Monetary Authority of Singapore

FINANCIAL ADVISERS ACT

(CAP. 110)
NOTICE ON RECOMMENDATIONS ON INVESTMENT
PRODUCTS
Notice on Recommendations On Investment Products 2

Issue Date : 28 July 2011 (last updated on 17 September 2021)

NOTICE ON RECOMMENDATIONS ON INVESTMENT PRODUCTS

Introduction

1 This Notice is issued pursuant to section 58 of the Financial Advisers Act

(Cap. 110) ["the Act"]. The earlier notice (“FAA-N01”) issued on 1 October
2002 and last updated on 19 April 2011 on the same subject is cancelled.

2 Subject to paragraph 3 and 4A, this Notice shall apply to -

(a) licensed financial advisers;

(b) exempt financial advisers;

(c) representatives of financial advisers;

(d) persons who are exempt under regulation 29 of the Financial

Advisers Regulations (Rg 2) [“FAR”]; and

(e) representatives of persons who are exempt under regulation 29 of

the FAR.

3 This Notice shall not apply to persons specified in paragraph 2 who are
exempted from complying with section 27 of the Act under regulations 18A,
27A, 28, 31(4), 31(5), 31(7), 31(8), 32B, 33A, and 34 of the FAR only in respect
of the activities for which they are exempt under these regulations.
[FAA-N16 (Amendment) 2017]
[FAA-N16 (Amendment) 2021]

4 This Notice shall not apply:

(a) to any recommendation made with respect to simple life policies

sold as an ancillary product to loans with a simple payment basis for
the insurance cover. These include policies that cover outstanding
loans through personal loans, car loans and credit card balances, but
exclude mortgage reducing term assurance plans; and
Notice on Recommendations On Investment Products 3

(b) to any transaction where –

(i) only factual information is provided with respect to any

Excluded Investment Product, including the marketing of any
designated investment products through the use of direct
response advertising communications through any medium,
including mail, print, TV, radio, and electronic media referred
to in paragraph 29 of the Notice on Information to Clients and
Product Information Disclosure [Notice No. FAA-N03], and

(ii) prior to such transaction no advice or recommendation is made

by the licensed financial adviser, exempt financial adviser or
their representatives to the client.

4A This Notice shall not apply to any recommendation made by persons

specified in paragraph 2 if the following criteria are met:

(a) the recommendation is made to a client that is:

(i) not an individual; and

(ii) not an accredited investor;

(b) the recommendation is with respect to an over-the-counter

derivatives contract that is –

(i) a foreign exchange forward contract;

(ii) an interest rate swap;

(iii) a contract that combines –

(A) more than one foreign exchange forward contract; or

(B) a foreign exchange forward contract with an interest

rate swap; and

(c) the investment product mentioned in (b) is entered into or is to be

entered into by the client solely for the purpose of hedging.
Notice on Recommendations On Investment Products 4

4B This Notice shall not apply to any recommendation made by an exempt

financial institution if the following criteria are met:

(a) the recommendation is made to a client that is:

(i) not an individual; and

(ii) not an accredited investor;

(b) the recommendation is with respect to an over-the-counter

derivatives contract that combines a foreign exchange forward
contract with a spot foreign exchange contract other than for the
purpose of leveraged foreign exchange trading; and

(c) the investment product mentioned in (b) is entered into or is to be

entered into by the client solely for the purpose of hedging.
[FAA-N16 (Amendment) 2021]

5 This Notice sets out the standards to be maintained by financial advisers

and their representatives with respect to recommendations made on investment
products.

Definitions

6 For the purposes of this Notice, unless the context otherwise requires:

“accredited investor” has the same meaning as in regulation 2(1) of the

FAR;
FAA-N16 (Amendment) 2021]

“approved exchange” has the same meaning as in section 2(1) of the

Securities and Futures Act (Cap. 289);
[FAA-N16 (Amendment No. 3) 2018]

“bundled product” has the same meaning as in paragraph 2 of the Notice

on Market Conduct Standards for Direct Life Insurer as a Product Provider
[MAS Notice 318];
[FAA-N16 (Amendment) 2018]
Notice on Recommendations On Investment Products 5

“bundled product disclosure document”, in relation to a bundled product”,

has the same meaning as in paragraph 2 of the Notice on Market Conduct
Standards for Direct Life Insurer as a Product Provider [MAS Notice 318];
[FAA-N16 (Amendment) 2018]

“capital markets products” has the same meaning as in section 2(1) of the
Securities and Futures Act (Cap. 289);

“CIS documents”, in relation to a collective investment scheme, has the

same meaning as in paragraph 4 of the Schedule to the Securities and
Futures (Capital Markets Products) Regulations 2018;
[FAA-N16 (Amendment No. 3) 2018]

“client” includes a prospective client;

“collective investment scheme” has the same meaning as in section 2(1)

of the Securities and Futures Act (Cap. 289);

“connected person” has the same meaning as in section 2(1) of the Act;

“cover page”, in relation to a life policy, has the same meaning as in

paragraph 2 of the Notice on Market Conduct Standards for Direct Life
Insurer as a Product Provider [MAS Notice 318];
[FAA-N16 (Amendment) 2018]

“Customer Account Review” means a review of a client’s knowledge and

experience in derivatives for the purpose of making a recommendation to
the client on, or allowing the client to transact in, a Listed Specified
Investment Product;
[FAA-N16 (Amendment No. 3) 2018]

“Customer Knowledge Assessment” means a review of a client’s

knowledge and experience in any unlisted Specified Investment Product;
[FAA-N16 (Amendment) 2012]
[FAA-N16 (Amendment No. 2) 2018]

“dealer” has the same meaning as in regulation 34A(2) of the FAR;

[FAA-N16 (Amendment) 2017]
Notice on Recommendations On Investment Products 6

“debenture” has the same meaning as in section 2(1) of the Securities and
Futures Act (Cap. 289);

“designated investment product” has the same meaning as in section 25(6)

of the Act;

“Excluded Investment Product” means any investment product set out in

Annex 1 to this Notice;

“execution-related advice” has the same meaning as in regulation 34A(2)

of the FAR;
[FAA-N16 (Amendment) 2017]

“exempt financial adviser” means a person who is exempt from holding a

financial adviser’s licence under section 23(1)(a), (b), (c), (d), or (e) of the
Act;
[FAA-N16 (Amendment) 2012]

“exempt financial institution” means a person who is exempt from holding

a capital markets services licence under section 99(1)(a) or (b) of the
Securities and Futures Act (Cap. 289);
[FAA-N16 (Amendment No. 3) 2018]

“financial adviser” means a holder of a financial adviser’s licence of the

Act or an exempt financial adviser;
[FAA-N16 (Amendment) 2012]

“foreign exchange forward contract” means an over-the-counter

derivatives contract, under which one party agrees to purchase or sell a
specified quantity of a currency to another party, at a specified future time
(which includes at any time during a specified future period) and at a
specified price payable at that time, whether or not the settlement is effected
through actual delivery of the specified currency or otherwise;
[FAA-N16 (Amendment) 2021]

“investment product” has the same meaning as in section 2(1) of the Act;

“investment-linked policy” has the same meaning as in the First Schedule

to the Insurance Act (Cap. 142);
[FAA-N16 (Amendment) 2012]
Notice on Recommendations On Investment Products 7

“investment-linked policy sub-fund” or “ILP sub-fund” has the same

meaning as in paragraph 4(e) of the Notice on Investment-Linked Policies
[MAS Notice 307];
[FAA-N16 (Amendment) 2012]
[FAA-N16 (Amendment) 2018]

“issuer” means -
(a) in relation to an offer of units in a collective investment
scheme, the responsible person for the collective investment
scheme; or
(b) in relation to an offer of any other investment products, the
entity that issues or will issue the investment product being
offered;
[FAA-N16 (Amendment) 2012]
[FAA-N16 (Amendment No. 3) 2018]

“interest rate swap” means an over-the-counter derivatives contract, where

the parties to the contract agree to exchange sum(s) of cash, which is or are
based on a notional amount that is calculated with reference to one or more
specified interest rates, on either a specified date or a specified series of
dates.
[FAA-N16 (Amendment) 2021]

