Consultation Paper on Enhancing Safeguards for Proper Conduct of Digital Prospecting and Marketing Activities

In view of the increased use of digital media in the marketing of financial products and services, the Monetary Authority of Singapore (MAS) has launched a new consultation in this context. Specifically, MAS seeks to enhance the conduct requirements of financial market participants when using such media in their marketing strategies. Such requirements are currently already covered in the Financial Advisers Regulations and the Securities and Futures (Licensing and Conduct of Business) Regulations, as relevant provisions apply to all advertisements, irrespective the method of dissemination (e.g. via traditional media (print media) or digital media). However, they do not account for specific risks when using social media platforms for the marketing of products and should thus be aligned and enhanced.
##### In detail, MAS proposes to
1. issue new Guidelines on Standards of Conduct for Digital Prospecting and Marketing Activities (FSG-G03) to set out its expectations as regards digital prospecting and marketing activities of financial institutions and their representatives which must be conducted in a responsible and professional manner. The guidelines would thereby cover issues ranging from the responsibilities of senior management in this context, to the implementation of adequate corporate governance strategies, to the implementation of adequate market conduct safeguards (e.g. the assessment of whether or not the use of digital media is appropriate for promoting (certain) financial products and services). The Guidelines would apply to all financial institutions and their representatives who prospect and market financial products and services to customers via digital media.
2. modify its current Notice FAA-N02 on the „Appointment and Use of Introducers by Financial Advisers“ to „refine“ the obligations of financial market participants that use third parties or other appointed „introducers“ to generate „online leads“ to stipulate more stringent requirements as to the collection and safeguarding of client data and to the oversight of such entities or persons.
3. modify the Financial Advisers Regulations and the Securities and Futures (Licensing and Conduct of Business) Regulations both as regards the advertising and advertisement obligations of financial market participants to
– require advertisements to state the identity of the financial institution (financial market participant) promoting a certain product or service in an effort to allow investors and consumers to check the identity against MAS-authorized institutions list; and
– bring so-called non-product advertisements where no specific product or service is promoted under the remit of the current rules and regulations that apply for product advertisements, leading to similar application and approval requirements for such promotions.
The consultation will be open up to June 30, 2023. MAS proposes to bring into effect the enhanced requirements six to nine months following the issuance of a consultation conclusion paper.