PETALING JAYA: The long-awaited single licensing framework for the local financial advisory services, similar to that of Singapore, is a step closer to fruition.
This comes on the heels of recent discussions between the regulators – Bank Negara and the Securities Commission (SC) – and the Association of Financial Advisers (AFA) following earlier talks held with other relevant parties early this year.
“There are about 280 licensed financial adviser representatives in 18 financial advisory firms in the country to serve a population of 30 million.
“In Singapore, there are more than 3,000 financial advisers to serve a population of 5.4 million.
“Using the same ratio, Malaysia should have about 17,000 financial advisers. The move to have a single licence bodes well for the industry,” an industry observer told StarBiz.
Besides reducing the hassle to apply for separate licences, the move could also help cushion the ballooning household debt situation in Malaysia, which is one of the highest in Asia-Pacific, as it would promote growth in the financial planning industry and help customers to plan their financial needs more effectively.
Malaysia’s household debt-to-gross domestic product ratio stood at 86.8% last year.
Besides providing financial planning services, financial advisers and planners are also licensed to advise on insurance products and unit trusts.
Financial advisers, as intermediaries, came into the scene in 2005 and are currently regulated by the Financial Services Act (FSA) and Islamic Financial Services Act (IFSA).
“It appears that the regulators are keen to streamline the single licensing framework for the financial advisory services in the country.
“This will help reduce cost and the hassle of applying for two separate licences for insurance and investment consultations from the central bank and SC respectively,” an industry player added.
The framework, upon implementation, would be jointly regulated by the central bank and the SC.
The central bank and the SC had in 2012 entered into a memorandum of understanding to enhance joint regulatory oversight in a few areas, including the field of financial planners and financial advisers.
In Singapore for example, financial advisory services carried out by financial advisers are regulated by the Monetary Authority of Singapore and industry observers feels the way forward for the local market here will be to have a single licence as in other jurisdictions.
Two eminent measures pertaining to financial advisory and financial planning came into effect this month.
To address current talent shortage in the financial planning and advisory business, AFA president Alfred Sek said the central bank had expanded the list of qualifications to become a financial adviser (under the FSA) and financial planner (under the Capital Markets and Services Act).
According to Sek, the revised regulatory requirements will not lead to a compromise in the quality of advice given to consumers.
On another matter, Sek pointed out that the SC and the central bank had reduced the paid-up capital and shareholders funds from RM100,000 each to RM50,000 for the holders of the capital market service licence dealing in financial planning or private retirement schemes or for an approved financial adviser.
AFA is also collaborating with the central bank to come up with a financial adviser handbook to help financial consumers to be better informed about the role of financial advisers.
Already a subscriber? Log in
Get 20% OFF The Star Digital Access
Cancel anytime. Ad-free. Unlimited access with perks.
