FTT Financial Advisers Act 2

Question 1

What is the 'cooling-off period' for life insurance policies in Singapore?

Accepted Answer

14 days from the date the policy is delivered to the policyholder, during which the policyholder may cancel without penalty

Answer

Singapore's regulatory framework provides for a 14-day free-look (cooling-off) period for life insurance policies. During this time, the policyholder may return the policy and receive a refund of premiums paid (subject to deductions for medical expenses incurred in underwriting).

Question 2

What is the 'switching' rule for financial advisers in Singapore?

Accepted Answer

Advisers must disclose all costs and consequences of switching between investment products and demonstrate the switch is in the client's best interest

Answer

The switching rule requires financial advisers to clearly disclose to clients all costs and implications of switching from one product to another (such as surrender charges and new front-end fees) and to demonstrate that the switch is in the client's interest, not just the adviser's.

Question 3

What is 'product due diligence' for financial advisers?

Accepted Answer

Analysing and assessing an investment product before recommending it to clients, to understand its features, risks, costs, and suitability

Answer

Product due diligence requires financial advisers to thoroughly analyse investment products before recommending them — understanding features, risks, costs, and which client profiles the product is suitable for. This forms the foundation of sound, client-appropriate advice.

Question 4

Under MAS Notice FAA-N16, what is required when recommending life insurance products?

Accepted Answer

Conducting a needs analysis to recommend the most suitable product based on the client's financial needs and objectives

Answer

MAS Notice FAA-N16 requires financial advisers to conduct a comprehensive needs analysis to understand the client's financial situation and objectives before recommending life insurance products, ensuring that recommendations are based on the client's actual needs.

Question 5

What are 'life insurance commission disclosure' requirements under Singapore regulations?

Accepted Answer

Financial advisers must disclose to clients the commissions and fees they receive for recommending and selling life insurance products

Answer

MAS requires financial advisers to disclose to clients the commissions and other benefits they receive from recommending and selling life insurance products. This transparency helps clients understand potential conflicts of interest in the adviser's recommendations.

Singapore FTT Practice Test

Singapore FTT Practice Test

FTT Financial Advisers Act 2