an investment product to a client which, if it had been disclosed to the client, would have resulted in the client not purchasing the investment product; (d) in relation to the quality of the financial advisory services provided, where the representative fails to execute the client’s instructions without valid cause and the representative’s failure to do so results in the client incurring material losses; or (e) in relation to the quality of the financial advisory services provided, where the representative has carried out any act of misrepresentation, gross negligence, or serious misconduct. 4.5.4 Category 2 infraction 4.5.4.1 A financial adviser shall ensure that the ISA Unit classifies any infraction which is not a Category 1 infraction, as a Category 2 infraction. 4.5.5 Disregarded as infraction 4.5.5.1 Where the ISA Unit uncovers minor lapses or administrative oversights in relation to —

--- Page 16 --- Notice on Requirements for the Remuneration Framework for Representatives and Supervisors (“Balanced Scorecard Framework”) and Independent Sales Audit Unit 14 (a) a sampled transaction; (b) a finding from a mystery shopping exercise; or (c) a substantiated complaint, which does not affect client’s interest or impinge on the fitness and propriety of the representative, the financial adviser may allow the ISA Unit to not consider such minor lapses, or administrative oversights, as infractions. For example, if the representative did not fill in the name of the dependants during a fact-find exercise conducted on a client and his failure to provide such information did not affect the results of the client’s financial needs analysis, the ISA Unit will not need to regard such an administrative oversight as an infraction under the balanced scorecard framework. However, where such minor lapses or administrative oversights are prevalent, the financial adviser must ensure that the ISA Unit assesses whether such lapses or oversights would impinge on the fitness and propriety of the representative. [FAA-N20 (Amendment) 2025] 4.5.6 Rectification of infractions 4.5.6.1 A financial adviser shall take all reasonable steps to rectify all infractions uncovered by the ISA Unit. 4.6 Grading Table for Representatives (“Representatives’ Grading Table”) 4.6.1 A financial adviser shall incorporate the following Representatives’ Grading Table in its balanced scorecard framework: Representatives’ Grading Table Balanced Percentage1 (“X”) or number of Percentage of specified scorecard cases2 with infractions in a variable income that a grade for a calendar quarter3 representative is entitled to representative for a calendar quarter for a calendar quarter A X < 5% or one case with Category 100% 2 infractions B 5% ≤ X < 10% or two cases with 75% to less than 100% Category 2 infractions C 10% ≤ X < 20% or three cases 50% to less than 75% with Category 2 infractions

--- Page 17 --- Notice on Requirements for the Remuneration Framework for Representatives and Supervisors (“Balanced Scorecard Framework”) and Independent Sales Audit Unit 15 D 20% ≤ X < 30% or four cases 25% to less than 50% with Category 2 infractions E (a) X ≥ 30% or five or more cases 0% to less than 25% with Category 2 infractions; or (b) One or more cases with Category 1 infractions 1 The denominator to be used in the computation of the percentage of cases2 with Category 2 infraction is calculated based on the sum of – (a) the total number of cases that would have been sampled in all three rounds of sampling under paragraph 4.4.2.6, notwithstanding that the ISA Unit may not have progressed to the second or third round of sampling of transactions in respect of a representative; and (b) the number of cases referred to under paragraphs (b) and (c) of footnote 2 of the Representatives’ Grading Table. The financial adviser may refer to the worked examples set out in Annex 3 for guidance. 2 A “case” means – (a) a sampled transaction; (b) a finding arising from any mystery shopping exercise, if any, referred to in paragraph 4.4.3; or (c) a substantiated complaint, if any, referred to in paragraph 4.4.4. The calculation is based on the number of cases with infractions, and not the number of infractions uncovered by the ISA Unit in relation to a representative. For example, a case with multiple Category 2 infractions will be considered as one case with Category 2 infractions, whilst a case with one Category 1 infraction and multiple Category 2 infractions will be considered as one case with a Category 1 infraction. 3 Where a representative has committed only Category 2 infractions, the financial adviser shall calculate the percentage and the number of cases with infractions in a calendar quarter. Where the percentage of cases with Category 2 infractions and the number of cases with Category 2 infractions determined in a calendar quarter correspond to two different balanced scorecard grades under the Representatives’ Grading Table respectively, the financial adviser shall assign the better of the two balanced scorecard grades to the representative. For example, in relation to a representative, where two out of ten cases were found to have Category 2 infractions, and the financial adviser determines that a balanced scorecard grade D would be assigned in respect of the percentage of cases and a balanced scorecard grade B would be assigned in respect of the number of cases with infractions, the financial adviser

--- Page 18 --- Notice on Requirements for the Remuneration Framework for Representatives and Supervisors (“Balanced Scorecard Framework”) and Independent Sales Audit Unit 16 shall assign the better of the two balanced scorecard grades i.e. grade B, to the representative for that calendar quarter. 4.6.2 A financial adviser shall, for each of its representatives other than – (a) a representative who is exempt from the application of the balanced scorecard framework under regulation 34A of the FAR; (b) a representative who ceases to provide financial advisory services during the relevant calendar quarter and where the financial adviser has assessed and documented its assessment in writing that it is not possible for the financial adviser to comply with paragraphs 4.1.1(i) to (vii), in respect of that representative; or (c) a representative who has not effected any transaction and does not have any case with infractions referred to in footnote 2 of the Representatives’ Grading Table arising from findings from mystery shopping exercises or substantiated complaints, during the relevant calendar quarter4 – satisfy all of the following requirements by the end of every calendar quarter immediately subsequent to a measurement quarter: (i) determine the percentage of cases with Category 2 infractions or the number of cases with Category 1 infractions or Category 2 infractions, based on footnotes 1 and 2 of the Representatives’ Grading Table; (ii) subject to footnote 3 of the Representatives’ Grading Table, assign the balanced scorecard grade to the representative set out in the first column of the Representatives’ Grading Table, which corresponds with the determined percentage of cases with Category 2 infractions or number of cases with Category 1 infraction or Category 2 infractions referred to in sub-paragraph (i); (iii) determine the percentage of specified variable income that the representative is entitled to, based on the balanced scorecard grade assigned to the representative under sub-paragraph (ii); (iv) apply the percentage of specified variable income that the representative is entitled to under sub-paragraph (iii) on the specified variable income in the measurement quarter to determine the amount of specified variable income which the representative is entitled to; and (v) compute the amount of specified variable income which the representative is not entitled to by taking the difference between the specified variable income that the representative is entitled to under 4 For the avoidance of doubt, a financial adviser shall not assign a balanced scorecard grade to a representative referred to in paragraph 4.6.2(c) for the calendar quarter in which the representative has not effected any transaction and does not have any case with infraction referred to in footnote 2 of the Representatives’ Grading Table arising from findings from mystery shopping exercises or substantiated complaints.

--- Page 19 --- Notice on Requirements for the Remuneration Framework for Representatives and Supervisors (“Balanced Scorecard Framework”) and Independent Sales Audit Unit 17 sub-paragraph (iv) and specified variable income. 4.6.3 If – (a) any of the cases with Category 1 or Category 2 infraction arose from a substantiated complaint in relation to an incident which occurred in a calendar quarter which is prior to the measurement quarter; and (b) the financial adviser has ascertained that the representative’s variable income in that calendar quarter where the incident arose is lower than his variable income in the measurement quarter, the financial adviser shall perform steps (a) to (e) to determine the final amount of specified variable income and the effective percentage of specified variable income which the representative is not entitled to: Step (a): Apportion the amount of specified variable income under paragraph 4.6.2(v) between – (i) case(s) with infractions arising from substantiated complaints (“Income X”); and (ii) case(s) with infractions arising from post-transaction checks and findings of mystery shopping exercises (“Income Y”), based on the number of cases with infractions arising from the post- transaction checks, mystery shopping exercises and substantiated complaints. For example, the representative is found to have one case with Category 1 infraction arising from a substantiated complaint and two cases with Category 2 infraction arising from post-transaction checks. Based on the Representatives’ Grading Table, he is assigned a balanced scorecard grade E and determined not to be entitled to S$18,000 (i.e. 75% of specified variable income of S$24,000) of his specified variable income in the measurement quarter. Income X will be S$6,000 (i.e. 1/3 of S$18,000), whilst Income Y will be S$12,000 (i.e. 2/3 of S$18,000). Step (b): Compute the proportion of past variable income in the calendar quarter where the incident resulting in the substantiated complaint arose (“past variable income”) to current variable income in the measurement quarter (“current variable income”) by taking the past variable income as a percentage of the current variable income. For the avoidance of doubt, the financial adviser shall apply the gross variable income5 in the computation of the proportion of past to current income. For example, if the incident resulting in the 5 Gross variable income refers to variable income before factoring in the following – (i) any amount which the representative is not entitled to under the balanced scorecard framework; and (ii) any subsequent changes to the transactions, such as termination of a life policy after inception.

