SINGAPORE - Financial advice and information provided by representatives to potential clients have been found to be 'inadequate', based on the results of a mystery shopping survey conducted by the Monetary Authority of Singapore (MAS).
While information on clients' personal particulars and employment were gathered, not all were quizzed on their investment experience, financial objectives, risk preferences and financial situation, according to a press statement by the MAS.
About 50 per cent of the mystery shoppers were not quizzed about their risk tolerance or financial objectives and 40 per cent were not asked for their investment experience.
The survey, conducted between Oct to Dec last year, saw 126 mystery shoppers making 500 visits to 11 banks and 4 insurance companies.
The survey also found that in 30 per cent of the cases, the products recommended did not match the person's financial objectives or their stated investment horizon.
According to The Straits Times, Mr Lee Chuan Teck, MAS assistant managing director for capital markets, said these two findings were 'particularly disturbing'.
He was speaking at the Singapore Management University Market for Financial Advice Symposium yesterday.
Mr Lee added: 'If we do not make an effort to understand our clients' needs, how do we expect to recommend the right product to them?'
Another finding saw that while basic information on products were given, details on risk factors and the amount and frequency of fees and charges, for example, were omitted in a significant number of advisory sessions.
The MAS imposed a rule in January that gets customers to take a test to prove that they have the relevant financial experience and knowledge before getting the go-ahead to buy certain complex investment products.
But the MAS can only do so much, said Mr Lee, who also chairs the panel for the Financial Advisory Industry Review (Fair).
"While we can regulate on what an adviser needs to do and who needs advising, it is harder to regulate the quality of advice given," he said.