Statute Details
- Title: Financial Advisers (Exemption from Sections 25 to 29 and 36) Regulations
- Act Code: FAA2001-RG6
- Legislative Type: Subsidiary legislation (SL)
- Authorising Act: Financial Advisers Act (Cap. 110), s 100(1)
- Citation: G.N. No. S 616/2004
- Revised Edition: 2007 RevEd (2 July 2007)
- Current Status: Current version as at 27 Mar 2026
- Key Provisions: Regulation 1 (Citation), Regulation 2 (Definitions), Regulation 3 (Exemption)
- Amendment Noted: Amended by S 461/2021 with effect from 1 July 2021 (noted in the extract for the definition of “merchant bank”)
What Is This Legislation About?
The Financial Advisers (Exemption from Sections 25 to 29 and 36) Regulations (“Exemption Regulations”) create a targeted regulatory carve-out within Singapore’s Financial Advisers regulatory framework. In plain terms, the Regulations allow certain banks and merchant banks to be exempt from specific obligations in the Financial Advisers Act (“FAA”) when they provide financial advisory services connected to particular types of “products” (namely, “existing products” and “new products”).
The exemption is not a general permission to avoid regulation. It is conditional and product-specific. The Regulations recognise that banks may have offered certain investment products before a key regulatory cut-off date (7 October 2004) and may continue to advise on them, while also addressing how “new products” (offered on or after that date) are treated when they were previously classified—or intended to be classified—as deposits by banks.
Practically, the Exemption Regulations sit at the intersection of (i) the FAA’s financial adviser conduct and licensing regime, and (ii) the Banking Act’s framework for deposits, liquidity reserves, and liabilities base. The Regulations use definitions drawn from the Banking Act to determine when a product is treated as a deposit (or not), and then tailor the exemption accordingly.
What Are the Key Provisions?
1. Definitions that anchor the exemption to banking concepts
Regulation 2 defines key terms used in the exemption. Most importantly:
- “bank in Singapore” adopts the meaning in s 2(1) of the Banking Act.
- “deposit” adopts the meaning in s 4B of the Banking Act.
- “liabilities base” refers to the liabilities against which minimum liquid assets and minimum cash balances are required as reserves under ss 38 and 39 of the Banking Act.
- “merchant bank” is defined by reference to merchant bank licences under the Banking Act (with an amendment noted by S 461/2021).
- “existing product” means an investment product offered before 7 October 2004 that had been classified by a bank as a deposit, but which does not fall within the Banking Act definition of “deposit” in s 4B.
- “new product” means an investment product offered on or after 7 October 2004 that was classified, or intended to be offered, by any bank as a deposit before that day, but which does not fall within the Banking Act definition of “deposit”.
This structure is significant: the exemption is designed for products that were “deposit-like” in commercial classification, but legally fall outside the Banking Act’s “deposit” definition. That mismatch is what triggers the need for a carefully bounded exemption under the FAA.
2. The core exemption: who is exempt and for what services
Regulation 3(1) provides the operative exemption. Subject to conditions in paragraphs (2) and (3), the Authority (MAS) “hereby exempts”:
- any bank in Singapore, or
- any merchant bank,
that has notified the Authority under regulation 37 of the Financial Advisers Regulations (Rg 2) of the commencement of its business as a financial adviser, from sections 25 to 29 and 36 of the FAA in respect of the provision of any financial advisory service relating to:
- (a) an existing product; or
- (b) a new product.
Two points matter for practitioners:
- Notification requirement: the exemption is available only to banks/merchant banks that have notified MAS under the Financial Advisers Regulations about commencement of financial adviser business. This is a procedural gatekeeping mechanism.
- Scope limitation: the exemption applies only “in respect of” financial advisory services relating to the specified products. It is not a blanket exemption for all advisory activities.
3. Conditions for banks: maintaining liabilities base and avoiding “deposit” misrepresentation
Regulation 3(2) imposes different conditions depending on whether the advisory service relates to an existing product or a new product.
- Existing product (bank in Singapore): the exemption is conditional on the bank continuing to include the existing product in the computation of its liabilities base until the date of maturity of the product.
- New product (bank in Singapore): two conditions apply:
- the bank must include the new product in the computation of its liabilities base until the date of maturity; and
- the bank must not represent or refer to the new product as a deposit in any offer, invitation or advertisement issued in relation to that product.
