Monetary Authority of Singapore Issues Response to Consultation Paper on Revisions to Misconduct Reporting Requirements and Proposals to Mandate Reference Checks for Representatives

• MAS will apply the misconduct reporting requirements to RFMCs as well, which would complement the fit and proper requirements on RFMCs and their representatives.
  
  
• Previously, the misconduct reporting requirements did not apply to RFMCs.

• Please refer to Annex A below setting out a summary of the revised categories of reportable misconduct.

• MAS set out the following guiding principles in determining whether an act is a misconduct reportable to MAS:

• actual and potential detriment to the client and/or the FMC
• actual and potential number of clients impacted
• willfulness of the representative
• sufficiency of care and diligence exercised and whether the representative acted in the best interest of the client
• impact to the financial industry’s reputation, integrity, and interest

• MAS will extend the timeline for FMCs to lodge a misconduct report with MAS. FMCs are required to lodge a misconduct report within 21 calendar days when the FMC has reasonable grounds to believe that a misconduct has been committed.

• Currently, under the Misconduct Notices, FMCs are required to lodge a report with MAS no later than 14 days after the discovery of a representative’s misconduct.

• In the interest of information symmetry, MAS will make it mandatory for FMCs to provide representatives with a copy of the misconduct report filed with MAS within 21 calendar days from the date of submission of the misconduct report to MAS.

• When FMCs subsequently lodge an update on the misconduct report (Update Report) with MAS, they are also required to provide a copy of the Update Report to representatives within 21 calendar days from the date of submission of the Update Report to MAS.

•  MAS will require representatives to provide their current or recruiting FMCs with any misconduct report that has been filed against them, including subsequent updates to the misconduct report.

• This is in line with the policy intent to enable FMCs to make proper assessments of their current or prospective representatives’ fitness and propriety.

•  MAS will require FMCs to update MAS after they are aware of the outcome of police investigations.

• FMCs will be required to update MAS within 21 calendar days following the receipt of information from the police or other sources on the conclusion of the investigation and whether further action will be taken (such as the initiation of prosecution against the representative).

•  MAS will expand on the current guidance set out in the Misconduct Notices with regard to MAS’ expectations on the rigor and quality of FMCs’ investigations into misconduct committed by their representatives.

Templates for submission of

(a) misconduct reports and
(b) investigation reports to MAS

• MAS will require FMCs to submit their misconduct and investigation reports to MAS using prescribed formats. The templates are appended at Annex 2 of the Response to Feedback.

• When an investigation has been conducted for a suspected reportable misconduct, FMCs are expected to submit the investigation report within 21 calendar days upon establishing, with reasonable certainty, that a misconduct has been committed.

• MAS has not indicated when it will implement the revised misconduct reporting requirements.

• MAS will require FMCs, including RFMCs, to conduct reference checks on prospective representatives with their current/past employer(s) and to respond to reference check requests.

• Mandating reference checks would level the playing field across the industry and provide greater consistency in FMCs’ standards and practices in conducting and responding to reference check requests.

Scope of reference checks

(a) Mandatory Information

(b) Lookback Period

• Please refer to Annex B for a summary of mandatory information covering the representative’s appointment history that FMCs should provide in response to reference check requests.

• The lookback period for reference checks will be set at a minimum of five years.

• The lookback period will be based on the number of calendar years and not years of employment.

Implementation of reference checks

(a) Timeline to respond to reference checks 

(b) Challenges in obtaining reference checks or responding to reference check requests 

• MAS intends to prescribe a timeline of 21 calendar days for FMCs to respond to reference check requests.

• The prescribed timeline will commence upon receipt of the reference check requests from recruiting FMCs.

• However, where individuals request recruiting FMCs to maintain the confidentiality of their applications, the recruiting FMC may conduct the reference check after the individual’s appointment has ceased with the current FMC.

• Where the recruiting FMC is unable to obtain a reference from the individual’s past/current employer(s) within the prescribed timeline or if the reference obtained is incomplete, the FMC is still required to make an assessment of the individual’s fitness and propriety based on other available information and due diligence conducted.

• MAS has proposed a transitional period of six months in implementing the reference check requirements from the date the relevant notice(s) under the relevant legislation is published.