FTT Financial Advisers Act

Question 1

What is the primary purpose of the Financial Advisers Act (FAA) in Singapore?

Accepted Answer

To regulate the giving of financial advice and the marketing and sale of investment products in Singapore

Answer

To regulate banking activities and deposit taking

Answer

To govern the listing of companies on SGX

Answer

To set standards for audit and accounting firms

Question 2

What is the 'Know Your Client' (KYC) obligation for financial advisers under the FAA?

Accepted Answer

To gather information on a client's financial situation, risk tolerance, investment experience, and investment objectives before making recommendations

Answer

Only to verify a client's identity for AML purposes

Answer

To collect the client's contact details and employment information only

Answer

To conduct KYC only for clients investing more than S$200,000

Question 3

The 'suitability' requirement under MAS guidelines means that:

Accepted Answer

A financial adviser must only recommend products that are appropriate for the client's specific financial profile

Answer

All products offered must be the cheapest available in the market

Answer

Advisers must recommend the product with the highest potential returns

Answer

Clients must be offered all available products regardless of their profile

Question 4

What is the 'Customer Knowledge Assessment (CKA)' under MAS guidelines?

Accepted Answer

An assessment to determine whether a customer has the relevant knowledge or experience to transact in specified investment products without further advice

Answer

An exam that customers must pass before opening any brokerage account

Answer

A credit assessment of a customer's ability to repay investment loans

Answer

An MAS-administered test for all retail investors

Question 5

Under the FAA, what must a financial adviser provide to a retail client before recommending a specified investment product?

Accepted Answer

A Product Highlights Sheet (PHS) and the relevant prospectus or profile statement

Answer

Only an email summary of the product

Answer

A verbal explanation without any written document

Answer

The adviser's own internal research report

Question 6

What is the 'balanced scorecard (BSC) framework' for financial advisory firms?

Accepted Answer

A framework linking representatives' remuneration to multiple criteria beyond just sales volume, to reduce mis-selling incentives

Answer

A framework requiring advisers to maintain equal proportions of each asset class in client portfolios

Answer

A framework requiring equal service to retail and institutional clients

Answer

A framework requiring commissions to be equally split between adviser and firm