--- Page 20 --- Notice on Requirements for the Remuneration Framework for Representatives and Supervisors (“Balanced Scorecard Framework”) and Independent Sales Audit Unit 18 substantiated complaint took place in the calendar quarter January to March 2016 where the representative’s variable income was S$12,000 and his variable income in the measurement quarter is S$24,000, the percentage of past to current income will be 50% (i.e. S$12,000/S$24,000 x 100%). Step (c): Apply the proportion of past to current income determined in step (b) on Income X to determine the amount of specified variable income that the representative is not entitled to after factoring cases with infractions arising from substantiated complaints (“Income Z”). For example, if the proportion of past to current variable income determined in step (b) is 50% and Income X is S$6,000, the amount of specified variable income that the representative is not entitled to after factoring cases with infractions arising from substantiated complaints is S$3,000 (i.e. 50% of S$6,000). Step (d): Compute the final amount of specified variable income which the representative is not entitled to by totalling Income Y and Income Z. For example, if Income Y is S$12,000 and Income Z is S$3,000, the final amount of specified variable income which the representative is not entitled to is S$15,000. Step (e): Compute the effective percentage of specified variable income that the representative is not entitled to by taking the final amount of specified variable income under step (d) as a percentage of specified variable income. In addition, compute the corresponding effective percentage of specified variable income that the representative is entitled to in the measurement quarter. For example, the final amount of specified variable income which the representative is not entitled to is S$15,000 and the specified variable income is S$24,000, the effective percentage of specified variable income that the representative is not entitled to will be 62.5% (i.e. S$15,000/S$24,000 x 100%). The corresponding effective percentage of specified variable income that the representative is entitled to will be 37.5% (i.e. 100% - 62.5%). 4.6.4 For the purpose of performing step (b) under paragraph 4.6.3, a financial adviser shall ensure that it keeps and maintains sufficient records of each representative’s past variable income. Where the financial adviser does not have record of a representative’s past variable income, it may place reliance on the balanced scorecard performance record which had been provided to the representative in the past to determine the representative’s past variable income. Where both the financial adviser and the representative do not have record of the representative’s past variable income,

--- Page 21 --- Notice on Requirements for the Remuneration Framework for Representatives and Supervisors (“Balanced Scorecard Framework”) and Independent Sales Audit Unit 19 the financial adviser shall not apply steps (a) to (e) under paragraph 4.6.3. Instead, it shall use the variable income in the current calendar quarter to calculate how much the representative is entitled to, set out in paragraph 4.6.2. 4.7 Recovery of specified variable income which representative is not entitled to in the calendar quarter 4.7.1 Where a financial adviser has paid any variable income in relation to a portfolio of transactions to a representative for any calendar quarter before determining the percentage of specified variable income or effective percentage of specified variable income (as the case may be) in relation to that portfolio of transactions which the representative is entitled to for that calendar quarter under the balanced scorecard framework, the financial adviser shall only recover the percentage of specified variable income or effective percentage of specified variable income (as the case may be) which the representative is not entitled to for that calendar quarter from the amount of variable income in relation to the portfolio of transactions which has been paid to the representative, by no later than the end of two calendar quarters subsequent to the measurement quarter, unless there are exceptional circumstances6 where the financial adviser has made an assessment that it is reasonable to recover the income over a longer period of time. For example, where a representative is remunerated by way of variable income only and his variable income from the arrangement of four life policies in the calendar quarter of January to March 2016 is S$10,000 (i.e. the specified variable income measured against the non-sales KPIs is S$6,000 for the calendar quarter of January to March 2016). The financial adviser pays the representative S$2,000 (i.e. specified variable income paid out is S$1,200) in relation to the portfolio of transactions in March 2016 before determining in June 2016 that the representative is actually entitled to only 50% of his specified variable income (i.e. S$3,000) in relation to the portfolio of transactions for the calendar quarter of January to March 2016. The financial adviser shall recover 50% of S$1,200 (i.e. S$600), which has been paid to the representative, by the end of September 2016. 4.7.2 Where the payment of any amount of specified variable income is made in relation to financial advisory services provided by a representative over more than one calendar quarter (such as bonuses which are paid annually), a financial adviser shall apportion such specified variable income using any reasonable method over the calendar quarters. The financial adviser shall then determine the percentage of the apportioned specified variable income which the representative is entitled to in each calendar quarter based on the performance of the representative against the non-sales KPIs in the same calendar quarter. Please refer to worked examples 1 and 4 in Annex 3 for guidance. 6 Exceptional circumstances may include situations where a representative is experiencing financial difficulty and is unable to make repayments.

--- Page 22 --- Notice on Requirements for the Remuneration Framework for Representatives and Supervisors (“Balanced Scorecard Framework”) and Independent Sales Audit Unit 20 4.7.3 For the avoidance of doubt, where a financial adviser has determined the percentage of specified variable income or effective percentage of specified variable income (as the case may be) which a representative is entitled to for a calendar quarter but the payment of any amount of specified variable income is deferred by a financial adviser (including where bonuses are paid on an annual basis or commissions earned are spread and paid out over a number of years), the financial adviser shall only pay out the amount of specified variable income that the representative is entitled to. 5 Requirements of the balanced scorecard framework for supervisors of a financial adviser 5.1 Introduction 5.1.1 A financial adviser shall, for each of its supervisors, other than a supervisor who ceases to supervise or manage the conduct and performance of any representative during the relevant calendar quarter and in respect of whom, the financial adviser has assessed and documented its assessment in writing that it is not possible for the financial adviser to comply with sub-paragraphs (a) and (b) – (a) determine the percentage of specified variable income which the supervisor is entitled to based on the percentage of specified variable income or effective percentage of specified variable income (as the case may be) which a representative under his supervision or management is entitled to in the calendar quarter; and (b) assign the balanced scorecard grade to the supervisor set out in the second column of the Supervisors’ Grading Table, based on the percentage of total specified variable income which is calculated based on the formula in footnote 1 of the Supervisors’ Grading Table, by the end of every calendar quarter immediately subsequent to a measurement quarter. For the avoidance of doubt, where a financial adviser operates a tier structure for its representatives and supervisors, any supervisor who belongs to a second or higher tier and receives any variable income in relation to financial advisory services provided by a representative, shall be deemed to be a supervisor who is responsible for the supervision or management of the conduct and performance of that representative for the purpose of paragraphs (a) and (b). 5.2 Specified variable income 5.2.1 Subject to paragraph 5.2.3, where a financial adviser remunerates a supervisor by way of – (a) variable income only in any calendar quarter and the representatives under the supervision or management of the supervisor are –

--- Page 23 --- Notice on Requirements for the Remuneration Framework for Representatives and Supervisors (“Balanced Scorecard Framework”) and Independent Sales Audit Unit 21 (i) remunerated by way of variable income, whether wholly or partly, the financial adviser shall measure only 60% of the variable income provided or to be provided to the supervisor in the calendar quarter against his representatives’ performance under the balanced scorecard framework in the same calendar quarter; or (ii) not remunerated by way of any variable income, the financial adviser shall assess the supervisor’s performance in a calendar quarter against the performance of his representatives under the balanced scorecard framework in the same calendar quarter and factor the assessment into any appraisal of the supervisor, including remuneration and promotion reviews; or (b) a fixed salary and variable income component in any calendar quarter, and the representatives under the supervision or management of the supervisor are – (i) remunerated by way of variable income, whether wholly or partly, the financial adviser shall measure all variable income provided or to be provided to the supervisor in the calendar quarter against the representatives’ performance under the balanced scorecard framework in the same calendar quarter; or (ii) not remunerated by way of any variable income, the financial adviser shall assess the supervisor’s performance in a calendar quarter against the performance of the representatives under the balanced scorecard framework in the same calendar quarter and factor the assessment into any appraisal of the supervisor, including remuneration and promotion reviews. 5.2.2 Where a financial adviser does not remunerate a supervisor by way of any variable income and regardless of how the representatives under his supervision or management are remunerated, the financial adviser shall assess the supervisor’s performance in a calendar quarter against the performance of his representatives under the balanced scorecard framework in the same calendar quarter and factor the assessment into any appraisal of the supervisor, including remuneration and promotion reviews. 5.2.3 Where any specified variable income of a supervisor has been measured against the performance of any of his representatives under the balanced scorecard framework in any calendar quarter, the financial adviser shall not measure the specified variable income of the supervisor against the performance of any of his representatives under the balanced scorecard framework in any other calendar quarter. For example, based on the percentage of specified variable income which a representative is entitled to in the calendar quarter of April to June 2016, a supervisor is entitled to receive an

--- Page 24 --- Notice on Requirements for the Remuneration Framework for Representatives and Supervisors (“Balanced Scorecard Framework”) and Independent Sales Audit Unit 22 amount of specified variable income of S$1,500, but he will only be paid S$1,000 in June 2016 and S$500 in June 2017; the financial adviser must not measure the deferred payment of S$500 to be paid to the supervisor in June 2017 against the performance of his representative under the balanced scorecard framework in the calendar quarter of April to June 2017. 5.3 Percentage of specified variable income which supervisor is entitled to in a calendar quarter 5.3.1 A financial adviser shall, for every calendar quarter and in respect of any variable income payable to a supervisor in relation to a portfolio of transactions effected by a representative, whose supervision or management the supervisor is responsible for, pay the supervisor the percentage of specified variable income which is the same as the percentage of specified variable income or effective percentage of specified variable income (as the case may be) which the representative is entitled to in relation to that portfolio of transactions in the calendar quarter under the balanced scorecard framework. For example, if a representative is entitled to 75% of the specified variable income in relation to his portfolio of transactions effected in the calendar quarter of April to June 2016 under the balanced scorecard framework, the supervisor is entitled to 75% of the specified variable income in relation to the same portfolio of transactions in the same calendar quarter; or if a representative is entitled to the full amount of the specified variable income in relation to his portfolio of transactions effected in the calendar quarter of April to June 2016, the supervisor is entitled to the full amount of specified variable income in relation to the same portfolio of transactions in the same calendar quarter. 5.4 Recovery of specified variable income which supervisor is not entitled to in the calendar quarter 5.4.1 Where a financial adviser has paid any variable income to a supervisor in relation to a portfolio of transactions effected by a representative under his supervision for any calendar quarter before determining the percentage of specified variable income which the supervisor is entitled to in relation to that portfolio of transactions effected by that representative for that calendar quarter under the balanced scorecard framework, the financial adviser shall only recover the percentage of specified variable income which the supervisor is not entitled to for that calendar quarter from the amount of variable income which has been paid to the supervisor in relation to that portfolio of transactions effected by that representative, by no later than the end of two calendar quarters subsequent to the measurement quarter unless there are exceptional circumstances7 where the financial adviser has made an assessment that it is reasonable to recover the income over a longer period of time. For example, where a supervisor is 7 Exceptional circumstances may include situations where a supervisor is experiencing financial difficulty and is unable to make repayments.