“leveraged foreign exchange trading” has the same meaning as in section

2(1) of the Securities and Futures Act (Cap. 289)
[FAA-N16 (Amendment) 2021]

“life policy” has the same meaning as in the First Schedule to the Insurance
Act (Cap. 142);
[FAA-N16 (Amendment) 2012]

“Listed Specified Investment Product” means a Specified Investment

Product which is approved in-principle for listing and quotation on, or
listed for quotation or quoted on, an organised market;
[FAA-N16 (Amendment No. 3) 2018]

“manager” has the same meaning as in paragraph 4(f) of the Notice on

Investment-Linked Policies [MAS Notice 307];
[FAA-N16 (Amendment) 2012]
[FAA-N16 (Amendment) 2018]
Notice on Recommendations On Investment Products 8

“organised market” has the same meaning as in section 2(1) of the

Securities and Futures Act (Cap. 289);
[FAA-N16 (Amendment No. 3) 2018]

“overseas exchange” has the same meaning as in section 2(1) of the

Securities and Futures Act (Cap. 289);
[FAA-N16 (Amendment No. 3) 2018]

“Overseas-Listed Investment Product” means any capital markets product

that is approved in-principle for listing and quotation only on, or listed for
quotation or quoted only on, one or more overseas exchange(s);
[FAA-N16 (Amendment No. 3) 2018]

“over-the-counter derivatives contract” has the same meaning as in

regulation 2 of the Securities and Futures (Licensing and Conduct of
Business) Regulations;
[FAA-N16 (Amendment) 2021]

“policy illustration”, in relation to a life policy, has the same meaning as

in paragraph 2 of the Notice on Market Conduct Standards for Direct Life
Insurer as a Product Provider [MAS Notice 318];
[FAA-N16 (Amendment) 2018]

“product highlights sheet” means a product highlights sheet prepared by

issuers or insurers in accordance with the MAS Guidelines on the Product
Highlights Sheet (SFA 13-G10) or the Notice on Investment-Linked
Policies [MAS Notice 307] respectively;
[FAA-N16 (Amendment) 2012]
[FAA-N16 (Amendment) 2018]

“prospectus” has the same meaning as in section 283(1) of the Securities

and Futures Act (Cap. 289);
[FAA-N16 (Amendment) 2012]

“product summary”, in relation to a life policy, has the same meaning as

in paragraph 2 of the Notice on Market Conduct Standards for Direct Life
Insurer as a Product Provider [MAS Notice 318];
[FAA-N16 (Amendment) 2018]
Notice on Recommendations On Investment Products 9

“Relevant Participant” has the same meaning as in paragraph 3(a)(ii) of

the Notice on the Sale of Investment Products [Notice No. SFA 04-N12];
[FAA-N16 (Amendment) 2012]

“Relevant Policyholder” has the same meaning as in paragraph 4(ka) of

the Notice on Investment-Linked Policies [MAS Notice 307];
[FAA-N16 (Amendment) 2012]
[FAA-N16 (Amendment) 2018]

“representative” has the same meaning as in section 2(1) of the Act;

“responsible person” has the same meaning as in section 2(1) of the

Securities and Futures Act (Cap. 289);
[FAA-N16 (Amendment) 2012]

“senior management” means any person holding the office of chief

executive officer, or executive director in the financial adviser;

“Specified Investment Product” means any investment product other than

an Excluded Investment Product;

“spot foreign exchange contract” has the same meaning as in section 2(1)
of the Securities and Futures Act (Cap.289)
[FAA-N16 (Amendment) 2021]

“Switching” includes a situation where a client disposes of, or reduces his

interest in, all or part of an investment product to acquire, or increase his
interest in, all or part of another investment product, and “switch” shall be
construed accordingly;
[FAA-N16 (Amendment) 2012]

“third party” means a financial adviser, a holder of a capital markets

services licence under the Securities and Futures Act (Cap. 289) or an
exempt financial institution;
[FAA-N16 (Amendment No. 3) 2018]

“transact” means:
(a) the purchase of any Specified Investment Product other than in
connection with the creation of short positions; or
Notice on Recommendations On Investment Products 10

(b) the sale of any Specified Investment Product in connection

with the creation of short positions,
and “transacted” and “transacts” shall have a corresponding meaning;
[FAA-N16 (Amendment) 2012]

“unit” has the same meaning as in section 2(1) of the Securities and
Futures Act (Cap. 289); and

“unlisted Specified Investment Product” means a Specified Investment

Product other than a Listed Specified Investment Product.
[FAA-N16 (Amendment No. 2) 2018]
[FAA-N16 (Amendment No. 3) 2018]

6A For the avoidance of doubt, “transaction” referred to in paragraphs 4(b),

12, 32(b), 36(ii), 41A, 41B and 42(b) of this Notice, paragraph 2(a) in Annex 1
to this Notice and paragraph 1(c) in Annex 2 to this Notice shall not have a
corresponding meaning to the term “transact” as defined in paragraph 6.
[FAA-N16 (Amendment) 2012]
[FAA-N16 (Amendment No. 2) 2018]
Notice on Recommendations On Investment Products 11

Representatives of Financial Advisers

7 Unless otherwise specified, a representative shall comply with any

requirement imposed on a financial adviser in this Notice when acting on its
behalf.

Recommendations on Investment Products

8 Section 27 of the Act requires licensed financial advisers to have a

reasonable basis for any recommendation made, with respect to any investment
product, to a person who may reasonably be expected to rely on the
recommendation1. In particular, the licensed financial adviser shall give due
consideration to the person's investment objectives, financial situation and
particular needs.

9 Where the investment product recommended is a Specified Investment

Product, the financial adviser shall also give due consideration to the person’s
knowledge or experience in the Specified Investment Product.

10 A financial adviser that is involved in making recommendations on

investment products to clients shall comply with the requirements set out in this
Notice in relation to the following aspects:

(a) know your client;

(b) needs analysis; and

(c) documentation and record keeping.

Know Your Client

11 In order for a financial adviser to make a recommendation that takes into

account a client’s investment objectives, financial situation and particular needs,
the financial adviser, except in the circumstances provided in paragraph 11A,
shall take reasonable steps to collect and document the following information
from the client:

1 Sections 23(4) and 37 of the Act provides that section 27 also applies to exempt financial advisers,
appointed and provisional representatives.
Notice on Recommendations On Investment Products 12

(a) the financial objectives of the client;

(b) the risk tolerance of the client;

(c) the employment status of the client;

(d) the financial situation of the client, including assets, liabilities, cash
flow and income;

(e) the source and amount of the client’s regular income;

(f) the financial commitments of the client;

(g) the current investment portfolio of the client, including any life
policy;

(h) whether the amount to be invested is a substantial portion of the

client’s assets; and

(i) for any recommendation made in respect of life policies, the number
of dependants of the client and the extent and duration of financial
support required for each of the dependants.
[FAA-N16 (Amendment No. 3) 2018]

11A A financial adviser who makes a recommendation on investment products

to a client through a digital advisory platform, may elect not to collect and
document any of the information referred to in paragraph 11(c) to (i) from the
client, provided that:

(a) the entire process by which the recommendation is made to the client
is electronically automated on the platform, and there is no
intervention by any person in the process, except to the extent that
intervention is necessary to provide technical assistance to the client
or to resolve any inconsistent responses which are detected pursuant
to paragraph (c);

(b) the platform is programmed with compulsory questions, which are

answered by the client, to effectively identify and preclude the
making of a recommendation to any client whose financial
Notice on Recommendations On Investment Products 13

objectives or risk tolerance is unsuitable for the investment

products;

(c) the platform is programmed to be able to detect any inconsistent

responses provided by the client, and all inconsistent responses are
resolved before any recommendation is made to the client;

(d) at the point when the recommendation is made to the client, the
recommendation is accompanied by a risk disclosure statement to
alert the client that the recommendation does not take into account
the client’s financial situation and particular needs, as may be
determined from the information referred to in paragraph 11(c) to
(i), insofar as the financial adviser has elected not to collect and
document such information; and

(e) the recommendation is limited to units in a collective investment

scheme in which the manager of the collective investment scheme
complies with all the investment restrictions referred to in paragraph
2 of the Schedule to the Securities and Futures (Capital Markets
Products) Regulations 2018, even if the CIS documents of the
collective investment scheme do not require this.
[FAA-N16 (Amendment No. 3) 2018]

12 For the purpose of collecting and documenting information referred to in

paragraph 11, a financial adviser may rely on information previously provided
by the client to the financial adviser only if the client confirms at the time of the
transaction that there are no material changes to the information.

