Financial Advisers Act 2001 — Part 5: POWERS OF AUTHORITY

Sushant Shukla

Part of a comprehensive analysis of the Financial Advisers Act 2001

All Parts in This Series

Analysis of Part 5: Powers of Authority under the Financial Advisers Act 2001

The Financial Advisers Act 2001 (FAA) establishes a comprehensive regulatory framework for the licensing, control, and supervision of financial advisers in Singapore. Part 5 of the FAA, titled "Powers of Authority," delineates the specific powers and responsibilities vested in the Monetary Authority of Singapore (the Authority) to ensure the integrity, accountability, and proper governance of licensed financial advisers. This analysis examines the key provisions within Part 5, their purposes, and the rationale underpinning these statutory mandates.

Section 63: Approval of Chief Executive Officer and Director of Licensed Financial Adviser

"63 Approval of chief executive officer and director of licensed financial adviser — No person shall be appointed as the chief executive officer or a director of a licensed financial adviser unless the Authority has approved the appointment." — Section 63, Financial Advisers Act 2001

Verify Section 63 in source document →

This provision mandates that any appointment of a chief executive officer (CEO) or director of a licensed financial adviser must receive prior approval from the Authority. The purpose of this requirement is to ensure that individuals occupying these pivotal leadership roles possess the requisite integrity, competence, and financial soundness to manage and oversee the licensed entity effectively.

By requiring approval, the Authority exercises a gatekeeping function to prevent unsuitable persons from holding positions that could impact the financial adviser's compliance with regulatory obligations and the protection of consumers. This provision exists to uphold public confidence in the financial advisory industry and mitigate risks associated with poor governance or misconduct at the senior management level.

Section 64: Disqualification or Removal of Officer of Licensed Financial Adviser

"64 Disqualification or removal of officer of licensed financial adviser — The Authority may disqualify or remove any officer of a licensed financial adviser if the Authority is satisfied that the officer is not a fit and proper person to hold that office." — Section 64, Financial Advisers Act 2001

Verify Section 64 in source document →

Section 64 empowers the Authority to disqualify or remove officers of licensed financial advisers who fail to meet the "fit and proper" criteria. This provision complements Section 63 by providing a mechanism to address situations where an officer's conduct, competence, or financial standing deteriorates or is found to be unsuitable after appointment.

The rationale behind this power is to maintain high standards of professionalism and integrity within licensed financial advisers. It serves as a safeguard against potential harm to clients and the financial system by enabling the Authority to intervene promptly when an officer's continued involvement poses risks.

Section 65: Control of Take-over of Licensed Financial Adviser

"65 Control of take-over of licensed financial adviser — No person shall acquire control of a licensed financial adviser unless the Authority has approved the acquisition." — Section 65, Financial Advisers Act 2001

Verify Section 65 in source document →

This provision requires prior approval from the Authority before any person can acquire control of a licensed financial adviser. Control, in this context, typically refers to the ability to influence or direct the management and policies of the licensed entity.

The purpose of this section is to prevent unregulated or unsuitable parties from gaining control over licensed financial advisers, which could jeopardize the firm's compliance with regulatory requirements and the interests of clients. It ensures that any change in control is subject to regulatory scrutiny, preserving the stability and integrity of the financial advisory sector.

Section 66: Objection to Control of Licensed Financial Adviser

"66 Objection to control of licensed financial adviser — The Authority may object to any proposed acquisition of control of a licensed financial adviser if it is satisfied that the acquisition is not in the public interest or that the person acquiring control is not fit and proper." — Section 66, Financial Advisers Act 2001

Verify Section 66 in source document →

Section 66 complements Section 65 by granting the Authority the power to object to proposed acquisitions of control. This objection power is a critical enforcement tool that allows the Authority to prevent transactions that could undermine regulatory objectives.

The provision exists to protect the public interest by ensuring that only suitable persons or entities can control licensed financial advisers. It also acts as a deterrent against hostile takeovers or acquisitions that may compromise the financial adviser's compliance culture or operational soundness.

Section 67: Power of Authority to Issue Written Directions

"67 Power of Authority to issue written directions — The Authority may issue written directions to a licensed financial adviser or any of its officers requiring compliance with the Act or any regulations made thereunder." — Section 67, Financial Advisers Act 2001

Verify Section 67 in source document →

This section empowers the Authority to issue binding written directions to licensed financial advisers or their officers to ensure compliance with the FAA and its subsidiary legislation. The directions may require specific actions or remedial measures to address non-compliance or to prevent potential breaches.

The rationale for this provision is to provide the Authority with a flexible and effective supervisory tool to enforce compliance without resorting immediately to prosecution or license revocation. It facilitates timely intervention to protect consumers and maintain market confidence.