--- Page 25 --- Notice on Requirements for the Remuneration Framework for Representatives and Supervisors (“Balanced Scorecard Framework”) and Independent Sales Audit Unit 23 remunerated by way of variable income only and his variable income in relation to the arrangement of four life policies by a representative under his supervision or management for the calendar quarter January to March 2016 is S$5,000 (i.e. the amount of specified variable income of the supervisor in relation to the portfolio of transactions which is measured against the performance of his representative under the balanced scorecard framework is S$3,000 for the calendar quarter of January to March 2016). The financial adviser pays the supervisor S$1,000 (i.e. specified variable income paid out is S$600) in relation to the portfolio of transactions in February 2016 before determining in June 2016 that the representative under the supervisor’s supervision is actually entitled to only 50% of his specified variable income in relation to the portfolio of transactions for the calendar quarter of January to March 2016, and correspondingly, the supervisor is entitled to only 50% of his specified variable income in relation to that portfolio of transactions (i.e. S$1,500). The financial adviser shall recover 50% of S$600 (i.e. S$300), which has been paid to the supervisor, by the end of September 2016. 5.4.2 Where the payment of any amount of specified variable income is made to a supervisor in relation to financial advisory services provided by representatives under the supervision or management of the supervisor over more than one calendar quarter (such as bonuses which are paid annually), the financial adviser shall apportion such specified variable income using any reasonable method over the calendar quarters. The financial adviser shall then determine the percentage of the apportioned specified variable income which the supervisor is entitled to in each calendar quarter based on his representatives’ performance under the balanced scorecard framework in the same calendar quarter. Please refer to worked examples 2, 3 and 5 in Annex 3 for guidance. 5.4.3 For the avoidance of doubt, where a financial adviser has determined the percentage of specified variable income which the supervisor is entitled to for a calendar quarter but the payment of any amount of specified variable income is deferred by the financial adviser (including where bonuses are paid on an annual basis or commissions earned are spread and paid out over a number of years), the financial adviser shall only pay out the amount of specified variable income that the supervisor is entitled to. 5.5 Grading table for supervisors (“Supervisors’ Grading Table”) 5.5.1 A financial adviser shall incorporate the following Supervisors’ Grading Table in the balanced scorecard framework: Supervisors’ Grading Table

--- Page 26 --- Notice on Requirements for the Remuneration Framework for Representatives and Supervisors (“Balanced Scorecard Framework”) and Independent Sales Audit Unit 24 Percentage of total specified variable income1 Balanced scorecard grade for a from all representatives under his supervision supervisor for a calendar that a supervisor is entitled to in a calendar quarter quarter 75% to 100% Good 50% to less than 75% Satisfactory 25% to less than 50% Fair 0% to less than 25% Unsatisfactory 1 A financial adviser shall compute the percentage of total specified variable income that the supervisor is entitled to in a calendar quarter as follows: Percentage of total specified variable income = (Sum of specified variable income which a supervisor is entitled to in a calendar quarter under the balanced scorecard framework, in respect of every representative under his supervision or management) x 100% (Sum of specified variable income of the supervisor in the same calendar quarter which is subject to the balanced scorecard framework, in respect of every representative under his supervision or management) For example, where the specified variable income of a supervisor is S$5,000 and S$10,000 from Representatives A and B respectively in the calendar quarter of April to June 2016; if Representative A is entitled to 75% of his specified variable income while Representative B is entitled to 100% of his specified variable income in the calendar quarter of April to June 2016, then the supervisor is entitled to S$13,750 (i.e. 75% of S$5,000 from Representative A and 100% of S$10,000 from Representative B) in the same calendar quarter; the percentage of total specified variable income that the supervisor is entitled to in that calendar quarter will be 91.7% (rounded up to 1 decimal place) (i.e. S$13,750/S$15,000 x 100%). 5.5.2 A financial adviser shall, for every calendar quarter, assign to a supervisor the balanced scorecard grade set out in the second column of the Supervisors’ Grading Table which corresponds with the percentage of total specified variable income set out in the first column of the Supervisors’ Grading Table.

--- Page 27 --- Notice on Requirements for the Remuneration Framework for Representatives and Supervisors (“Balanced Scorecard Framework”) and Independent Sales Audit Unit 25 6 Avenue for appeal by representatives and supervisors 6.1 A financial adviser shall put in place a process for addressing any appeal made by any representative or supervisor in relation to the balanced scorecard framework, including any appeal in relation to – (a) the review and assessment of the performance of the representative in relation to his provision of financial advisory services, against the non- sales KPIs and the determination of any infraction; (b) the classification of any infraction committed by the representative; (c) the percentage or number of cases of Category 1 or Category 2 infractions committed by the representative; (d) the percentage or amount of specified variable income that the representative or supervisor is entitled to under the balanced scorecard framework; (e) the percentage of the total specified variable income of the supervisor; or (f) the balanced scorecard grade assigned to the representative or supervisor. 7 Record keeping 7.1 A financial adviser shall keep records of its processes and methods undertaken, and every assessment and determination made under or in relation to the balanced scorecard framework for a period of not less than five years. 8 Maintenance of register 8.1 A financial adviser shall maintain a register of all representatives who only provide financial advisory services in relation to the rollovers of any dual currency investment or structured note relating to equities or commodities, or such other product as the Authority may approve on an exceptional basis, for a period of not less than five years. 9 Provision of balanced scorecard performance record to representatives and supervisors 9.1 A financial adviser shall ensure that it provides a balanced scorecard performance record for each representative and supervisor (other than a representative referred to in paragraph 4.1.1(a) or (b) and a supervisor who ceases to supervise or manage the conduct and performance of any representative during the relevant calendar quarter) in respect of the representative’s and supervisor’s performance under the balanced scorecard framework in every calendar quarter by the end of two calendar

--- Page 28 --- Notice on Requirements for the Remuneration Framework for Representatives and Supervisors (“Balanced Scorecard Framework”) and Independent Sales Audit Unit 26 quarters immediately subsequent to the measurement quarter. The balanced scorecard performance record shall minimally include details such as gross variable income, gross specified variable income, balanced scorecard grade, percentage entitlement to specified variable income, and amount of specified variable income that the representative or supervisor is entitled to. 10 Responsibilities of board and senior management 10.1 According to the Guidelines on Fair Dealing – Board and Senior Management Responsibilities for Delivering Fair Dealing Outcomes to Customers (FAA-G11), the board is responsible for charting the corporate policy and strategy to deliver the fair dealing outcomes and promote a culture of fair dealing with clients. The board oversees the senior management of a financial adviser in implementing corporate policies and strategies approved by the board. The board and senior management are accountable for the implementation of the balanced scorecard framework which incentivises fair dealing conduct. 10.2 A financial adviser shall establish a management information framework for the purpose of allowing the board and senior management to monitor the operations of the balanced scorecard framework and measure the achievement of the fair dealing outcomes. 10.3 A financial adviser shall put in place measures, such as training or coaching to ensure that – (a) its representatives meet the non-sales KPIs; and (b) its supervisors carry out their duties or functions in their supervision or management of the conduct and performance of their representatives in a proper manner. 11 Submission of reports to the Authority 11.1 Subject to paragraph 12, a financial adviser shall submit the following reports for every measurement quarter to the Authority in accordance with the respective formats set out in Annex 2 to this Notice– (a) a report on the balanced scorecard grades assigned to representatives of the financial adviser for the measurement quarter, categorised according to representatives who do not perform any supervisory role, and representatives who performs supervisory roles as Tier 2 or Tier 3 supervisors; (b) a report on the total number of representatives who have been assigned balanced scorecard grades;

--- Page 29 --- Notice on Requirements for the Remuneration Framework for Representatives and Supervisors (“Balanced Scorecard Framework”) and Independent Sales Audit Unit 27 (c) a report on the number of appeals made by representatives to the financial adviser in relation to the balanced scorecard framework, including the number of rejected, outstanding and successful appeals, and the outcomes of successful appeals; (d) a report on the number of successful appeals by representatives which involve a reassignment of balanced scorecard grades; (e) a report on the details of successful appeals involving a reassignment from a balanced scorecard grade E to a better grade; (f) a report on the details of the infractions committed by representatives who have been assigned a balanced scorecard grade E (including the classification of the infractions and names of the representatives who committed the infractions); (g) a report on the balanced scorecard grades assigned to supervisors of the financial adviser for any measurement quarter; (h) a report on the number of appeals made by supervisors to the financial adviser in relation to the balanced scorecard framework, including the number of rejected, outstanding and successful appeals, and the outcomes of successful appeals; and (i) a report on the number of successful appeals by supervisors which involve a reassignment of balanced scorecard grades. [FAA-N20 (Amendment No. 2) 2020] 11.2 A financial adviser shall submit the reports for each measurement quarter to the Authority by the following dates, whichever is applicable: (a) in respect of reports for the measurement quarter ending 31 March, by 30 September of the same calendar year, (b) in respect of reports for the measurement quarters ending 30 June and 30 September, by 31 March of the following calendar year; and (c) in respect of reports for the measurement quarter ending 31 December, by 30 September of the following calendar year; or such longer period as the Authority may approve. [FAA-N20 (Amendment No. 2) 2020] 12 Transitional arrangements for implementation of new reporting formats 12.1 A financial adviser may submit the reports set out in paragraph 11.1 for measurement quarters which ended 31 March 2020, 30 June 2020 and 30 September 2020, to the Authority in accordance with the respective formats set out in Annex 2 to this Notice in force immediately before 5 October 2020. [FAA-N20 (Amendment No. 2) 2020]

--- Page 30 --- Notice on Requirements for the Remuneration Framework for Representatives and Supervisors (“Balanced Scorecard Framework”) and Independent Sales Audit Unit 28 *Note on History of Amendments 1. FAA-N20 (Amendment) 2020 with effect from 16 April 2020. 2. FAA-N20 (Amendment No. 2) 2020 with effect from 16 September 2020. 3. FAA-N20 (Amendment) 2025 with effect from 29 December 2025.

--- Page 31 --- Notice on Requirements for the Remuneration Framework for Representatives and Supervisors (“Balanced Scorecard Framework”) and Independent Sales Audit Unit 29 ANNEX 1 Non-sales Key Performance Indicators Non-sales KPI 1: Understanding a client’s needs • A representative must take reasonable steps8 to conduct sufficient fact-find to understand the circumstances and needs of his clients. • In determining if a representative has taken reasonable steps to conduct sufficient fact-find to understand the circumstances and needs of a client, a financial adviser shall take into account the following list of factors (which are non-exhaustive) – (a) whether the representative has taken reasonable steps to collect all pertinent information from the client and correctly documented all the information collected from the fact-find process; (b) whether the representative conducted the fact-find with the client before or after giving advice or making a recommendation, or both (as the case may be); (c) whether the representative influenced the client’s inputs or responses during the fact-find stage. Non-sales KPI 2: Suitability of product recommendations • A representative must have a reasonable basis for any recommendation made to a client and take into account the client’s financial objectives, investment horizon, risk profile, financial situation and particular circumstances and needs. Non-sales KPI 3: Adequacy of information disclosure • A representative must have highlighted, explained and provided all material information in relation to the investment product or class of investment products to the client. • A representative must ensure that any statement or representation to the client is not false or misleading. • Material information to be highlighted, explained and provided to clients shall include, but is not limited to, the terms and conditions of the investment product, the benefits to be or likely to be derived from or the risks that may arise from purchasing the investment product, the premium, costs, expenses, investment 8 A representative must collect as much relevant information as possible so as to understand the circumstances and needs of a client. Where a client does not wish to provide the information required during the fact-find process, the representative should clearly document the client’s decision.