13 Paragraph 11 does not apply to a financial adviser who is also a dealer in

respect of his carrying on the business of providing execution-related advice,
provided that –

(a) the information referred to in paragraph 11 shall already have been

collected from the client and documented by the financial adviser at
the time when the relationship was first established with the client;
and

(b) the financial adviser shall update the client’s profile in respect of the
information referred to in paragraph 11 at least on an annual basis
Notice on Recommendations On Investment Products 14

or as and when informed by the client of any change in the client’s

profile.

14 A financial adviser shall highlight the following in writing to its client:

(a) the information provided by the client will be the basis on which the
recommendation will be made; and

(b) any inaccurate or incomplete information provided by the client may

affect the suitability of the recommendation.

Customer Knowledge Assessment

15 A financial adviser shall ensure that it has been informed by the issuer of
an investment product which is not approved in-principle for listing and
quotation on, or listed for quotation or quoted on, an organised market, as to
whether the investment product is a Specified Investment Product, before making
any recommendation on that investment product. The financial adviser shall keep
proper records of such information and shall accordingly convey this information
to a client who intends to transact in that investment product.
[FAA-N16 (Amendment) 2012]
[FAA-N16 (Amendment No. 2) 2018]
[FAA-N16 (Amendment No. 3) 2018]

16 Subject to paragraph 27, where the investment product is an unlisted

Specified Investment Product, a financial adviser shall conduct a Customer
Knowledge Assessment based on the criteria set out in Annex 2 to this Notice
before making a recommendation on the unlisted Specified Investment Product
concerned to a client.
[FAA-N16 (Amendment) 2012]
[FAA-N16 (Amendment No. 2) 2018]
[FAA-N16 (Amendment No. 3) 2018]

17 For the purpose of the Customer Knowledge Assessment, a financial

adviser shall take into consideration information on a client’s educational
qualifications, investment experience and work experience. Where a client does
not provide information on his educational qualifications, investment experience
or work experience, the financial adviser shall deem the client not to possess
knowledge or experience in the unlisted Specified Investment Product
concerned.
Notice on Recommendations On Investment Products 15

17A When conducting a Customer Knowledge Assessment for a new client,

or for a client whose previous Customer Knowledge Assessment is no longer
valid in accordance with paragraph 26, a financial adviser shall assess a client’s
investment experience according to:

(a) the classification of the investment product(s) previously transacted

by the client; and

(b) the listing status of such investment product(s),

at the time that the client had transacted in such investment product(s).
[FAA-N16 (Amendment) 2012]

18 A financial adviser shall highlight in writing to the client that any

inaccurate or incomplete information provided by the client may affect the
outcome of the Customer Knowledge Assessment.

19 Subject to paragraphs 24 and 25, a financial adviser shall not allow a client
to transact in an unlisted Specified Investment Product unless it is satisfied, on
the basis of the outcome of the Customer Knowledge Assessment referred to in
paragraph 16 or 27, that the client has knowledge or experience in the unlisted
Specified Investment Product, as set out in Annex 2 to this Notice.
[FAA-N16 (Amendment No. 3) 2018]

20 Notwithstanding a positive outcome of the Customer Knowledge

Assessment, the financial adviser shall offer to provide advice concerning the
unlisted Specified Investment Product to the client.

21 Where the client does not wish to receive advice concerning the unlisted
Specified Investment Product from the financial adviser, the financial adviser
shall document the decision of the client and highlight to the client in writing that
it is the client’s responsibility to ensure the suitability of the unlisted Specified
Investment Product selected. The financial adviser shall also warn the client in
writing that the client has chosen not to receive advice and will therefore not be
able to rely on section 27 of the Act to file a civil claim in the event he alleges
he has suffered a loss, and confirm in writing if the client wishes to proceed
without advice.
[FAA-N16 (Amendment) 2011]
Notice on Recommendations On Investment Products 16

Requirements where Clients are Assessed Not to Possess Knowledge or

Experience in Unlisted Specified Investment Products

22 Where a financial adviser assesses a client not to possess knowledge or

experience in an unlisted Specified Investment Product pursuant to the Customer
Knowledge Assessment, it shall inform the client of the outcome of the Customer
Knowledge Assessment.

23 Where a client, after being informed of the outcome of the Customer

Knowledge Assessment in accordance with paragraph 22, nevertheless intends
to proceed to transact in the unlisted Specified Investment Product, the financial
adviser shall provide advice to the client, taking into account the client's
investment objectives, financial situation and particular needs, as well as the
outcome of the Customer Knowledge Assessment.
[FAA-N16 (Amendment) 2011]
[FAA-N16 (Amendment) 2012]

24 If a client, who is assessed as not possessing the knowledge or experience

in the unlisted Specified Investment Product pursuant to the Customer
Knowledge Assessment, nevertheless chooses to transact in an unlisted Specified
Investment Product which is not recommended by the financial adviser, the
financial adviser shall:

(a) inform the client in writing of the outcome of the Customer

Knowledge Assessment;

(b) obtain the client’s written confirmation that the client still intends to
proceed to transact in the unlisted Specified Investment Product
despite the outcome of the Customer Knowledge Assessment; and

inform the client in writing that it is the client’s responsibility to ensure the
suitability of the product selected.
[FAA-N16 (Amendment) 2011]
[FAA-N16 (Amendment) 2012]

25 In respect of such a client as referred to in paragraph 24 who has confirmed

that he intends to proceed to transact in the unlisted Specified Investment Product
(referred to in paragraphs 25 and 25A as “relevant trade”), the financial adviser
shall not allow the client to proceed with the relevant trade unless its senior
Notice on Recommendations On Investment Products 17

management, who is not involved in that relevant trade and is not a connected
person to the client:

(a) has confirmed with the client that the client has been properly
informed of all relevant facts as required under paragraphs 22 and
24, and that the client is aware of the implications and consequences
of proceeding with that relevant trade;

(b) is satisfied that the financial adviser has complied with the
requirements set out in paragraphs 22 and 24; and

(c) has given approval for the financial adviser to proceed with the
client’s request,

whether personally, or by means of any designated person or any written

framework approved pursuant to paragraph 25A.
[FAA-N16 (Amendment) 2012]
[FAA-N16 (Amendment No. 3) 2018]

25A For the purpose of paragraph 25, the senior management of the financial
adviser may:

(a) designate any person who is not its senior management, and who is
not involved in that relevant trade and is not a connected person to
the client (referred to in paragraphs 25 and 25A as “designated
person”) to fulfil the requirements set out in paragraph 25(a), (b) and
(c) on behalf of its senior management, so long as its senior
management ensures that the designated person fulfils those
requirements; or

(b) approve a written framework stipulating the circumstances under

which approval for the financial adviser to proceed with a client’s
request under paragraph 25(c) may be given by a designated person
or by an automated process on behalf of its senior management, so
long as its senior management ensures that the framework is
sufficiently robust to fulfil the requirements set out in paragraph
25(a) and (b).

