Guidelines on Provision of Financial Advisory Service¶
Overview¶
The Monetary Authority of Singapore (MAS) issued Guidelines FAA-G11 on 10 July 2019 under the Financial Advisers Act 2001 (FAA). These guidelines provide clarity on what constitutes the "provision of financial advisory service" under paragraphs 1 and 2 of the Second Schedule to the FAA — specifically:
- Paragraph 1: Advising others, whether directly or through publications or writings (in electronic, print or other form), concerning any investment product (other than advising on corporate finance within the meaning of the SFA)
- Paragraph 2: Advising others by issuing or promulgating analyses or reports (in electronic, print or other form) concerning any investment product
The guidelines do not create new obligations — they clarify the scope of existing FAA requirements to help financial institutions and individuals determine whether a licence or exemption is required.
Scope of Application¶
These guidelines are relevant to: - Persons determining whether their activities constitute provision of financial advisory service (and therefore require a financial adviser's licence or representative's registration) - Licensed Financial Advisers and their representatives assessing whether particular communications or publications fall within regulated activity - Exempt Financial Advisers and persons relying on licensing exemptions - Companies and individuals providing investment-related publications, newsletters, or analyses
Two-Stage Assessment Framework¶
FAA-G11 sets out a two-stage test for determining whether an activity constitutes providing financial advisory service:
Stage 1: Does the Activity Amount to Providing Financial Advice?¶
An activity amounts to advising on investment products if it involves: - Making a recommendation, suggestion, or guidance to a specific person or persons (whether identified by name or as a class) that they should purchase, sell, or hold a specific investment product - Issuing analyses or reports that contain a recommendation on a specific investment product
Activities that do NOT constitute financial advisory service: - General market commentary that does not recommend a specific investment product - Factual information about investment products that does not involve a recommendation - Educational content about investment concepts without reference to specific products - News reporting or journalism about financial markets - Publishing prices, indices, or statistical data - Legal, accounting, or tax advice that is incidental to professional services and does not constitute investment advice
Stage 2: Is the Person Carrying On Business in the Activity?¶
Even if an activity amounts to providing financial advice, a licence is only required if the person is "carrying on business" in that activity. Factors indicating a person is carrying on business include: - The activity is done for reward or commercial gain (directly or indirectly) - The activity is conducted on a regular or systematic basis - The activity involves holding oneself out as providing financial advisory services - The activity has a commercial purpose, even if not the primary purpose
Activities that are NOT considered carrying on business: - Occasional advice given as part of an incidental professional relationship (e.g., a lawyer who incidentally comments on a client's investment) - Advice given by an individual to close personal associates (friends, family) without any commercial element - Internal corporate communications within a group of companies about managing group treasury or risk
Application to Specific Scenarios¶
Digital and Online Platforms¶
FAA-G11 clarifies that the medium of communication is irrelevant — advice provided through digital platforms (websites, apps, chatbots, social media) is subject to the same analysis as advice provided in person or in print. Key considerations:
- Robo-advisers: Algorithm-driven platforms that make investment recommendations are providing financial advisory service and require a licence unless an exemption applies
- Online newsletters and subscription services: If these contain specific investment recommendations, the provider may need a financial adviser's licence
- Social media and online forums: Persons who regularly post specific investment recommendations for commercial gain may be carrying on business in financial advisory service
Publications and Research¶
- Sell-side research: Analysts producing research reports with buy/sell/hold recommendations are providing financial advisory service (generally exempt under licensing exemptions for CMS licensees)
- Independent research firms: Firms selling investment research with specific recommendations need to be licensed financial advisers or CMS licensees
- Purely educational content: Content explaining investment concepts without specific recommendations does not constitute financial advisory service
Referral and Introductory Services¶
Referring clients to a financial adviser or investment product provider does not, by itself, constitute providing financial advisory service, provided: - The referring person does not make a specific investment recommendation - The referral is to a licensed entity, not to a specific product - The referral fee is disclosed to the client
Relationship with Other FAA Provisions¶
FAA-G11 focuses specifically on the boundary of regulated activity. Once an activity is determined to constitute providing financial advisory service, the full suite of FAA obligations applies, including:
| Obligation | FAA Reference |
|---|---|
| Licensing / representative registration | FAA Part II |
| Conduct of business (dealing honestly, fairly, in best interests) | FAA S.25 |
| Disclosure of material information to clients | FAA S.25, S.26 |
| Suitability obligations | FAA S.27 |
| Compliance with MAS notices | FAA S.58 |
For the information disclosure and Product Highlights Sheet requirements (sometimes confused with FAA-G11), see: - MAS Notice FAA-N03 (Information to Clients and Product Information Disclosure) — Notice-level requirements on disclosures to clients - SFA S.240A and MAS Notice SFA04-N12 — Product Highlights Sheet requirements for collective investment schemes and investment products
Common Compliance Questions¶
Q: Does providing investment recommendations to colleagues constitute financial advisory service? A: Internal advice within a company (e.g., treasury function advising the group on managing its own assets) is generally not considered providing financial advisory service to "others" under the FAA.
Q: Does a company website with market commentary require a financial adviser's licence? A: Not if the commentary is general market information without specific investment recommendations. If the website begins making specific buy/sell recommendations, the provider should seek legal advice on licensing obligations.
Q: Does providing information about a specific unit trust (e.g., describing its features and performance) constitute financial advisory service? A: Describing features and performance without making a recommendation (i.e., without saying "you should buy / hold / sell this fund") is generally not financial advisory service. Adding a recommendation ("this fund is suitable for long-term investors like you") likely crosses the threshold.
Source Documents¶
- MAS Guidelines on Provision of Financial Advisory Service (FAA-G11), issued 10 July 2019: https://www.mas.gov.sg/-/media/MAS/Regulations-and-Financial-Stability/Regulations-Guidance-and-Licensing/Financial-Advisers/Guidelines/Guidelines-on-Provision-of-Financial-Advisory-Service-10-July-2019.pdf
- MAS Response to Consultation on Guidelines on Provision of Financial Advisory Service: https://www.mas.gov.sg/-/media/MAS/News-and-Publications/Consultation-Papers/10-Jul-2019-Consult-Response-FA-Guidelines/Response-to-Consultation-on-Guidelines-on-Provision-of-Financial-Advisory-Service-and-Design-of-Advi.pdf
- Allen & Gledhill commentary on FAA-G11: https://www.allenandgledhill.com/sg/publication/articles/12350/mas-issues-guidelines-on-provision-of-financial-advisory-service
- Financial Advisers Act 2001, Second Schedule: https://www.mas.gov.sg/regulation/acts/financial-advisers-act
- MAS Notice FAA-N03 (Information to Clients — separate from FAA-G11): https://www.mas.gov.sg/regulation/notices/notice-faa-n03