--- Page 32 --- Notice on Requirements for the Remuneration Framework for Representatives and Supervisors (“Balanced Scorecard Framework”) and Independent Sales Audit Unit 30 horizon, fees and other charges that may be imposed in relation to the investment product, and the identity of the product manufacturer of the investment product. • Financial advisers and their representatives must, where applicable, make reference to the Notice on Information to Clients and Product Information Disclosure (FAA- N03), the Notice on Dual Currency Investments (FAA-N11) and the Guidelines on Structured Deposits (FAA-G09) on the type of information that must be disclosed to clients. Non-sales KPI 4: Standards of professionalism and ethical conduct in relation to the provision of financial advisory services • A representative must provide financial advisory services in a professional and ethical manner, and must not engage in any unprofessional or unethical acts. • Unprofessional or unethical acts, other than those under non-sales KPIs 1 to 3, refer to – (a) acts involving fraud, dishonesty, or other offences of a similar nature, misrepresentation, or acts involving non-compliance with regulatory requirements or serious breach of the financial adviser’s internal policy or code of conduct which would render the representative liable to demotion, suspension or termination of the representative’s employment or arrangement with the financial adviser; and (b) acts that impinge on the fitness and propriety of representatives set out in the Guidelines on Fit and Proper Criteria (FSG-G01). [FAA-N20 (Amendment) 2025]

--- Page 33 --- Notice on Requirements for the Remuneration Framework for Representatives and Supervisors (“Balanced Scorecard Framework”) and Independent Sales Audit Unit 31 ANNEX 2 NAME OF FINANCIAL ADVISER: REPORT FOR MEASUREMENT QUARTER FROM: _ to ___ SECTION A: FOR REPRESENTATIVES This section is only applicable to representatives who are remunerated by way of variable income, whether wholly or partly Table 1(a) – Number of representatives by balanced scorecard grade Balanced scorecard grade Number of representatives Does not perform any Performs supervisory role as Performs supervisory role as supervisory role (i.e. Tier 1) a Tier 2 supervisor a Tier 3 supervisor A B C D E Sub-total Total number of representatives

--- Page 34 --- Notice on Requirements for the Remuneration Framework for Representatives and Supervisors (“Balanced Scorecard Framework”) and Independent Sales Audit Unit 32 Comments for Table 1(a) (if any) Table 1(b)(i) – Number of appeals handled by the financial adviser in the measurement quarter Total number of outstanding appeals by representatives at the beginning of the measurement quarter Breakdown: 1) Number of successful appeals which involve: (i) a reassignment to a better balanced scorecard grade (please provide a breakdown of the reassignment of grades under table 1(b)(ii)) (ii) no reassignment of balanced scorecard grades but an increase in percentage entitlement to specified variable income (iii) others, please describe:

2) Number of rejected appeals 3) Number of outstanding appeals pending final outcome Total number of appeals submitted by representatives against the financial adviser’s assignment of balanced scorecard grades during the measurement quarter Breakdown: 1) Number of successful appeals which involve:

--- Page 35 --- Notice on Requirements for the Remuneration Framework for Representatives and Supervisors (“Balanced Scorecard Framework”) and Independent Sales Audit Unit 33 (i) a reassignment to a better balanced scorecard grade (please provide a breakdown of the reassignment of grades under table 1(b)(ii)) (ii) no reassignment of balanced scorecard grades but an increase in percentage entitlement to specified variable income (iii) others, please describe:

2) Number of rejected appeals 3) Number of outstanding appeals pending final outcome Table 1(b)(ii) – Number of successful appeals which involve a reassignment of balanced scorecard grades Revised balanced scorecard grades A B C D Original balanced B scorecard grades C D E Comments for Table 1(b)(i) and 1(b)(ii) (if any)

--- Page 36 --- Notice on Requirements for the Remuneration Framework for Representatives and Supervisors (“Balanced Scorecard Framework”) and Independent Sales Audit Unit 34 Table 1(c) – Details of successful appeals involving a reassignment from a balanced scorecard grade E to a better grade S/N Name of representative (Note: Name as reflected in the Register of Final balanced scorecard grade Representatives) Comments for Table 1(c) (if any) Table 1(d) – Details of infractions committed by representatives who have been assigned a balanced scorecard grade E Name of representative (Note: Name Category of infraction / brief description of infraction Misconduct report as reflected in the Register of number (if applicable) Representatives) Comments for Table 1(d) (if any)

--- Page 37 --- Notice on Requirements for the Remuneration Framework for Representatives and Supervisors (“Balanced Scorecard Framework”) and Independent Sales Audit Unit 35 This section is only applicable to representatives who are not remunerated by way of any variable income Table 2(a) – Number of representatives by balanced scorecard grade Balanced scorecard grade Number of representatives Does not perform any Performs supervisory role as Performs supervisory role as supervisory role (i.e. Tier 1) a Tier 2 supervisor a Tier 3 supervisor A B C D E Sub-total Total number of representatives Comments for Table 2(a) (if any)

--- Page 38 --- Notice on Requirements for the Remuneration Framework for Representatives and Supervisors (“Balanced Scorecard Framework”) and Independent Sales Audit Unit 36 Table 2(b)(i) – Number of appeals handled by the financial adviser in the measurement quarter Total number of outstanding appeals by representatives at the beginning of the measurement quarter Breakdown: 1) Number of successful appeals which involve: i) a reassignment to a better balanced scorecard grade (please provide a breakdown of the reassignment of grades under table 2(b)(ii)) ii) others, please describe:

2) Number of rejected appeals 3) Number of outstanding appeals pending final outcome Total number of appeals submitted by representatives against the financial adviser’s assignment of balanced scorecard grades during the measurement quarter Breakdown: 1) Number of successful appeals which involve: i) a reassignment to a better balanced scorecard grade (please provide a breakdown of the reassignment of grades under table 2(b)(ii)) ii) others, please describe:

2) Number of rejected appeals

--- Page 39 --- Notice on Requirements for the Remuneration Framework for Representatives and Supervisors (“Balanced Scorecard Framework”) and Independent Sales Audit Unit 37 3) Number of outstanding appeals pending final outcome Table 2(b)(ii) – Number of successful appeals which involve a reassignment of balanced scorecard grades Revised balanced scorecard grades A B C D Original balanced B scorecard grades C D E Comments for Table 2(b)(i) and 2(b)(ii) (if any) Table 2(c) – Details of successful appeals involving a reassignment from a balanced scorecard grade E to a better grade S/N Name of representative (Note: Name as reflected in the Register of Final balanced scorecard grade Representatives)

--- Page 40 --- Notice on Requirements for the Remuneration Framework for Representatives and Supervisors (“Balanced Scorecard Framework”) and Independent Sales Audit Unit 38 Comments for Table 2(c) (if any) Table 2(d) – Details of infractions committed by representatives who have been assigned a balanced scorecard grade E Name of representative (Note: Name as Category of infraction / brief description of infraction Misconduct report reflected in the Register of Representatives) number (if applicable) Comments for Table 2(d) (if any)

--- Page 41 --- Notice on Requirements for the Remuneration Framework for Representatives and Supervisors (“Balanced Scorecard Framework”) and Independent Sales Audit Unit 39 SECTION B: FOR SUPERVISORS Table 1(a) – Number of supervisors by balanced scorecard grade assigned Balanced scorecard grade assigned Number of supervisors Good Satisfactory Fair Unsatisfactory Comments for Table 1(a) (if any) Table 1(b)(i) – Number of appeals handled by the financial adviser in the measurement quarter Total number of outstanding appeals by supervisors at the beginning of the measurement quarter Breakdown: 1) Number of successful appeals which involve: i) a reassignment to a better balanced scorecard grade (please provide a breakdown of the reassignment of grades under table 1(b)(ii))

--- Page 42 --- Notice on Requirements for the Remuneration Framework for Representatives and Supervisors (“Balanced Scorecard Framework”) and Independent Sales Audit Unit 40 ii) no reassignment of balanced scorecard grades but an increase in percentage entitlement to variable income iii) others, please describe:

2) Number of rejected appeals 3) Number of outstanding appeals pending final outcome Total number of appeals submitted by supervisors against the financial adviser’s assignment of balanced scorecard grades during the measurement quarter Breakdown: 1) Number of successful appeals which involve: i) a reassignment to a better balanced scorecard grade (please provide a breakdown of the reassignment of grades under table 1(b)(ii)) ii) no reassignment of balanced scorecard grades but an increase in percentage entitlement to variable income iii) others, please describe:

2) Number of rejected appeals 3) Number of outstanding appeals pending final outcome

--- Page 43 --- Notice on Requirements for the Remuneration Framework for Representatives and Supervisors (“Balanced Scorecard Framework”) and Independent Sales Audit Unit 41 Table 1(b)(ii) – Number of successful appeals which involve a reassignment of balanced scorecard grades Revised balanced scorecard grade Good Satisfactory Fair Original balanced Satisfactory scorecard grades Fair Unsatisfactory Comments for Table 1(b)(i) and 1(b)(ii) (if any)

--- Page 44 --- Notice on Requirements for the Remuneration Framework for Representatives and Supervisors (“Balanced Scorecard Framework”) and Independent Sales Audit Unit 42 ANNEX 3 Worked Example 1 Applicable to a representative who is remunerated for his provision of financial advisory services by way of variable income only A representative would receive variable income of S$15,000 from 10 transactions effected in the calendar quarter January to March 2020 (i.e. the measurement quarter). The variable income is paid to the representative over the income payment period which is spread over 6 years. For the remaining 3 calendar quarters of 2020, the representative earns variable income of S$10,000 (April to June 2020), S$10,000 (July to September 2020) and S$15,000 (October to December 2020) from transactions effected in those calendar quarters respectively. The representative earns an annual bonus tied to sales volume in 2020 of S$10,000. During the post-transaction checks conducted by the ISA Unit on sampled transactions effected during the calendar quarter January to March 2020, 2 cases with Category 2 infractions were uncovered. The financial adviser also investigated and substantiated a complaint against the representative in March 2020 in relation to a transaction which was effected in February 2016. The case of the substantiated complaint was determined by the financial adviser to be 1 case with Category 2 infractions. There were no cases with infractions uncovered in the remaining 3 quarters of 2020. The variable income which the representative earned from 5 transactions effected in the calendar quarter January to March 2016 was S$5,000.