[FAA-N16 (Amendment No. 3) 2018]

Notice on Recommendations On Investment Products 18

Validity of the Outcome of Customer Knowledge Assessment

26 Where a client is assessed to have the knowledge or experience to transact

in an unlisted Specified Investment Product, the financial adviser may allow the
client to transact in such unlisted Specified Investment Product for a period of
one year from the date of the Customer Knowledge Assessment. After a year has
elapsed, the financial adviser shall conduct a new Customer Knowledge
Assessment on the client, or rely on a new Customer Knowledge Assessment
conducted by a third party for the client under paragraph 27, before it provides
any recommendation on any unlisted Specified Investment Product to the client.
[FAA-N16 (Amendment No. 3) 2018]

Reliance on a Third Party Customer Knowledge Assessment

27 Where a client of a financial adviser has previously undergone a Customer

Knowledge Assessment with a third party, the financial adviser may, instead of
conducting a Customer Knowledge Assessment, rely on the Customer
Knowledge Assessment previously conducted by the third party for such client,
if the following conditions are met:

(a) the financial adviser is satisfied that the third party had complied
with the criteria set out in Annex 2 to this Notice and the
requirements set out in paragraphs 17 to 18 when the third party
conducted the Customer Knowledge Assessment for such client;

(b) the third party is not one which the financial adviser has been
specifically precluded by the Authority from relying on; and

(c) the third party is able and willing to provide, without delay, upon
the financial adviser’s request, any data, documents, or information
obtained by the third party with respect to the Customer Knowledge
Assessment conducted for such client, which the financial adviser
would be required or would want to obtain.

[FAA-N16 (Amendment) 2011]

[FAA-N16 (Amendment) 2012]
[FAA-N16 (Amendment No. 3) 2018]
Notice on Recommendations On Investment Products 19

27A For the purposes of conducting the Customer Knowledge Assessment

provided in paragraphs 15 to 26 and 27D, the reference to a “client” in those
paragraphs only refers to a natural person.
[FAA-N16 (Amendment) 2011]
[FAA-N16 (Amendment No. 3) 2018]

27B Before relying on the Customer Knowledge Assessment previously

conducted by a third party as referred to in paragraph 27, the financial adviser
shall –

(a) document the basis for its satisfaction that the criteria and
requirements referred to in paragraph 27(a) had been met; and

(b) obtain from the third party the documentation for the Customer
Knowledge Assessment referred to in paragraph 40.
[FAA-N16 (Amendment No. 3) 2018]

27C For the avoidance of doubt, notwithstanding its reliance on the Customer
Knowledge Assessment previously conducted by a third party, a financial adviser
shall remain responsible for its Customer Knowledge Assessments obligations in
this Notice.
[FAA-N16 (Amendment No. 3) 2018]

Jointly Transacting in Unlisted Specified Investment Products

27D Where two or more clients intend to jointly transact in an unlisted

Specified Investment Product, the requirements to conduct the Customer
Knowledge Assessment as provided in paragraphs 15 to 27C shall apply to the
financial adviser in respect of each of the clients before making a
recommendation on such unlisted Specified Investment Product.
[FAA-N16 (Amendment No. 3) 2018]

Customer Account Review

27E Subject to paragraph 27Q, a financial adviser shall conduct a Customer

Account Review based on criteria set out in Annex 3 to this Notice before making
a recommendation on any Listed Specified Investment Product.
[FAA-N16 (Amendment No. 3) 2018]
Notice on Recommendations On Investment Products 20

27F For the purpose of the Customer Account Review, a financial adviser
shall take into consideration information on a client’s educational qualifications,
investment experience and work experience. Where a client does not provide
information on his educational qualifications, investment experience or work
experience, the financial adviser shall deem the client not to possess knowledge
or experience in derivatives.
[FAA-N16 (Amendment No. 3) 2018]

27G When conducting a Customer Account Review for a client for the first
time, or for a client whose previous Customer Account Review is no longer valid
in accordance with paragraph 27T, a financial adviser shall assess a client’s
investment experience according to:

(a) the classification of the capital markets product(s) previously

transacted by the client; and

(b) the listing status of such capital markets product(s),

at the time that the client had transacted in such capital markets product(s).
[FAA-N16 (Amendment No. 3) 2018]

27H A financial adviser shall highlight to the client in writing that any
inaccurate or incomplete information provided by the client may affect the
outcome of the Customer Account Review.
[FAA-N16 (Amendment No. 3) 2018]

27I Subject to paragraphs 27N and 27O, a financial adviser shall not allow a
client to transact in a Listed Specified Investment Product unless it is satisfied,
on the basis of the outcome of the Customer Account Review referred to in
paragraph 27E or 27Q, that the client has knowledge or experience in the Listed
Specified Investment Product, as set out in Annex 3 to this Notice.
[FAA-N16 (Amendment No. 3) 2018]

27J Notwithstanding a positive outcome of the Customer Account Review,

the financial adviser shall offer to provide advice concerning the Listed Specified
Investment Product to the client.
[FAA-N16 (Amendment No. 3) 2018]

27K Where the client does not wish to receive advice concerning the Listed
Specified Investment Product from the financial adviser, the financial adviser
Notice on Recommendations On Investment Products 21

shall document the decision of the client and highlight to the client in writing that
it is the client’s responsibility to ensure the suitability of the Listed Specified
Investment Product selected. The financial adviser shall also warn the client in
writing that the client has chosen not to receive advice and will therefore not be
able to rely on section 27 of the Act to file a civil claim in the event he alleges
he has suffered a loss, and confirm in writing if the client wishes to proceed
without advice.
[FAA-N16 (Amendment No. 3) 2018]

Requirements where Clients are Assessed Not to Possess Knowledge or

Experience in Derivatives

27L Where a financial adviser assesses a client not to possess knowledge or

experience in derivatives pursuant to the Customer Account Review, it shall
inform the client of the outcome of the Customer Account Review.
[FAA-N16 (Amendment No. 3) 2018]

27M Where a client, after being informed of the outcome of the Customer
Account Review, in accordance with paragraph 27L, nevertheless intends to
proceed to transact in a Listed Specified Investment Product, the financial adviser
shall provide advice to the client, taking into account the client's investment
objectives, financial situation and particular needs, as well as the outcome of the
Customer Account Review.
[FAA-N16 (Amendment No. 3) 2018]

27N If a client, who is assessed as not possessing knowledge or experience in

derivatives pursuant to the Customer Account Review, nevertheless chooses to
transact in a Listed Specified Investment Product which is not recommended by
the financial adviser, the financial adviser shall:

(a) inform the client in writing of the outcome of the Customer Account
Review;

(b) obtain the client’s written confirmation that the client still intends to
proceed to transact in the Listed Specified Investment Product
despite the outcome of the Customer Account Review; and
Notice on Recommendations On Investment Products 22

inform the client in writing that it is the client’s responsibility to ensure the
suitability of the product selected.
[FAA-N16 (Amendment No. 3) 2018]

27O In respect of such a client as referred to in paragraph 27N who has

confirmed that he intends to proceed to transact in the Listed Specified
Investment Product (referred to in paragraphs 27O and 27P as “relevant
trade”), the financial adviser shall not allow the client to proceed with the
relevant trade unless its senior management, who is not involved in that
relevant trade and is not a connected person to the client:

(a) has confirmed with the client that the client has been properly
informed of all relevant facts as required under paragraphs 27L
and 27N, and that the client is aware of the implications and
consequences of proceeding with that relevant trade;

(b) is satisfied that the financial adviser has complied with the
requirements set out in paragraphs 27L and 27N; and

(c) has given approval for the financial adviser to proceed with the
client’s request,

whether personally, or by means of any designated person or any written

framework approved pursuant to paragraph 27P.
[FAA-N16 (Amendment No. 3) 2018]

27P For the purpose of paragraph 27O, the senior management of the
financial adviser may:

(a) designate any person who is not its senior management, and who
is not involved in that relevant trade and is not a connected person
to the client (referred to in paragraphs 27O and 27P as
“designated person”), to fulfil the requirements set out in
paragraph 27O(a), (b) and (c) on behalf of its senior management,
so long as its senior management ensures that the designated
person fulfils those requirements; or

(b) approve a written framework stipulating the circumstances under

which approval to proceed with a client’s request under paragraph
27O(c) may be given by a designated person or by an automated
Notice on Recommendations On Investment Products 23

process on behalf of its senior management, so long as its senior

management ensures that the framework is sufficiently robust to
fulfil the requirements set out in paragraph 27O(a) and (b).
[FAA-N16 (Amendment No. 3) 2018]