These conditions reflect a policy balance. On one hand, the bank must continue to treat the product as part of its reserve/liquidity calculations (liabilities base), thereby preserving prudential treatment. On the other hand, for new products, the Regulations add a marketing/communications restriction to prevent regulatory arbitrage through branding or customer-facing descriptions.
4. Conditions for merchant banks: anti-misrepresentation for new products
Regulation 3(3) provides that for a merchant bank, where the financial advisory service relates to a new product, the exemption is subject to the condition that the bank shall not represent or refer to the new product as a deposit in any offer, invitation or advertisement issued in relation to that product.
Notably, the extract does not impose an explicit “liabilities base” condition for merchant banks. This may be because the liabilities base concept is tied to the Banking Act reserve regime applicable to banks in Singapore; however, practitioners should verify the regulatory rationale and ensure that internal compliance frameworks align with the precise wording of the exemption.
5. Effective period: time-limited effect for new products
Regulation 3(4) specifies when the exemption “shall have effect”:
- Existing product: from the date of offer until the date of maturity of the product.
- New product (bank/merchant bank): from 7 October 2004 until 1 June 2005.
This temporal limitation is crucial. Even if a product qualifies as a “new product” under the definition, the exemption’s effect is capped to the stated period. For counsel advising on compliance, this means the exemption may not cover advisory services outside that window, and the FAA obligations in sections 25 to 29 and 36 may become applicable depending on the product’s timing and the nature of the advisory service.
How Is This Legislation Structured?
The Regulations are concise and structured around three provisions:
- Regulation 1 (Citation): provides the short title for referencing the Regulations.
- Regulation 2 (Definitions): sets out the interpretive framework, including definitions imported from the Banking Act and the key product categories (“existing product” and “new product”).
- Regulation 3 (Exemption): contains the operative exemption, the conditions attached to it, and the effective dates.
There are no additional parts or schedules in the extract. The legislative design is therefore “definition-led”: once the product and institution fall within the defined categories, the exemption turns on compliance with the stated conditions and time limits.
Who Does This Legislation Apply To?
The Exemption Regulations apply to banks in Singapore and merchant banks that have notified MAS under regulation 37 of the Financial Advisers Regulations (Rg 2) of the commencement of their business as a financial adviser.
In terms of subject matter, the exemption is limited to financial advisory services relating to existing products and new products as defined. It does not apply to advisory services unrelated to those products, and it does not operate as a general waiver of the FAA obligations in sections 25 to 29 and 36.
Why Is This Legislation Important?
For practitioners, the Exemption Regulations are important because they clarify when banks and merchant banks can provide financial advisory services without being fully subject to particular FAA provisions. This can affect licensing scope, compliance processes, disclosure obligations, and internal governance for product-related advice.
The Regulations also demonstrate a regulatory technique commonly used in financial services: conditional exemptions that preserve prudential treatment while limiting consumer-facing misrepresentation. The “liabilities base” condition for existing and new products (for banks in Singapore) ensures that products outside the strict Banking Act “deposit” definition are still treated conservatively for reserve/liquidity purposes. Meanwhile, the prohibition on representing a “new product” as a deposit in offers, invitations, or advertisements addresses conduct and marketing integrity.
Finally, the time-limited effect for “new products” (from 7 October 2004 to 1 June 2005) is a practical compliance checkpoint. Counsel should treat the exemption as potentially narrow in duration and ensure that advisory activities are mapped to the product’s offer date and maturity date, and to the relevant regulatory period. Where advisory services fall outside the exemption window, the FAA provisions in sections 25 to 29 and 36 may apply in full.
Related Legislation
- Financial Advisers Act (Cap. 110) — particularly sections 25 to 29 and 36 (the provisions being exempted)
- Financial Advisers Regulations (Rg 2) — regulation 37 (notification of commencement of financial adviser business)
- Banking Act (Cap. 19) — definitions and concepts referenced in Regulation 2 (including “deposit” and “liabilities base”)
Source Documents
This article provides an overview of the Financial Advisers (Exemption from Sections 25 to 29 and 36) Regulations for legal research and educational purposes. It does not constitute legal advice. Readers should consult the official text for authoritative provisions.