--- Page 45 --- Notice on Requirements for the Remuneration Framework for Representatives and Supervisors (“Balanced Scorecard Framework”) and Independent Sales Audit Unit 43 Part (I): Assignment of balanced scorecard grade to the representative for his performance in the measurement quarter of January to March 2020 Number of cases in Number of cases with Balanced Scorecard Grade measurement quarter of infractions January to March 2020 (a) Post-transaction checks by ISA First round of check: 1 case Percentage of cases with Category 2 infractions Unit with Category 2 infractions = (3/5) x 100% = 60% (Grade: E) (Note: Sample size for 3 rounds of Second round of check: 1 case (Note: Denominator of 5 is derived from the total number of sampling with Category 2 infractions cases that would have been sampled in all three rounds of First round: 1 case sampling, plus one substantiated complaint case.) Second round: 1 case Third round of check: No case Third round: 2 cases with infractions Number of cases with Category 2 infractions = 3 cases (Grade: Total sample size for 3 rounds of C) sampling = 4 cases) (b) Number of substantiated 1 case with Category 2 Final Balanced Scorecard Grade: C complaints against infractions representative [Note: Where the percentage of cases with Category 2 (c) Mystery shopping None conducted infractions and the number of cases with Category 2 infractions determined in a measurement quarter, corresponds to two different balanced scorecard grades under the Representatives’ Grading Table respectively, the financial adviser shall assign the better of the two balanced scorecard grades to the representative.]

--- Page 46 --- Notice on Requirements for the Remuneration Framework for Representatives and Supervisors (“Balanced Scorecard Framework”) and Independent Sales Audit Unit 44 Part (II): Computation of representative’s entitlement to variable income from transactions effected in the measurement quarter of January to March 2020 Given that the representative has been assigned a balanced scorecard grade C, he will be entitled to 50% to less than 75% of his specified variable income. Assuming that the financial adviser determined that the representative is entitled to 50% of his specified variable income, the representative’s entitlement to variable income will be computed as follows: Specified variable income = 60%9 x S$15,000 = S$9,000 Amount of specified variable income affected by the balanced scorecard grade = (100%-50%) x S$9,000 = S$4,500 Given that one of the cases with Category 2 infractions arose from a substantiated complaint in relation to a transaction effected in February 2016, which is prior to the measurement quarter January to March 2020, and as the variable income in the calendar quarter January to March 2016 was lower than that in the measurement quarter, steps (a) to (e) have to be performed: Step (a): To apportion the amount of specified variable income affected by the balanced scorecard grade between – (i) case(s) with infraction arising from substantiated complaints = 1/3 x S$4,500 = S$1,500 (i.e. Income X) (ii) case(s) with infraction arising from post-transaction checks and findings from mystery shopping exercises = 2/3 x S$4,500 = S$3,000 (i.e. Income Y) Step (b): Given that the variable income for the calendar quarter January to March 2016 (i.e. S$5,000) was lower than the variable income in the measurement quarter (i.e. S$15,000), to compute the proportion of past to current income as follows: Proportion of past to current income = S$5,000/S$15,000 x 100% = 33.3% 9 60% of a representative’s variable income, based on the portfolio of transactions effected in the measurement quarter of January to March 2020, is measured against the non-sales KPIs.

--- Page 47 --- Notice on Requirements for the Remuneration Framework for Representatives and Supervisors (“Balanced Scorecard Framework”) and Independent Sales Audit Unit 45 Step (c): To apply the proportion of past to current income on Income X as follows: Amount of specified variable income representative is not entitled to after factoring cases with infractions arising from substantiated complaints = 33.3% x S$1,500 = S$500 (rounded to the nearest dollar) (i.e. Income Z) Step (d): To compute the final amount of specified variable income affected under the balanced scorecard framework by totalling Income Y and Income Z as follows: Final amount of specified variable income which representative is not entitled to =S$3,000 + S$500 = S$3,500 Step (e): To compute the effective percentage of specified variable income the representative is entitled to as follows: Effective percentage of specified variable income representative is entitled to = (S$9,000-S$3,500)/S$9,000 x 100% = 61.1% Note: Effective percentage of specified variable income representative is not entitled to = 100% - 61.1% = 38.9% Amount of variable income that representative is entitled to for transactions effected in the measurement quarter January to March 2020 = S$15,000 - S$3,500 = S$11,500

--- Page 48 --- Notice on Requirements for the Remuneration Framework for Representatives and Supervisors (“Balanced Scorecard Framework”) and Independent Sales Audit Unit 46 Assuming that specified variable income in the calendar quarter January to March 2016 was S$20,000, i.e. higher than specified variable income in the measurement quarter January to March 2020 Part (II): Computation of representative’s entitlement to variable income from transactions effected in the measurement quarter of January to March 2020 Given that the representative has been assigned a balanced scorecard grade C, he will be entitled to 50% to less than 75% of his specified variable income. Assuming that the FA firm determined that the representative is entitled to 50% of his specified variable income, the representative’s entitlement to variable income will be computed as follows: Specified variable income = 60% x S$15,000 = S$9,000 Amount of specified variable income affected by the balanced scorecard grade = (100%-50%) x S$9,000 = S$4,500 Amount of variable income that representative is entitled to for transactions effected in the measurement quarter January to March 2020 = S$15,000 - S$4,500 = S$10,500 Note: Steps (a) to (e) will not need to be performed.

--- Page 49 --- Notice on Requirements for the Remuneration Framework for Representatives and Supervisors (“Balanced Scorecard Framework”) and Independent Sales Audit Unit 47 Part (III): Recovery or payment of specified variable income over the income payment period Scenario A Assume that the variable income earned by the representative for the measurement quarter of January to March 2020 is paid out annually and spread over an income payment period of 6 years as follows: Period January to January to January to January to January to January to Total March 2020 March 2021 March 2022 March 2023 March 2024 March 2025 Percentage of variable 55% 20% 10% 5% 5% 5% 100% income for the measurement quarter of January to March 2020, spread over 6 years Amount of variable 8,250 3,000 1,500 750 750 750 15,000 income which the representative would receive (S$) Amount of specified 60% x 8,250 60% x 3,000 60% x 1,500 60% x 750 60% x 750 60% x 750 9,000 variable income the = 4,950 = 1,800 = 900 = 450 = 450 = 450 representative would receive (S$) The amount of variable income to be recovered or paid out in each period after factoring the representative’s performance against the non-sales KPIs under the balanced scorecard framework will be as follows:

--- Page 50 --- Notice on Requirements for the Remuneration Framework for Representatives and Supervisors (“Balanced Scorecard Framework”) and Independent Sales Audit Unit 48 Period January to March 2020 January to January to January to January to January to Total March 2021 March 2022 March 2023 March 2024 March 2025 (S$) Amount of specified variable 4,950 x 38.9% = 1,925 1,800 x 900 x 38.9% 450 x 38.9% 450 x 38.9% 450 x 38.9% 3,500 income affected by the balanced 38.9% = 700 = 350 = 175 = 175 = 175 scorecard grade (S$) (rounded to the nearest dollar) Amount of variable income that 8,250 – 1,925 = 6,325 3,000 – 700 1,500 - 350 = 750 –175= 750 – 175 = 750 – 175 = 11,500 representative is entitled to (S$) = 2,300 1,150 575 575 575 Recovery of variable income If the financial adviser had Amount of Amount of Amount of Amount of Amount of 11,500 affected by the balanced paid S$8,250 to the variable variable variable variable variable scorecard grade/ deferred representative before income to be income to be income to be income to be income to be payment of variable income determining the percentage paid out in paid out in paid out in paid out in paid out in which representative is entitled of specified variable January to January to January to January to January to to income which the March 2021 March 2022 March 2023 March 2024 March 2025 representative is entitled to = S$2,300 = S$1,150 = S$575 = S$575 = S$575 in the measurement quarter of January to March 2020 i.e. S$6,325, the financial adviser shall recover the percentage of specified variable income which the representative is not entitled to i.e. S$1,925, by no later than end of September 2020.

--- Page 51 --- Notice on Requirements for the Remuneration Framework for Representatives and Supervisors (“Balanced Scorecard Framework”) and Independent Sales Audit Unit 49 Scenario B Assume that the variable income is spread over the same income payment period as Scenario A. However, the variable income is paid out in equal monthly payments as follows: Monthly payment over the 6 years from January 2020 to December 2025 = S$15,000 / 6 years / 12 months = $209 (rounded up to the nearest dollar) The amount of variable income to be recovered or paid out in each period after factoring the representative’s performance against the non-sales KPIs under the balanced scorecard framework will be as follows: Extract of variable income which would be received, for example, over the 10 month period from January to October 2020 Period January February March April May June July August September October 2020 2020 2020 2020 2020 2020 2020 2020 2020 2020 Amount of variable income received or to be 209 209 209 209 209 209 209 209 209 209 received (S$) (rounded up to the nearest dollar) Amount of specified variable income 209x 209 x 209 x 209 x 209x 209 x 209 209 x 209 x 209 x received or to be received (S$) (rounded up 60%= 126 60%= 126 60%= 60%= 60%= 60%= x 60%= 60%= 126 60%= to the nearest dollar) 126 126 126 126 60% 126 126 = 126 Amount of specified variable income 126 x 126 x 126 x 126 x 126 x 126 x 126 126 x 126 x 126 x affected by the balanced scorecard grade 38.9% = 38.9% = 38.9% 38.9% 38.9% 38.9% x 38.9% 38.9% 38.9% (S$) (rounded to the nearest dollar) 49 49 = 49 = 49 = 49 = 49 38.9 = 49 = 49 = 49 % = 49 Amount of variable income that 209 –49 = 209 – 49= 209 – 209 – 209 – 209 – 209 209 – 209 – 49= 209 – representative is entitled to (S$) 160 160 49= 160 49= 49= 49= – 49= 160 160 49= 160 160 160 160 49= 160