Reliance on a Third Party Customer Account Review

27Q Where a client of a financial adviser has previously undergone a

Customer Account Review with a third party, the financial adviser may,
instead of conducting a Customer Account Review, rely on the Customer
Account Review previously conducted by the third party for such client, if the
following conditions are met:

(a) the financial adviser is satisfied that the third party had complied
with the criteria set out in Annex 3 to this Notice and the
requirements set out in paragraphs 27F to 27H when the third
party conducted the Customer Account Review for such client;

(b) the third party is not one which the financial adviser has been
specifically precluded by the Authority from relying on; and

(c) the third party is able and willing to provide, without delay, upon
the financial adviser’s request, any data, documents, or
information obtained by the third party with respect to the
Customer Account Review conducted for such client, which the
financial adviser would be required or would want to obtain.
[FAA-N16 (Amendment No. 3) 2018]

27R Before relying on the Customer Account Review previously conducted

by a third party as referred to in paragraph 27Q, the financial adviser shall –

(a) document the basis for its satisfaction that the criteria and
requirements referred to in paragraph 27Q(a) had been met; and

(b) obtain from the third party the documentation for the Customer
Account Review referred to in paragraph 40.
[FAA-N16 (Amendment No. 3) 2018]
Notice on Recommendations On Investment Products 24

27S For the avoidance of doubt, notwithstanding its reliance on the

Customer Account Review previously conducted by a third party, a financial
adviser shall remain responsible for its Customer Account Review obligations
in this Notice.
[FAA-N16 (Amendment No. 3) 2018]

Validity of the Outcome of Customer Account Review

27T No financial adviser shall make a recommendation to a client to

transact in a Listed Specified Investment Product after 3 years has expired
from the date of the conduct of the Customer Account Review for the client
concerned, until and unless –

(a) the financial adviser has checked and is satisfied that –

(i) the client has transacted in a Listed Specified

Investment Product more than once during the
preceding 3-year period; and

(ii) in every subsequent 3-year period, the client has

transacted in a Listed Specified Investment Product
more than once during that 3-year period; or

(b) the financial adviser has conducted a new Customer Account

Review for the client concerned by repeating the steps in
paragraphs 27E to 27O, or the financial adviser has relied on
a new Customer Account Review conducted by a third party
for the client concerned under paragraph 27Q.
[FAA-N16 (Amendment No. 3) 2018]

Jointly Transacting in Listed Specified Investment Products

27U Where two or more clients intend to jointly transact in a Listed

Specified Investment Product, the requirements to conduct the Customer
Account Review as provided in paragraphs 27E to 27T shall apply to the
financial adviser in respect of each of the clients before making a
recommendation on such Listed Specified Investment Product.
[FAA-N16 (Amendment No. 3) 2018]
Notice on Recommendations On Investment Products 25

27V For the purposes of conducting the Customer Account Review

provided in paragraphs 27E to 27U, any reference to a “client” in those
paragraphs only refers to a natural person.
[FAA-N16 (Amendment No. 3) 2018]

Needs Analysis

28 Section 27 of the Act requires a financial adviser to analyse the

information provided by the client and identify the product that is suitable for
the client based on the information obtained from the client.
[FAA-N16 (Amendment) 2011]

29 A financial adviser shall put in place systems and processes for its
representatives to determine whether the product recommended is suitable for
the client based on the information obtained from the client. The financial
adviser shall take into consideration the nature of the product, key risks and
other features including the investment tenor, fees and liquidity required.

30 Where the financial adviser is unable to identify a suitable product, it

shall inform the client accordingly.

31 A financial adviser shall explain to its client the basis for its
recommendation. The basis on which the financial adviser is making the
recommendation to the client shall be documented.

32 Where a client does not want:

(a) to provide any information requested by the financial adviser in

accordance with paragraph 11; or

(b) to accept the recommendation of the financial adviser and

chooses to proceed with the transaction in another investment
product which is not recommended by the financial adviser,

the financial adviser may proceed with the client's request, but it shall
document the decision of the client and highlight to the client in writing that it
is the client’s responsibility to ensure the suitability of the product selected.
[FAA-N16 (Amendment) 2011]
[FAA-N16 (Amendment) 2012]
Notice on Recommendations On Investment Products 26

33 Where a client chooses not to receive any recommendation from a

financial adviser, the financial adviser shall ensure that there is proper
documentation to demonstrate that this is so.

34 Where a financial adviser is:

(a) making a recommendation on life policies;

(b) arranging contracts of insurance in respect of life policies; or

(c) carrying out both of the above activities,

it is expected to comply with the LIA Minimum Standard for Life Insurance
Advisory Process issued by the Life Insurance Association of Singapore.

34A Notwithstanding paragraph 34(a), where a financial adviser is making

a recommendation on a bundled product, it shall disclose to the client the
option of purchasing a comparable term life insurance product as set out in the
bundled product disclosure document.
[FAA-N16 (Amendment) 2018]

Documentation and Record Keeping

35 The financial adviser shall make reasonable efforts to document the

basis for the recommendation referred to in paragraph 36(b), and such
documentation shall include the following:

(a) the client’s statement of his investment objectives, financial

situation and particular needs;

(b) the financial adviser’s reasonable basis for making the

recommendation to the client having regard to the information
obtained from the client; and

(c) the financial adviser’s assessment of the disadvantages of the

investment product based on circumstances of the client.

36 A financial adviser shall furnish to its client a document containing the

following when making a recommendation in respect of an investment product
to the client:
Notice on Recommendations On Investment Products 27

(a) a summary of the information gathered by the financial adviser

pursuant to paragraph 11; and

(b) any recommendation made to the client by the financial adviser

and the basis for the recommendation,

and, where applicable, also furnish to its client a statement that the client
does not want to:

(i) provide any information requested by the financial adviser in

accordance with paragraph 11;

(ii) accept the recommendation of the financial adviser and has

chosen to proceed with the transaction in another investment
product which is not recommended by the financial adviser; or

(iii) receive any recommendation from the financial adviser,

before the client signs on the application form for the purchase of an
investment product or gives his consent to dispose of an investment product.
[FAA-N16 (Amendment) 2011]
[FAA-N16 (Amendment) 2012]

37 A financial adviser shall furnish the following documents to a client

when making a recommendation:

(a) in the case of a collective investment scheme or a debenture, a

copy of the prospectus or profile statement and product
highlights sheet (if applicable) issued in respect of the
collective investment scheme or the debenture, or any other
offer document, or both (as the case may be), as may be
prescribed by the relevant laws, including:

(i) a supplementary prospectus or supplementary profile

statement issued in respect of the collective investment
scheme or the debenture; and

(ii) a replacement prospectus or replacement profile statement

issued in respect of the collective investment scheme or
the debenture.
Notice on Recommendations On Investment Products 28

(b) in the case of a life policy (including a bundled product), a

copy of the cover page, product summary, policy illustration,
bundled product disclosure document and product highlights
sheet in respect of that policy, as prepared and provided by the
direct life insurer (where such documents are available in
respect of that policy).
[FAA-N16 (Amendment) 2018]

38 The financial adviser may, with the client’s written consent, give the
client an abridged version of the document or statement referred to in
paragraph 36. The financial adviser shall also maintain a copy of this
document or statement and the abridged version of the document or statement,
where applicable, for record keeping purposes.

39 A financial adviser who is also a dealer is not required to furnish to its

client the document referred to in paragraph 36 when making recommendation
in respect of an investment product to the client.