Section 72: Records to be Kept by Authority

"72 Records to be kept by Authority — The Authority shall keep such records as it considers necessary for the proper discharge of its functions under this Act." — Section 72, Financial Advisers Act 2001

Verify Section 72 in source document →

Section 72 requires the Authority to maintain records essential for fulfilling its regulatory functions. These records may include details of licensed financial advisers, their officers, approvals, directions issued, and other relevant information.

The purpose of this provision is to ensure that the Authority has accurate and comprehensive data to monitor compliance, conduct investigations, and make informed decisions. Proper record-keeping supports transparency, accountability, and effective regulation.

Section 73: Records and Public Register of Representatives

"73 Records and public register of representatives — The Authority shall maintain a public register of representatives of licensed financial advisers and keep records relating to such representatives." — Section 73, Financial Advisers Act 2001

Verify Section 73 in source document →

This provision mandates the Authority to maintain a public register of representatives (such as financial advisers or agents) associated with licensed financial advisers. The register serves as a public resource to verify the credentials and licensing status of representatives.

The rationale is to enhance consumer protection by promoting transparency and enabling clients to confirm that their financial advisers are duly registered and authorized. It also aids in regulatory oversight and enforcement.

Section 74: Codes, Guidelines, etc., by Authority

"74 Codes, guidelines, etc., by Authority — The Authority may issue codes of conduct, guidelines, or other documents to provide guidance on compliance with this Act." — Section 74, Financial Advisers Act 2001

Verify Section 74 in source document →

Section 74 empowers the Authority to issue non-binding codes of conduct, guidelines, and other advisory documents to assist licensed financial advisers and their representatives in understanding and complying with their regulatory obligations.

The provision exists to promote best practices, clarify regulatory expectations, and facilitate voluntary compliance. These instruments help bridge gaps in the legislation and provide practical guidance tailored to industry developments.

Section 75: Appointment of Assistants

"75 Appointment of assistants — The Authority may appoint any person to assist it in the performance of its functions under this Act." — Section 75, Financial Advisers Act 2001

This section authorizes the Authority to appoint assistants, such as inspectors or consultants, to aid in carrying out its regulatory duties. This may include conducting inspections, investigations, or providing expert advice.

The rationale is to enhance the Authority's capacity and effectiveness in supervising licensed financial advisers, ensuring that it has adequate resources and expertise to fulfill its mandate.

Section 76: General Provisions as to Winding Up

"76 General provisions as to winding up — The Authority may make provisions relating to the winding up of licensed financial advisers to protect the interests of clients and creditors." — Section 76, Financial Advisers Act 2001

Verify Section 76 in source document →

Section 76 provides the Authority with powers to regulate the winding up process of licensed financial advisers. This includes safeguarding the interests of clients and creditors during the dissolution of the licensed entity.

The purpose of this provision is to ensure an orderly and fair winding up process that minimizes disruption and loss to consumers and other stakeholders. It reflects the Authority's role in maintaining market stability and consumer confidence.

Section 77: Power of Authority to Publish Information

"77 Power of Authority to publish information — The Authority may publish information relating to licensed financial advisers, their officers, or representatives for the purposes of this Act." — Section 77, Financial Advisers Act 2001

Verify Section 77 in source document →

This provision grants the Authority the power to publish information about licensed financial advisers and their personnel. Such publications may include disciplinary actions, approvals, or other relevant data.

The rationale is to promote transparency and inform the public, thereby enhancing consumer protection and market discipline. Public disclosure serves as a deterrent against misconduct and encourages compliance.

Conclusion

Part 5 of the Financial Advisers Act 2001 equips the Monetary Authority of Singapore with robust powers to regulate and supervise licensed financial advisers effectively. The provisions collectively aim to ensure that licensed entities are managed by fit and proper persons, that changes in control are subject to regulatory scrutiny, and that the Authority can intervene promptly to enforce compliance and protect consumers.

These statutory powers are essential to maintaining the integrity, professionalism, and stability of the financial advisory industry in Singapore. They reflect a balanced approach that combines preventive measures, supervisory oversight, and transparency to safeguard the interests of the public and uphold confidence in the financial services sector.

Sections Covered in This Analysis

Section 63: Approval of Chief Executive Officer and Director of Licensed Financial Adviser
Section 64: Disqualification or Removal of Officer of Licensed Financial Adviser
Section 65: Control of Take-over of Licensed Financial Adviser
Section 66: Objection to Control of Licensed Financial Adviser
Section 67: Power of Authority to Issue Written Directions
Section 72: Records to be Kept by Authority
Section 73: Records and Public Register of Representatives
Section 74: Codes, Guidelines, etc., by Authority
Section 75: Appointment of Assistants
Section 76: General Provisions as to Winding Up
Section 77: Power of Authority to Publish Information

Source Documents

For the authoritative text, consult SSO.

Written by Sushant Shukla

Topics

Singapore SSOStatutes Legislation