--- Page 52 --- Notice on Requirements for the Remuneration Framework for Representatives and Supervisors (“Balanced Scorecard Framework”) and Independent Sales Audit Unit 50 Extract of variable income which would be received, for example, over the 10 month period from January to October 2020 Period January February March April May June July August September October 2020 2020 2020 2020 2020 2020 2020 2020 2020 2020 Recovery of variable income affected by the If the financial adviser pays S$1,881 (S$209 x 9), from January to September 2020, to the Amount balanced scorecard grade/ deferred payment representative and determines the percentage of specified variable income which the of of variable income which representative is representative is entitled to for the calendar quarter of January to March 2020, by end September variable entitled to 2020, the financial adviser shall recover the percentage of specified variable income which the income representative is not entitled to i.e. S$441 (S$49 x 9), by no later than end of September 2020. to be paid out in October 2020 = S$160 Part (IV): Computation of the amount of annual bonus tied to sales volume in 2020 which the representative is entitled to Given that the annual bonus is tied to the representative’s sales performance over the 4 calendar quarters in 2020, the representative’s entitlement to his annual bonus is to be computed by assigning weights to each calendar quarter based on the amount of variable income he earns in each calendar quarter. The amount of bonus which the representative is entitled to will be computed as follows: January to March 2020 April to June 2020 July to September October to December Total 2020 2020 Variable income from 15,000 10,000 10,000 15,000 50,000 transactions effected (S$) Weightage of variable income 15,000/50,000 x 100% 10,000/50,000 x 10,000/50,000 x 100% 15,000/50,000 x 100% 100% from transactions effected for = 30% 100% = 20% = 20% = 30% each calendar quarter Amount of bonus tied to 30% x 10,000 = 3,000 20% x 10,000 = 20% x 10,000 = 2,000 30% x 10,000 = 3,000 10,000 transactions effected in each 2,000 calendar quarter (S$)

--- Page 53 --- Notice on Requirements for the Remuneration Framework for Representatives and Supervisors (“Balanced Scorecard Framework”) and Independent Sales Audit Unit 51 January to March 2020 April to June 2020 July to September October to December Total 2020 2020 Amount of bonus classified as 60%10 x 3,000 = 1,800 60% x 2,000 = 1,200 60% x 2,000 = 1,200 60% x 3,000 = 1,800 6,000 specified variable income for each calendar quarter (S$) Balanced scorecard grade for the Grade C Grade A Grade A Grade A calendar quarter and effective 61.1% 100% 100% 100% percentage entitlement to specified variable income Amount of bonus affected by the (100%-61.1%) x 1,800 0% x 1,200 = 0 0% x 1,200 = 0 0% x 1,800 = 0 700 balanced scorecard grade (S$) = 700 (rounded to the nearest dollar) Bonus that representative is 3,000 - 700 = 2,300 2,000 - 0 = 2,000 2,000 - 0 = 2,000 3,000 - 0 = 3,000 9,300 entitled to for each calendar quarter (S$) If the financial adviser had paid S$10,000 to the representative before determining the amount of bonus that representative is entitled to for the calendar year, the financial adviser shall recover the amount of bonus that the representative is not entitled to i.e. S$700, by no later than end of June 2021. If bonuses are paid out every calendar quarter rather than annually, the amount of bonus that the representative is entitled to each calendar quarter will be computed in a similar manner as his entitlement to variable income under Part (II). The bonus to be recovered in each calendar quarter will be as follows: Period January to March 2020 April to June 2020 July to September 2020 October to December 2020 Recovery of The recovery of the bonus The recovery of the bonus The recovery of the bonus The recovery of the bonus bonus affected by the balanced affected by the balanced affected by the balanced affected by the balanced affected by scorecard grade is to be scorecard grade is to be scorecard grade is to be scorecard grade is to be the balanced carried out or settled by no carried out or settled by carried out or settled by no 10 The representative’s performance on non-sales KPIs will be factored into 60% of bonuses being the specified variable income earned from the portfolio of transactions effected each calendar quarter.

--- Page 54 --- Notice on Requirements for the Remuneration Framework for Representatives and Supervisors (“Balanced Scorecard Framework”) and Independent Sales Audit Unit 52 Period January to March 2020 April to June 2020 July to September 2020 October to December 2020 scorecard later than end of no later than end of later than end of March carried out or settled by no grade September 2020. December 2020. 2021. later than end of June 2021.

--- Page 55 --- Notice on Requirements for the Remuneration Framework for Representatives and Supervisors (“Balanced Scorecard Framework”) and Independent Sales Audit Unit 53 Worked Example 2 Applicable to a supervisor who is remunerated by way of variable income only and the representatives who are under his supervision or management, are remunerated by way of variable income, whether wholly or partly A supervisor would receive a variable income of S$30,000 for the calendar quarter of January to March 2020 (i.e. measurement quarter). The variable income is paid to the supervisor over the income payment period spread over 6 years. For the remaining 3 calendar quarters of 2020, the supervisor earns variable income of S$20,000 (April to June 2020), S$20,000 (July to September 2020) and S$30,000 (October to December 2020) respectively. The supervisor earns an annual bonus tied to the sales volume of the representatives under his supervision or management in 2020 of S$50,000. The supervisor has 4 representatives directly under his supervision and management. The amount of variable income earned by the supervisor for the calendar quarter of January to March 2020 which is dependent on the financial advisory services provided by each of the representative under his supervision or management is as follows: Representative A – S$12,000 Representative B – S$6,000 Representative C – S$6,000 Representative D – S$6,000 Arising from the financial adviser’s assessment of the representatives’ performance against the non-sales KPIs for the calendar quarter of January to March 2020, it was determined that the representatives’ percentage entitlements to their specified variable income are as follows: Representative A – 61.1% Representatives B to D – 100% All representatives were entitled to their full specified variable income for the remaining 3 quarters of the year.

--- Page 56 --- Notice on Requirements for the Remuneration Framework for Representatives and Supervisors (“Balanced Scorecard Framework”) and Independent Sales Audit Unit 54 Part (I): Computation of the percentage of total specified variable income that the supervisor is entitled to in the measurement quarter January to March 2020 Representative Variable income of the Representatives’ Supervisor’s specified Supervisor’s entitlement supervisor which is dependent entitled percentage variable income (S$) to specified variable on the financial advisory of specified income (S$) (rounded to services provided by each of variable income the nearest dollar) the representative (S$) A 12,000 61.1% 60%x 12,000 = 7,200 61.1% x 7,200 = 4,399 B 6,000 100% 60% x6,000 = 3,600 100% x 3,600 = 3,600 C 6,000 100% 60% x 6,000 = 3,600 100% x 3,600 = 3,600 D 6,000 100% 60% x 6,000 = 3,600 100% x 3,600 = 3,600 Total (S$) 18,000 15,199 Percentage of total specified variable income that supervisor is entitled to in the measurement quarter = S$15,199 / S$18,000 = 84.4% According to the Supervisors’ Grading Table, the supervisor will be assigned a balanced scorecard grade of “Good”. Part (II): Recovery or payment of specified variable income over the income payment period Amount of specified variable income which supervisor is not entitled to in the measurement quarter = S$18,000 - S$15,199 = S$2,801 Given that the variable income earned by the supervisor is paid to the supervisor over the income payment period spread over 6 years, the financial adviser shall apply the same method of recovery or payment as described under Part (III) of Worked Example 1.

--- Page 57 --- Notice on Requirements for the Remuneration Framework for Representatives and Supervisors (“Balanced Scorecard Framework”) and Independent Sales Audit Unit 55 Part (III): Computation of the amount of annual bonus tied to sales volume of representatives under the supervisor and recovery of such annual bonus that supervisor is not entitled to Given that the annual bonus is tied to the supervisor’s variable income over the 4 calendar quarters in 2020, the supervisor’s entitlement to his annual bonus is to be computed by assigning weights to each calendar quarter based on the amount of variable income he earns in each calendar quarter. The amount of bonus which the supervisor is entitled to will be computed as follows: January to March April to June July to September October to Total 2020 2020 2020 December 2020 Variable income dependent 30,000 20,000 20,000 30,000 100,000 on financial advisory services provided by representatives (S$) Weightage of variable income 30,000/100,000 x 20,000/100,000 x 20,000/100,000 x 30,000/100,000 x 100% for each calendar quarter 100% = 30% 100% = 20% 100% = 20% 100% = 30% Amount of bonus tied to 30% x 50,000 20% x 50,000 20% x 50,000 30% x 50,000 50,000 variable income in each = 15,000 = 10,000 = 10,000 = 15,000 calendar quarter (S$) Amount of bonus classified as 60% x 15,000 60% x 10,000 60% x 10,000 60% x 15,000 30,000 specified variable income for = 9,000 = 6,000 = 6,000 = 9,000 each calendar quarter (S$) Percentage of total specified 84.4% (refer to 100% 100% 100% variable income that Part (I)) supervisor is entitled to in each calendar quarter

--- Page 58 --- Notice on Requirements for the Remuneration Framework for Representatives and Supervisors (“Balanced Scorecard Framework”) and Independent Sales Audit Unit 56 Amount of bonus that (100%-84.4%) x 0% x 6,000 = 0 0% x 6,000 = 0 0% x 9,000 = 0 1,404 supervisor is not entitled to 9,000 = 1,404 (S$) Bonus that supervisor is 15,000 –1,404 10,000 - 0 10,000 - 0 15,000 - 0 48,596 entitled to for each calendar = 13,596 = 10,000 = 10,000 = 15,000 quarter (S$) If the financial adviser had paid S$50,000 to the supervisor before determining the amount of bonus that supervisor is entitled to for the calendar year, the financial adviser shall recover the amount of bonus that the supervisor is not entitled to i.e. S$1,404, by no later than end of June 2021. If bonuses are paid out every calendar quarter rather than annually, the amount of bonus that the supervisor is entitled to each calendar quarter will be computed in a similar manner as his entitlement to variable income under Part (I). The bonus to be recovered each calendar quarter will be as follows: Period January to March 2020 April to June 2020 July to September 2020 October to December 2020 Recovery of The recovery of the bonus The recovery of the The recovery of the bonus The recovery of the bonus bonus that that the supervisor is not bonus that the supervisor that the supervisor is not that the supervisor is not supervisor is entitled to is carried out or is not entitled to is entitled to is carried out or entitled to is carried out or not entitled settled by no later than end carried out or settled by settled by no later than end settled by no later than end to of September 2020. no later than end of of March 2021. of June 2021. December 2020. [FAA-N20 (Amendment) 2025]