40 A financial adviser shall document every Customer Knowledge

Assessment and every Customer Account Review conducted for each client.
Such documentation shall include the following:

(a) information collected from a client on his educational

qualification, work experience and investment experience;

(b) an assessment of the client’s knowledge and experience in

derivatives or unlisted Specified Investment Products, as the
case may be;

(c) the outcome of the Customer Knowledge Assessment or the

Customer Account Review, as the case may be; and

(d) the approval of its senior management or designated person for

the financial adviser to proceed with the client’s request, where
applicable.
[FAA-N16 (Amendment No. 3) 2018]

41 A financial adviser shall maintain records of all communication

between the financial adviser and the client relating to the provision of
financial advisory in respect of a Listed Specified Investment Product,
Notice on Recommendations On Investment Products 29

including a record in the form of a file note or a tape recording of the telephone
conversation.
[FAA-N16 (Amendment) 2012]
[FAA-N16 (Amendment No. 2) 2018]
[FAA-N16 (Amendment No. 3) 2018]

Requirements on a financial adviser providing financial advisory services

in relation to units in a collective investment scheme, the units of which
are Excluded Investment Products (“EIP-CIS”)

41A Where the responsible person of the EIP-CIS is required to ensure that
a Customer Account Review or a Customer Knowledge Assessment referred
to in paragraph 29B(b)(i) or (ii) of the Notice on the Sale of Investment
Products [Notice No. SFA 04-N12] is conducted by a financial adviser on
every client who is an existing Relevant Participant as a result of any change
in investment objective, investment focus or investment approach of the EIP-
CIS which would cause the units in an EIP-CIS to be classified as Specified
Investment Products, and -

(a) a financial adviser of an existing Relevant Participant is able to

demonstrate to the responsible person concerned that it is
unable to conduct a Customer Account Review or a Customer
Knowledge Assessment as referred to in paragraph 29B(b)(i)
or (ii) of the Notice on the Sale of Investment Products [Notice
No. SFA 04-N12] for reasons beyond its reasonable control,
including where it is unable to contact the existing Relevant
Participant despite it having written to that existing Relevant
Participant regarding the conduct of such Customer Account
Review or Customer Knowledge Assessment and having made
repeated attempts thereafter to establish contact, or where the
existing Relevant Participant refuses to undergo a Customer
Account Review or a Customer Knowledge Assessment as
referred to in paragraph 29B(b)(i) or (ii) of the Notice on the
Sale of Investment Products [Notice No. SFA 04-N12]; or

(b) a financial adviser has conducted a Customer Account Review

or a Customer Knowledge Assessment in accordance with
paragraph 29B(b)(i) or (ii) of the Notice on the Sale of
Investment Products [Notice No. SFA 04-N12], and assesses
an existing Relevant Participant not to possess the adequate
Notice on Recommendations On Investment Products 30

knowledge or experience pursuant to such Customer Account

Review or Customer Knowledge Assessment, as the case may
be, and is unable to allow such existing Relevant Participant to
proceed to transact in the Listed Specified Investment Product
or in the unlisted Specified Investment Product,

the financial adviser may –

(i) allow the existing Relevant Participant concerned to continue

holding on to his existing position in the EIP-CIS; or

(ii) on the instructions of the existing Relevant Participant

concerned, execute a transaction or transactions on behalf of
the existing Relevant Participant concerned to reduce his
existing position in the EIP-CIS.

For the avoidance of doubt, the financial adviser shall not count such
transactions referred to in sub-paragraph (ii) as “investment experience” for the
purposes of conducting the Customer Account Review or the Customer
Knowledge Assessment for the existing Relevant Participant concerned.
[FAA-N16 (Amendment) 2012]
[FAA-N16 (Amendment No. 2) 2018]
[FAA-N16 (Amendment No. 3) 2018]

Requirements on a financial adviser providing financial advisory services

in relation to units in an investment-linked policy sub-fund, the units of
which are Excluded Investment Products (“EIP-ILP sub- fund”)

41B Where the insurer issuing an investment-linked policy (ILP) that has
an EIP-ILP sub-fund within the ILP is required to ensure that a Customer
Knowledge Assessment referred to in paragraph 47B of the Notice on
Investment-Linked Policies [MAS Notice 307] is conducted by a financial
adviser on every client who is a Relevant Policyholder as a result of any
change in investment objective or investment focus of the EIP-ILP sub- fund,
or investment approach of the manager which would cause the units in the
EIP-ILP sub-fund to be classified as Specified Investment Products, and -

(a) a financial adviser of an existing Relevant Policyholder is able

to demonstrate to the insurer concerned that it is unable to
conduct a Customer Knowledge Assessment as referred to in
Notice on Recommendations On Investment Products 31

paragraph 47B of the Notice on Investment-Linked Policies

[MAS Notice 307] for reasons beyond its reasonable control,
including where it is unable to contact the existing Relevant
Policyholder despite it having written to that existing Relevant
Policyholder regarding the conduct of such Customer
Knowledge Assessment and having made repeated attempts
thereafter to establish contact, or where the existing Relevant
Policyholder refuses to undergo a Customer Knowledge
Assessment as referred to in paragraph 47B of the Notice on
Investment-Linked Policies [MAS Notice 307]; or

(b) a financial adviser has conducted a Customer Knowledge

Assessment in accordance with paragraph 47B of the Notice on
Investment-Linked Policies [MAS Notice 307], and assesses an
existing Relevant Policyholder not to possess the adequate
knowledge or experience pursuant to such Customer
Knowledge Assessment, and is unable to allow such existing
Relevant Policyholder to proceed to transact in the unlisted
Specified Investment Product,

the financial adviser may –

(i) allow the existing Relevant Policyholder concerned to continue

holding on to his existing position in the EIP-ILP sub-fund; or

(ii) on the instructions of the existing Relevant Policyholder

concerned, execute a transaction or transactions on behalf of
the existing Relevant Policyholder concerned to reduce his
existing position in the EIP-ILP sub-fund.

For the avoidance of doubt, the financial adviser shall not count such
transactions referred to in sub-paragraph (ii) as “investment experience” for the
purposes of conducting the Customer Knowledge Assessment for the existing
Relevant Policyholder concerned.
[FAA-N16 (Amendment) 2012]
[FAA-N16 (Amendment) 2018]
Notice on Recommendations On Investment Products 32

Requirements on financial advisers providing financial advisory services

in relation to Overseas-Listed Investment Products

41C A financial adviser shall provide the risk warning statement set out in
Annex 4 to this Notice to its client before making a recommendation on any
Overseas-Listed Investment Product where it is the first time on or after 8
October 2018 that the financial adviser makes such recommendation to the
client.
[FAA-N16 (Amendment No. 3) 2018]

41D The financial adviser shall obtain the client’s acknowledgement of the
risk warning statement, in written form or otherwise, before making a
recommendation on any Overseas-Listed Investment Product, where it is for the
first time on or after 8 October 2018 that the financial adviser makes such
recommendation to the client.
[FAA-N16 (Amendment No. 3) 2018]

41E The financial adviser shall maintain records of the client’s

acknowledgment referred to in paragraph 41D for a period of not less than 5
years.
[FAA-N16 (Amendment No. 3) 2018]

41F Where a financial adviser makes a recommendation on an Overseas-

Listed Investment Product to its client, the financial adviser may implement a
system to identify and determine that the Overseas-Listed Investment Product
is to be classified as an Excluded Investment Product.
[FAA-N16 (Amendment No. 3) 2018]

41G Where a financial adviser does not implement a system to identify and
determine that an Overseas-Listed Investment Product is to be classified as an
Excluded Investment Product in accordance with paragraph 41F, the
Overseas-Listed Investment Product shall be classified as a Specified
Investment Product, and the requirements set out in paragraphs 27D to 27U,
with respect to the Customer Account Review, shall apply to a financial
adviser making a recommendation on an Overseas-Listed Investment Product
to its client.
[FAA-N16 (Amendment No. 3) 2018]
Notice on Recommendations On Investment Products 33

41H Where a financial adviser has classified an Overseas-Listed

Investment Product as an Excluded Investment Product, it shall ensure the
classification of the Overseas-Listed Investment Product concerned remains
accurate and current at all times.
[FAA-N16 (Amendment No. 3) 2018]

41I A financial adviser may outsource the identification and classification

of an Overseas-Listed Investment Product as an Excluded Investment Product
to another party. Where the identification and classification of an Overseas-
Listed Investment Product has been outsourced, the financial adviser shall be
responsible for the implementation of the classification system, including but
not limited to, the accuracy of the classification.
[FAA-N16 (Amendment No. 3) 2018]

41J For the purposes of the requirements provided in paragraphs 41C to

41E, any reference to a “client” in those paragraphs only refers to a natural
person.
[FAA-N16 (Amendment No. 3) 2018]

Switching of Designated Investment Products

42 A financial adviser shall not make a recommendation to a client to

switch from one designated investment product (referred to as “original
product”) to another designated investment product (referred to as
“replacement product”) in a manner that would be detrimental to the client. In
considering whether a switch is detrimental, the Authority may have regard to
a number of factors, including:

(a) whether the client suffers any penalty for terminating the
original product;

(b) whether the client will incur any transaction cost without
gaining any real benefit from such a switch;

(c) whether the replacement product confers a lower level of

benefit at a higher cost or same cost to the client, or the same
level of benefit at a higher cost; and

(d) whether the replacement product is less suitable for the client.
Notice on Recommendations On Investment Products 34

43 A financial adviser which makes a recommendation to a client to

switch from one designated investment product to another designated
investment product shall comply with the requirements set out in this Notice.

