Speeches

Mr Patrick Daniel, Editor-in-chief (English and Malay Newspapers Division), Singapore Press Holdings and Chairman of ShareInvestor Holdings Pte Ltd,

Mr. Christopher Lee, CEO of ShareInvestor,

Mr Alvin Tay, Editor of The Business Times,

Ladies and Gentlemen,

1. A very good morning to you. I am pleased to join you today for the opening of INVEST Fair 2011. This year’s fair comes at an interesting time, just a week after we witnessed the worst global stock market sell-off since the height of the global financial crisis.

2. It would appear that in the near term, markets will likely remain jittery due to 4 major factors:

a) the fragile economic climate, particularly the below-trend recovery in the US
b) the sovereign debt crisis in Europe, which poses contagion risks due to significant cross-border lending and trade with the US, Asia and Latin America
c) the risk of rising inflation due to expansionary monetary and fiscal policies
d) geo-political unrest in the Middle East and North Africa

3. The current volatile financial environment has given rise to a heightened sense of uncertainty among investors, and rightly so. The theme of this year’s INVEST Fair “Invest with Knowledge” is thus timely.

Safeguarding investors’ interests

4. Especially in a volatile environment, investors are concerned about safeguarding their interests. Naturally, they will first look to the Government. Since the global financial crisis, the Monetary Authority of Singapore (MAS) has introduced measures to enhance the sale and advisory process. New requirements have been put in place for distributors to assess the nature of a new product and its suitability for various consumer groups. This is to ensure that representatives have a consistent understanding of the nature and risks of a product, and can provide a reasonable basis for making specific recommendations to their clients.

5. Bank and finance company tellers have also been prohibited from referring customers to financial advisory representatives from the same institution for the purchase of investment products. This is to promote clearer segregation between traditional banking activities and the sale of investment products.

6. The MAS has also enhanced disclosure requirements in the sale and advisory process. For example, where a prospectus is provided, it must be accompanied by a Product Highlights Sheet which lists key features and risks of an investment product. This will help investors better understand the investment product and make an informed decision.

7. As part of efforts to further safeguard consumers, the MAS has announced that from next year, intermediaries will have to formally assess a retail customer’s investment knowledge and experience before selling them certain investment products.

8. To promote higher industry standards for the sale and marketing of investment products, it is important to continuously develop the competency of representatives. One initiative the MAS is currently working on with the Institute of Banking & Finance and the Singapore College of Insurance is to introduce additional examinations on product knowledge and analysis. These requirements will better equip representatives to explain the features and risks of investment products to consumers.

9. Significantly, the MAS plans to introduce legislative amendments to strengthen its powers to investigate and take regulatory actions under the Financial Advisers Act to protect investors against reckless or negligent representatives.

Role of the individual investor

10. While these safeguards are important, investors are ultimately responsible for ascertaining the suitability of a financial product for themselves. They will do well to remember, especially in this climate, that all investments carry some risks. It is impossible to eliminate all the risks, but two important steps in the decision-making process will help mitigate against them.

For financial products, deal with persons regulated by MAS

11. The first is to ensure that the intermediary promoting the product is regulated by the MAS and is authorised to provide financial advice on investment products. There are useful resources available on the MAS website, such as the Financial Institutions Directory and the Register of Representatives, which will enable investors to ascertain this. Investors might also want to take the precaution of checking if the entity they are dealing with is on the Investor Alert List.

How well do you understand the product?

12. Secondly, investors should consider how well they understand a product and its suitability in meeting their needs, by asking questions about the risks and returns in various scenarios, and comparing with similar products. They also need to consider if they have the time to monitor the performance of the product.

13. Investors should remember that they have every right to decide not to purchase a product, especially if they have any lingering doubts about the product or its distributor.

14. Finally, may I add that it is also in the interests of financial institutions and sellers of financial products to educate investors and enhance their understanding of product features and how they may or may not be suitable for certain investor profiles. In doing so, you can build greater confidence among investors, enhance their investment experience which will in turn provide a wider investor base to tap on.

15. In conclusion, let me offer my heartiest congratulations to the Business Times and ShareInvestor for putting together yet another edition of the Invest Fair, and for their continuing efforts to enhance investor education. I wish all investors and participants a most fruitful experience at INVEST Fair.

Thank you.