--- Page 59 --- Notice on Requirements for the Remuneration Framework for Representatives and Supervisors (“Balanced Scorecard Framework”) and Independent Sales Audit Unit 57 Worked Example 3 Applicable to a supervisor of supervisors, who is remunerated by way of variable income only and the representatives under his supervision or management are remunerated by way of variable income, whether wholly or partly A supervisor would receive variable income of S$50,000 during the calendar quarter January to March 2020 (i.e. measurement quarter). The variable income is paid to the supervisor over the income payment period spread over 6 years. For the remaining 3 calendar quarters of the year, the supervisor earns variable income of S$75,000 (April to June 2020), S$75,000 (July to September 2020) and S$50,000 (October to December 2020) respectively. The supervisor earns an annual bonus tied to sales volume of the representatives under his supervision or management in 2020 of S$100,000. The supervisor has 2 representatives under his supervision or management and 3 supervisors under his supervision or management, who collectively have 9 representatives under their supervision or management. The variable income which the supervisor would receive for the calendar quarter of January to March 2020 is relation to the financial advisory services provided by each of 11 representatives, and the supervisor is deemed to be the supervisor of the 9 representatives. The respective amounts of variable income which the supervisor would receive in relation to the financial advisory services provided by the 11 representatives for the calendar quarter of January to March 2020 are as follows: Supervisor 1 Supervisor 2 Supervisor 3 Direct representatives Representative A – S$4,000 Representatives D, E and F – Representatives G, H and I Representatives J and K – Representatives B and C – S$5,000 each – S$5,000 each S$5,000 each S$3,000 each Arising from the financial adviser’s review and assessment of each of the 11 representatives’ performance of the provision of financial advisory services against non-sales KPIs for the calendar quarter of January to March 2020, it is determined that the representatives are entitled to the following percentages of their specified variable income: Representative A – 61.1% Representatives B, C, D, E, F, G, H, I, J and K – 100% All representatives were entitled to 100% of their specified variable income for the remaining 3 quarters of the year.

--- Page 60 --- Notice on Requirements for the Remuneration Framework for Representatives and Supervisors (“Balanced Scorecard Framework”) and Independent Sales Audit Unit 58 Part (I): Computation of the percentage of total specified variable income that the supervisor is entitled to for the measurement quarter of January to March 2020 Supervisor / Variable income which Percentage of specified Supervisor’s Supervisor’s Representative the supervisor would variable income which specified variable entitlement to receive in relation to representatives are income subject to specified variable the financial advisory entitled to in the the balanced income in the services provided by measurement quarter of scorecard measurement each of the January to March 2020 framework (S$) quarter of January representative (S$) to March 2020 (S$) (rounded to the nearest dollar) 1 A 4,000 61.1% 60% x 4,000 = 2,400 61.1% x 2,400 = 1,466 B 3,000 100% 60% x 3,000 = 1,800 100% x 1,800 = 1,800 C 3,000 100% 60% x 3,000 = 1,800 100% x 1,800 = 1,800 2 D 5,000 100% 60% x 5,000 = 3,000 100% x 3,000 = 3,000 E 5,000 100% 60% x 5,000 = 3,000 100% x 3,000 = 3,000 F 5,000 100% 60% x 5,000 = 3,000 100% x 3,000 = 3,000 3 G 5,000 100% 60% x 5,000 = 3,000 100% x 3,000 = 3,000 H 5,000 100% 60% x 5,000 = 3,000 100% x 3,000 = 3,000 I 5,000 100% 60% x 5,000 = 3,000 100% x 3,000 = 3,000 J 5,000 100% 60% x 5,000 = 3,000 100% x 3,000 = 3,000 K 5,000 100% 60% x 5,000 = 3,000 100% x 3,000 = 3,000 Total (S$) 30,000 29,066

--- Page 61 --- Notice on Requirements for the Remuneration Framework for Representatives and Supervisors (“Balanced Scorecard Framework”) and Independent Sales Audit Unit 59 Percentage of total specified variable income that supervisor is entitled to in the measurement quarter = S$29,066 / S$30,000 = 96.9% According to the Supervisors’ Grading Table, the supervisor will be assigned a balanced scorecard grade of “Good”. Part (II): Recovery or deferred payment of variable income over the income payment period Amount of specified variable income which supervisor is not entitled to = S$30,000 - S$29,066 = S$934 Given that the variable income earned by the supervisor is paid to the supervisor over the income payment period spread over 6 years, the financial adviser shall apply the same method of recovery or payment as described under Part (III) of Worked Example 1. Part (III): Computation of the amount of annual bonus tied to sales volume of representatives under the supervisor and recovery of such annual bonus that supervisor is not entitled to The financial adviser should apply the same method of computation as described under Part (III) of Worked Example 2.

--- Page 62 --- Notice on Requirements for the Remuneration Framework for Representatives and Supervisors (“Balanced Scorecard Framework”) and Independent Sales Audit Unit 60 Worked Example 4 Applicable to a representative who is remunerated for his provision of financial advisory services by way of a fixed salary and a variable income component A representative earns variable income of S$10,000 and fixed salary of S$5,000 from 60 transactions effected in the calendar quarter of January to March 2020 (i.e. measurement quarter). There is no deferral of income payment. For the remaining 3 calendar quarters of 2020, the representative earns variable income of S$10,000 (April to June 2020), S$15,000 (July to September 2020) and S$15,000 (October to December 2020) from transactions effected in those calendar quarters respectively. The representative earns an annual bonus tied to sales volume in 2020 of S$10,000. During the post-transaction checks conducted by the ISA Unit on sampled transactions effected in the calendar quarter of January to March 2020, 1 case with Category 2 infractions was uncovered. The financial adviser also investigated and substantiated a complaint against the representative in March 2020 in relation to a transaction which was effected in February 2016. The case of the substantiated complaint was determined by the financial adviser to be 1 case with Category 2 infractions. The financial advisor also conducted a mystery shopping exercise and it was found that there was a case with Category 2 infractions in January 2020. There were no cases with infractions uncovered in relation to the representative in the remaining 3 quarters of 2020. The representative earned a variable income of S$5,000 and fixed salary of S$2,000 from 30 transactions effected in the calendar quarter January to March 2016.

--- Page 63 --- Notice on Requirements for the Remuneration Framework for Representatives and Supervisors (“Balanced Scorecard Framework”) and Independent Sales Audit Unit 61 Part (I): Assignment of balanced scorecard grade to the representative for his performance in relation to financial advisory services provided in the measurement quarter of January to March 2020 Number of cases for Number of cases with infractions Balanced Scorecard Grade measurement quarter January to March 2020 (a) Post-transaction checks First round of check: 1 case with Category 2 Percentage of cases with Category 2 infractions by ISA Unit infractions = 3/23 x 100% = 13% (Grade: C) Second round of check: No case with (Note: Sample size for 3 infractions (Note: Denominator of 23 is derived from the total rounds of sampling number of cases that would have been sampled in all First round: 3 cases (Note: The ISA Unit is not required to three rounds of sampling, plus one substantiated Second round: 6 cases perform the third round of post-transaction complaint and one mystery shopping finding.) Third round: 12 cases checks.) Total sample size for 3 Number of cases with Category 2 infractions = 3 cases rounds of sampling = 21 (Grade: C) cases) (b) Mystery shopping 1 case with Category 2 infractions Final Balanced Scorecard Grade: C exercise was conducted and the rep was visited once by the mystery shopper. (c) Substantiated complaint 1 case with Category 2 infractions

--- Page 64 --- Notice on Requirements for the Remuneration Framework for Representatives and Supervisors (“Balanced Scorecard Framework”) and Independent Sales Audit Unit 62 Part (II): Computation of representative’s entitlement to variable income from transactions effected in the measurement quarter of January to March 2020 Given that the representative has been assigned a balanced scorecard grade C, he will be entitled to 50% to less than 75% of his specified variable income. Assuming that the financial adviser determined that the representative is entitled to 50% of his specified variable income, the representative’s entitlement to variable income will be computed as follows: Specified variable income = S$10,000 Amount of specified variable income affected by the balanced scorecard grade = (100%-50%) x S$10,000 = S$5,000 Given that one of the cases with infraction arose from a substantiated complaint in relation to a transaction which was effected in February 2016 and prior to the measurement quarter, and as the variable income in the calendar quarter January to March 2016 was lower than that in the measurement quarter, steps (a) to (e) have to be performed: Step (a): To apportion the amount of specified variable income affected by the balanced scorecard grade between – (i) case(s) with infraction arising from substantiated complaints = 1/3 x S$5,000 = S$1,667 (i.e. Income X) (rounded to the nearest dollar) (ii) case(s) with infraction arising from post-transaction checks and findings from mystery shopping exercises = 2/3 x S$5,000 = S$3,333 (i.e. Income Y) (rounded to the nearest dollar) Step (b): Given that the variable income for the calendar quarter January to March 2016 (i.e. S$5,000) was lower than the variable income in the measurement quarter (i.e. S$10,000), to compute the proportion of past to current income as follows: Proportion of past to current income = S$5,000/S$10,000 x 100% = 50% Step (c): To apply the proportion of past to current income on Income X as follows:

--- Page 65 --- Notice on Requirements for the Remuneration Framework for Representatives and Supervisors (“Balanced Scorecard Framework”) and Independent Sales Audit Unit 63 Amount of specified variable income representative is not entitled to after factoring cases with infractions arising from substantiated complaints = 50% x S$1,667 = S$834 (rounded to the nearest dollar) (i.e. Income Z) Step (d): To compute the final amount of specified variable income affected under the balanced scorecard framework by totalling Income Y and Income Z as follows: Final amount of specified variable income which representative is not entitled to =S$3,333 + S$834 = S$4,167 Step (e): To compute the effective percentage of specified variable income the representative is entitled to as follows: Effective percentage of specified variable income representative is entitled to = (S$10,000-S$4,167)/S$10,000 x 100% = 58.3% Note: Effective percentage of specified variable income representative is not entitled to = 100% - 58.3% = 41.7% Amount of variable income that representative is entitled to for transactions effected in the measurement quarter of January to March 2020 = S$10,000 - S$4,167 = S$5,833 Part (III): Recovery of variable income affected by the balanced scorecard grade Given that there is no deferral of income payment, if the financial adviser had paid S$10,000 of variable income to the representative before determining the percentage of specified variable income which the representative is entitled to for the measurement quarter of January to March 2020, the financial adviser shall recover the variable income which the representative is not entitled to i.e. S$4,167, by no later than end of September 2020.