44 A financial adviser shall disclose, in writing, to a client any fee or

charge the client would have to bear if he were to switch from one designated
investment product to another, in order to ensure that the client is able to make
an informed decision on whether to switch.

45 This Notice shall take effect on 1 January 2012.

Note:

Under section 58(5) of the Act, any person who contravenes any
requirement specified in a written direction issued by the Authority (which
would include this Notice), shall be guilty of an offence and shall be liable
on conviction to a fine not exceeding $25,000 and, in the case of a
continuing offence, to a further fine not exceeding $2,500 for every day or
part thereof during which the offence continues after conviction.

*Notes on History of Amendments:

1. FAA-N16 (Amendment) 2011 with effect from 1 January 2012
2. FAA-N16 (Amendment) 2012 with effect from 11 December 2012
3. FAA-N16 (Amendment) 2015 with effect from 29 April 2015
4. FAA-N16 (Amendment) 2017 with effect from 1 April 2017
5. FAA-N16 (Amendment) 2018 with effect from 2 July 2018
6. FAA-N16 (Amendment No. 2) 2018 with effect from 9 July 2018
7. FAA-N16 (Amendment No. 3) 2018 with effect from 8 October 2018
8. FAA-N16 (Amendment) 2021 dated 17 September 2021 with effect from
9 October 2021, except for amendments in respect of paragraph 3 which
are effective from 17 September 2021.
Notice on Recommendations On Investment Products 35

ANNEX 1 – EXCLUDED INVESTMENT PRODUCTS

1 “Excluded Investment Product” means –

(a) any capital markets products that belong to a class of capital

markets products listed in the Schedule to the Securities and
Futures (Capital Markets Products) Regulations 2018;

(b) any life policy excluding an investment-linked policy (other

than an investment-linked policy where the units in an ILP sub-
fund within the investment-linked policy are referred to in
paragraph (c));

(c) any unit in an ILP sub-fund in the circumstances mentioned in

paragraph 2; or

(d) two or more products specified in paragraphs (a) to (c) in this

Annex that are linked together in a stapled manner such that
one product may not be transferred or otherwise dealt without
any of the other product(s).

[FAA-N16 (Amendment) 2012]

[FAA-N16 (Amendment) 2015]
[FAA-N16 (Amendment No. 2) 2018]

2. For the purpose of paragraph 1(c), the circumstances are all of the
following:
(a) the investment objectives and investment focus of the ILP sub-
fund, and investment approach of the manager stated in the
product summary as prescribed in Appendix A of the Notice on
Investment-Linked Policies [MAS Notice 307] require that the
manager of the ILP sub-fund must not engage in any securities
lending transaction or securities repurchase transaction in
relation to the scheme, except where —
(i) the securities lending transaction or securities
repurchase transaction (as the case may be) is carried out
for the sole purpose of efficient portfolio management;
and
Notice on Recommendations On Investment Products 36
(ii) the total value of securities subject to all the securities
lending transactions and securities repurchase
transactions entered into by the manager does not
exceed 50% of the net asset value of the scheme at any
time,
and the manager complies with the requirement;
(b) the product summary as prescribed in Appendix A of the Notice
on Investment-Linked Policies [MAS Notice 307] require that
the manager of the ILP sub-fund must —
(i) invest the property of the ILP sub-fund only in one or
more of the following:
(A) deposits as defined in section 4B(4) of the
Banking Act (Cap. 19);
(B) gold certificates, gold savings accounts or
physical gold;
(C) any investment product mentioned in paragraph
1(a) to (d);
(D) any product, instrument, contract or arrangement
(other than the investment products mentioned in
paragraph 1(a) to (d)) if the investment in such
product, instrument, contract or arrangement is
solely for the purpose of hedging or efficient
portfolio management; or
(ii) invest the property of the ILP sub-fund as follows:
(A) only in one or more products, instruments,
contracts or arrangements mentioned in sub-
paragraph (i); but
(B) may invest in some other product, instrument,
contract or arrangement if —
(BA) there is any change in any written law,
regulation, direction, rule or non-statutory
instrument of the jurisdiction where the
scheme is constituted, operating or
investing; and
Notice on Recommendations On Investment Products 37
(BB) following such change, the manager is
restricted or prohibited from investing in
any of the products, instruments, contracts
or arrangements mentioned in sub-
paragraph (i),
and, in the case of either sub-paragraph (i) or (ii), the manager
invests the property of the ILP sub-fund only in one or more of
the products, instruments, contracts or arrangements mentioned
in sub-paragraph (i).
[FAA-N16 (Amendment No. 2) 2018]

3. Where, under paragraph 2, the manager of the ILP sub-fund invests the
property of the ILP sub-fund in any product, instrument, contract or
arrangement not mentioned in paragraph 2(b)(i), whether or not in
accordance with a requirement mentioned in paragraph 2(b)(ii)(B), then the
unit in the ILP sub-fund ceases to be an Excluded Investment Product with
effect from the date of the investment.
[FAA-N16 (Amendment No. 2) 2018]
Notice on Recommendations On Investment Products 38

ANNEX 2 – CRITERIA FOR THE SATISFACTION OF THE

CUSTOMER KNOWLEDGE ASSESSMENT

1. A client who satisfies any of the following may be assessed as

possessing the knowledge or experience in an unlisted Specified
Investment Product for the purpose of the satisfaction of the Customer
Knowledge Assessment in the Specified Investment Product
concerned:

(a) The client holds a diploma or has higher qualifications in

accountancy, actuarial science, business/business
administration/business management/business studies, capital
markets, commerce, economics, finance, financial engineering,
financial planning, computational finance and insurance;

(b) The client has a professional finance-related qualification2;

(c) The client has invested in the following unlisted Specified

Investment Products:

(i) For transactions in collective investment schemes

(referred to as “CIS”) and investment-linked policies
(referred to as “ILPs”), the client has transacted in CIS or
ILPs at least 6 times in the preceding 3 years; or

(ii) For transactions in unlisted Specified Investment Products

(other than CIS and ILPs), the client has transacted in any
unlisted Specified Investment Products (other than CIS
and ILPs) at least 6 times in the preceding 3 years;

2
Examples of this would include the:
- Chartered Financial Analyst Examination conducted by the CFA Institute, USA;
- Association of Chartered Certified Accountants (ACCA) Qualifications;
- Associate Wealth Planner or Certified Financial Planner by the Certified Financial Planners Board of
Standards, USA;
- Certified Financial Risk Manager Programme by the Global Association of Risk Professionals, USA;
- Chartered Alternative Investment Analyst Examination conducted by the Chartered Alternative
Investment Analyst Association, USA; or
- Chartered Financial Consultant by the American College, USA.
Notice on Recommendations On Investment Products 39

(d) The client has a minimum of 3 consecutive years of working

experience3 in the past 10 years in the development of,
structuring of, management of, sale of, trading of, research on
and analysis of investment products or the provision of training
in investment products. Work experience in accountancy,
actuarial science, treasury or financial risk management
activities will also be considered relevant experience.

