MAS will soon embark on an exercise in "mystery shopping" to identify conduct issues in financial advisers, as a useful complement to its supervisory tools, said Ms Merlyn Ee, an Executive Director with the Singapore regulator.
When customer complaints are lodged with MAS, it is often difficult to tell which party is right or wrong, she noted.
“Mystery shopping would allow us to find out what actually transpired in the conversations between representatives and their customers, in particular whether the verbal representations made by representatives were misleading or inaccurate,” said Ms Ee, who was speaking at the Association of Financial Advisers (Singapore) 16th Annual Conference held last week.
Mystery shopping refers to visiting a shop, restaurant or any other service outlet incognito in order to assess the quality of the goods or services.
Ms Ee said that mystery shopping is a common practice among foreign regulators as well as financial industry associations in Singapore. As it has been about six years since MAS last did mystery shopping, it will start another exercise soon. She added that once the exercise is completed, the findings will be shared with those surveyed, as well as the public.
At the conference, she also highlighted enforcement as the other key regulatory priority for the year ahead. The centralisation of MAS’ enforcement function in August 2016 has strengthened its enforcement capabilities. In the past year, MAS has taken severe action in 1Malaysia Development Berhad (1MDB) related offences and the penny stock saga.
“Supervision cannot prevent all harm, and this is where enforcement actions come in. To achieve effective deterrence, enforcement outcomes must be adequate to deter not just the offender from committing the same offence, but also others from engaging in similar misconduct.”
She said that going forward, the Singapore regulator would be stepping up efforts to investigate misconduct such as misrepresentation, mis-selling and inappropriate advice, common breaches of the local Financial Advisers Act.