--- Page 66 --- Notice on Requirements for the Remuneration Framework for Representatives and Supervisors (“Balanced Scorecard Framework”) and Independent Sales Audit Unit 64 Part (IV): Computation of the amount of annual bonus tied to sales volume in 2020 which the representative is entitled to Given that the annual bonus is tied to the representative’s sales performance over the 4 calendar quarters in 2020, the representative’s entitlement to his annual bonus is to be computed by assigning weights to each calendar quarter based on the amount of variable income he earns in each calendar quarter. The amount of bonus which the representative is entitled to will be computed as follows: January to March April to June July to October to Total 2020 2020 September 2020 December 2020 Variable income from 10,000 10,000 15,000 15,000 50,000 transactions effected (S$) Weightage of variable income 10,000/50,000 x 10,000/50,000 15,000/50,000 x 15,000/50,000 x 100% from transactions effected for 100% = 20% x 100% =20% 100% = 30% 100% = 30% each calendar quarter Amount of bonus tied to 20% x 10,000 20% x 10,000 30% x 10,000 30% x 10,000 10,000 transactions effected in each = 2,000 = 2,000 = 3,000 = 3,000 calendar quarter (S$) Amount of bonus classified as 2,000 2,000 3,000 3,000 10,000 specified variable income for each calendar quarter (S$) Balanced scorecard grade for the Grade C Grade A Grade A Grade A calendar quarter and percentage 58.3% 100% 100% 100% entitlement to specified variable income Amount of bonus affected by the (100%-58.3%) x 0% x 2,000 0% x 3,000 = 0 0% x 3,000 = 0 834 balanced scorecard grade (S$) 2,000 = 834 = 0 Bonus that representative is 2,000 – 834 2,000 - 0 3,000 - 0 = 3,000 3,000 - 0 = 3,000 9,166 entitled to for each calendar = 1,166 = 2,000 quarter (S$)

--- Page 67 --- Notice on Requirements for the Remuneration Framework for Representatives and Supervisors (“Balanced Scorecard Framework”) and Independent Sales Audit Unit 65 If the financial adviser had paid S$10,000 to the representative before determining the amount of bonus that representative is entitled to for the calendar year, the financial adviser shall recover the amount of bonus that the representative is not entitled to i.e. S$834, by no later than end of June 2021. If bonuses are paid out every calendar quarter rather than annually, the amount of bonus that the representative is entitled to each calendar quarter will be computed in a similar manner as his entitlement to variable income under Part (II). The bonus to be recovered in each calendar quarter will be as follows: Period January to March 2020 April to June 2020 July to September 2020 October to December 2020 Recovery of The recovery of the bonus The recovery of the bonus The recovery of the bonus The recovery of the bonus bonus affected by the balanced affected by the balanced affected by the balanced affected by the balanced affected by scorecard grade is to be scorecard grade is to be scorecard grade is to be scorecard grade is to be the balanced carried out or settled by no carried out or settled by carried out or settled by no carried out or settled by no scorecard later than end of September no later than end of later than end of March later than end of June 2021. grade 2020. December 2020. 2021.

--- Page 68 --- Notice on Requirements for the Remuneration Framework for Representatives and Supervisors (“Balanced Scorecard Framework”) and Independent Sales Audit Unit 66 Worked Example 5 Applicable to a supervisor who is remunerated by way of a fixed salary and a variable income component and the representatives under his supervision or management are remunerated by way of variable income, whether wholly or partly A supervisor earns variable income of S$20,000 and fixed salary of S$10,000 during the calendar quarter January to March 2020 (i.e. measurement quarter). There is no deferral of income payment. For the remaining 3 calendar quarters of the year, the supervisor earns variable income of S$20,000 (April to June 2020), S$30,000 (July to September 2020) and S$30,000 (October to December 2020) respectively. The supervisor earns an annual bonus tied to sales volume of representatives under his supervision and management in 2020 of S$50,000. The supervisor has 4 representatives under his supervision or management. The amount of variable income earned by the supervisor during the calendar quarter January to March 2020 which is in relation to the financial advisory services provided by each of the representative under his supervision or management is as follows: Representative A – S$6,000 Representative B – S$5,000 Representative C – S$5,000 Representative D – S$4,000 Arising from the financial adviser’s assessment of the performance of each representatives’ provision of financial advisory services against the non-sales KPIs for the calendar quarter of January to March 2020, it was determined that the representatives’ are entitled to the following percentages of specified variable income are as follows: Representative A – 58.3% Representatives B to D – 100% All representatives were entitled to their full specified variable income for the remaining 3 quarters of the year.

--- Page 69 --- Notice on Requirements for the Remuneration Framework for Representatives and Supervisors (“Balanced Scorecard Framework”) and Independent Sales Audit Unit 67 Part (I): Computation of the percentage of total specified variable income that the supervisor is entitled to in the measurement quarter of January to March 2020 Representative Variable income of Percentage of specified Supervisor’s Specified variable income supervisor which is in variable income which specified (S$) which the supervisor is relation to the financial each representative is variable income entitled to for the advisory services provided entitled to for the (S$) measurement quarter of by each of the measurement quarter of January to March 2020 representatives for the January to March 2020 measurement quarter of January to March 2020 (S$) A 6,000 58.3% 6,000 58.3% x 6,000 = 3,498 B 5,000 100% 5,000 100% x 5,000 = 5,000 C 5,000 100% 5,000 100% x 5,000 = 5,000 D 4,000 100% 4,000 100% x 4,000 = 4,000 Total (S$) 20,000 17,498 Percentage of total specified variable income that supervisor is entitled to in the measurement quarter = S$17,498 / S$20,000 = 87.5% According to the Supervisors’ Grading Table, the supervisor will be assigned a balanced scorecard grade of “Satisfactory”. Part (II): Recovery or payment of specified variable income over the income payment period Amount of specified variable income which supervisor is not entitled to = S$20,000 - S$17,498 = S$2,502

--- Page 70 --- Notice on Requirements for the Remuneration Framework for Representatives and Supervisors (“Balanced Scorecard Framework”) and Independent Sales Audit Unit 68 Given that there is no deferral of income payment, if the financial adviser had paid S$20,000 of variable income to the supervisor before determining the percentage of specified variable income which the supervisor is entitled to for the measurement quarter of January to March 2020, the financial adviser shall recover the variable income which the supervisor is not entitled to i.e. S$2,502, by no later than end of September 2020. Part (III): Computation of the amount of annual bonus tied to sales volume of representatives under the supervisor and recovery of such annual bonus that supervisor is not entitled to Given that the annual bonus is tied to the supervisor’s variable income over the 4 calendar quarters in 2020, the supervisor’s entitlement to his annual bonus is to be computed by assigning weights to each calendar quarter based on the amount of variable income he earns in each calendar quarter. The amount of bonus which the supervisor is entitled to will be computed as follows: January to March April to June July to September October to Total 2020 2020 2020 December 2020 Variable income dependent 20,000 20,000 30,000 30,000 100,000 on financial advisory services provided by representatives (S$) Weightage of variable income 20,000/100,000 x 20,000/100,000 30,000/100,000 x 30,000/100,000 x 100% for each calendar quarter 100% = 20% x 100% = 20% 100% = 30% 100% = 30% Amount of bonus tied to 20% x 50,000 20% x 50,000 30% x 50,000 30% x 50,000 50,000 variable income in each = 10,000 = 10,000 = 15,000 = 15,000 calendar quarter (S$)

--- Page 71 --- Notice on Requirements for the Remuneration Framework for Representatives and Supervisors (“Balanced Scorecard Framework”) and Independent Sales Audit Unit 69 January to March April to June July to September October to Total 2020 2020 2020 December 2020 Percentage of total specified 87.5% (refer to 100% 100% 100% variable income that Part (I)) supervisor is entitled to in each calendar quarter Amount of bonus that (100%-87.5%) x 0% x 10,000 = 0% x 15,000 = 0 0% x 15,000 = 0 1,250 supervisor is not entitled to 10,000 = 1,250 0 (S$) Bonus that supervisor is 10,000 – 1,250 = 10,000 - 0 = 15,000 - 0 = 15,000 - 0 = 48,750 entitled to for each calendar 8,750 10,000 15,000 15,000 quarter (S$) If the financial adviser had paid S$50,000 to the supervisor before determining the amount of bonus that supervisor is entitled to for the calendar year, the financial adviser shall recover the amount of bonus that the supervisor is not entitled to i.e. S$1,250, by no later than end of June 2021. If bonuses are paid out every calendar quarter rather than annually, the amount of bonus that the supervisor is entitled to each calendar quarter will be computed in a similar manner as his entitlement to variable income under Part (I). The bonus to be recovered in each calendar quarter will be as follows: Period January to March 2020 April to June 2020 July to September 2020 October to December 2020 Recovery of The recovery of the bonus The recovery of the bonus The recovery of the bonus The recovery of the bonus bonus that that the supervisor is not that the supervisor is not that the supervisor is not that the supervisor is not supervisor is entitled to is carried out or entitled to is carried out or entitled to is carried out or entitled to is carried out or

--- Page 72 --- Notice on Requirements for the Remuneration Framework for Representatives and Supervisors (“Balanced Scorecard Framework”) and Independent Sales Audit Unit 70 not entitled settled by no later than end settled by no later than settled by no later than end settled by no later than end to of September 2020. end of December 2020. of March 2021. of June 2021.

Previous Next

Back to MAS Notices