2. Where a client is assessed to not possess knowledge or experience in

an unlisted Specified Investment Product, but subsequently
demonstrates sufficient understanding of the features and risks of that
Specified Investment Product through a learning module provided by
an independent body as set out in the Practice Note on
Recommendations on Investment Products [FAA PN-02], the client
may be deemed to possess the knowledge to transact in that unlisted
Specified Investment Product.
[FAA-N16 (Amendment) 2011]
[FAA-N16 (Amendment) 2012]
[FAA-N16 (Amendment No. 2) 2018]

3 Such working experience would also include the provision of legal advice or possession of legal
expertise on the relevant areas listed in limb (d).
Notice on Recommendations On Investment Products 40

ANNEX 3 – CRITERIA FOR THE ASSESSMENT OF A CUSTOMER

ACCOUNT REVIEW

1. A client who satisfies any of the following may be assessed as

possessing the knowledge or experience in derivatives for the
satisfaction of the Customer Account Review in the Specified
Investment Product concerned:

(a) the client holds a diploma or has higher qualifications in

accountancy, actuarial science, business/business
administration/business management/business studies, capital
markets, commerce, economics, finance, financial engineering,
financial planning, computational finance and insurance;

(b) the client has a professional finance-related qualification4;

(c) the client has transacted in Listed Specified Investment

Products at least 6 times in the preceding 3 years; or

(d) the client has a minimum of 3 consecutive years of working

experience5 in the past 10 years, in the development of,
structuring of, management of, sale of, trading of, research on
or analysis of investment products6, or the provision of training
in investment products. Work experience in accountancy,
actuarial science, treasury or financial risk management
activities will also be considered relevant experience.

4
Examples of this would include the:
- Chartered Financial Analyst Examination conducted by the CFA Institute, USA;
- Association of Chartered Certified Accountants (ACCA) Qualifications;
- Associate Wealth Planner or Certified Financial Planner by the Certified Financial Planners Board of
Standards, USA;
- Certified Financial Risk Manager Programme by the Global Association of Risk Professionals, USA;
- Chartered Alternative Investment Analyst Examination conducted by the Chartered Alternative
Investment Analyst Association, USA; or
- Chartered Financial Consultant by the American College, USA.
5
Such working experience would also include the provision of legal advice or possession of legal expertise
on the relevant areas listed in limb (d).
6
As defined in section 2 of the Financial Advisers Act (Cap. 110).
Notice on Recommendations On Investment Products 41

2. Where a client is assessed to not possess knowledge or experience in

derivatives, but subsequently demonstrates sufficient understanding
of the features and risks of derivatives through a learning module
provided by an independent body as set out in the Practice Note on
the Sale of Investment Products [SFA PN-01], the client may be
deemed to possess the knowledge to transact in Listed Specified
Investment Products.

[FAA-N16 (Amendment No. 3) 2018]

Notice on Recommendations On Investment Products 42

ANNEX 4 - RISK WARNING STATEMENT FOR OVERSEAS-

LISTED INVESTMENT PRODUCTS

OVERSEAS-LISTED INVESTMENT PRODUCTS

RISK WARNING

An overseas-listed investment product* is subject to the laws and

regulations of the jurisdiction it is listed in. Before you trade in an overseas-
listed investment product or authorise someone else to trade for you, you
should be aware of:

 The level of investor protection and safeguards that you are afforded
in the relevant foreign jurisdiction as the overseas-listed investment
product would operate under a different regulatory regime.
 The differences between the legal systems in the foreign jurisdiction
and Singapore that may affect your ability to recover your funds.
 The tax implications, currency risks, and additional transaction costs
that you may have to incur.
 The counterparty and correspondent broker risks that you are exposed
to.
 The political, economic and social developments that influence the
overseas markets you are investing in.

These and other risks may affect the value of your investment. You should
not invest in the product if you do not understand or are not comfortable
with such risks.

*An “overseas-listed investment product” in this statement refers to a

capital markets product that is approved in-principle for listing and
quotation only on, or listed for quotation or quoted only on, one or more
overseas exchange(s).

1. This statement is provided to you in accordance with paragraph 41C of

the Notice on Recommendations on Investment Products [FAA-N16].
Notice on Recommendations On Investment Products 43

2. This statement does not disclose all the risks and other significant
aspects of trading in an overseas-listed investment product. You should
undertake such transactions only if you understand and are comfortable
with the extent of your exposure to the risks.

3. You should carefully consider whether such trading is suitable for you
in light of your experience, objectives, risk appetite, financial resources
and other relevant circumstances. In considering whether to trade or to
authorise someone else to trade for you, you should be aware of the
following:

Differences in Regulatory Regimes

(a) Overseas markets may be subject to different regulations, and may

operate differently from approved exchanges in Singapore. For
example, there may be different rules providing for the safekeeping
of securities and monies held by custodian banks or depositories. This
may affect the level of safeguards in place to ensure proper
segregation and safekeeping of your investment products or monies
held overseas. There is also the risk of your investment products or
monies not being protected if the custodian has credit problems or
fails. Overseas markets may also have different periods for clearing
and settling transactions. These may affect the information available
to you regarding transaction prices and the time you have to settle
your trade on such overseas markets.

(b) Overseas markets may be subject to rules which may offer different
investor protection as compared to Singapore. Before you start to trade,
you should be fully aware of the types of redress available to you in
Singapore and other relevant jurisdictions, if any.

(c) Overseas-listed investment products may not be subject to the same

disclosure standards that apply to investment products listed for
quotation or quoted on an approved exchange in Singapore. Where
disclosure is made, differences in accounting, auditing and financial
reporting standards may also affect the quality and comparability of
information provided. It may also be more difficult to locate up-to-date
information, and the information published may only be available in a
foreign language.
Notice on Recommendations On Investment Products 44

Differences in legal systems

(d) In some countries, legal concepts which are practiced in mature legal
systems may not be in place or may have yet to be tested in courts. This
would make it more difficult to predict with a degree of certainty the
outcome of judicial proceedings or even the quantum of damages
which may be awarded following a successful claim.

(e) The Monetary Authority of Singapore will be unable to compel the

enforcement of the rules of the regulatory authorities or markets in
other jurisdictions where your transactions will be effected.

(f) The laws of some jurisdictions may prohibit or restrict the repatriation
of funds from such jurisdictions including capital, divestment
proceeds, profits, dividends and interest arising from investment in
such countries. Therefore, there is no guarantee that the funds you have
invested and the funds arising from your investment will be capable of
being remitted.

(g) Some jurisdictions may also restrict the amount or type of investment
products that foreign investors may trade. This can affect the liquidity
and prices of the overseas-listed investment products that you invest
in.

Different costs involved

(h) There may be tax implications of investing in an overseas-listed

investment product. For example, sale proceeds or the receipt of any
dividends and other income may be subject to tax levies, duties or
charges in the foreign country, in Singapore, or in both countries.

(i) Your investment return on foreign currency-denominated investment

products will be affected by exchange rate fluctuations where there is
a need to convert from the currency of denomination of the investment
products to another currency, or may be affected by exchange controls.

(j) You may have to pay additional costs such as fees and broker’s
commissions for transactions in overseas exchanges. In some
jurisdictions, you may also have to pay a premium to trade certain
Notice on Recommendations On Investment Products 45

listed investment products. Therefore, before you begin to trade, you

should obtain a clear explanation of all commissions, fees and other
charges for which you will be liable. These charges will affect your net
profit (if any) or increase your loss.

Counterparty and correspondent broker risks

(k) Transactions on overseas exchanges or overseas markets are generally

effected by your Singapore broker through the use of foreign brokers
who have trading and/or clearing rights on those exchanges. All
transactions that are executed upon your instructions with such
counterparties and correspondent brokers are dependent on their
respective due performance of their obligations. The insolvency or
default of such counterparties and correspondent brokers may lead to
positions being liquidated or closed out without your consent and/or
may result in difficulties in recovering your monies and assets held
overseas.

Political, Economic and Social Developments

(l) Overseas markets are influenced by the political, economic and social
developments in the foreign jurisdiction, which may be uncertain and
may increase the risk of investing in overseas-listed investment
products.

ACKNOWLEDGEMENT OF RECEIPT OF THIS RISK WARNING

STATEMENT

I acknowledge that I have received a copy of the Risk Warning Statement

and understand its contents.

Signature of customer:

Name of customer:

Date:

[FAA-N16 (Amendment No. 3) 2018]