In the ever-evolving landscape of capital markets services, staying abreast of regulatory changes is crucial for professionals aiming to provide top-notch service. This follows the Consultation Paper on Draft Notices on the Competency Requirements for Representatives Conducting Regulated Activities under the Financial Advisers Act and Securities and Futures Act. As a result, the Monetary Authority of Singapore (MAS) has decided to revise 2 Notices — one under the Securities and Futures Act 2001 (SFA) and one under the Financial Advisers Act 2001 (FAA) — which take effect on 1 April 2024. These changes to the competency requirements for representatives apply across both capital markets services and financial advisory activities.

What are the Revised Competency Requirements for Representatives?

• • Notice SFA04-N22 Competency Requirements for Representatives of Holders of Capital Markets Services License and Exempt Financial Institutions (SFA04-N22)

• • Notice FAA-N26 Competency Requirements for Representatives of Financial Advisers (FAA-N26)

Who Do the Competency Requirements for Representatives Apply To?

Understanding the competency requirements for representatives starts with knowing who each Notice covers.

SFA04-N22 applies to:

1. 1. Holders of a capital markets service license, other than venture capital fund managers;

1. 1. Exempt financial institutions;

1. 1. Individuals who intend to be appointed representatives of (a) or (b); and

1. 1. Existing appointed representatives of (a) or (b)

FAA-N26 applies to:

1. 1. Licensed financial advisers;

1. 1. Exempted financial advisers;

1. 1. Individuals who intend to be appointed representatives of (a) or (b); and

1. 1. Existing appointed representatives of (a) or (b)

Main amendments and exemptions to  Notice SFA 04-N22 and Notice FAA-N26.

Notice SFA 04-N22	Notice FAA-N26
The introduction of ethics and skills into the Capital Markets and Financial Advisory Services Examination(CFMAS)Exams as part of the Rules, Ethics and Skills (RES) Module.	The introduction of ethics and skills into the CMFAS Exams as part of the RES Module.
Customization of RES module content to cater to representatives engaged in trading on specific securities and derivatives exchanges.	Customization of RES module content to cater to representatives engaged in trading on specific securities and derivatives exchanges.
Retail Licensed Fund Management companies (LFMC) representatives who market collective investment schemes must pass the RES3 and CM-EIP modules (excluded investment products). Exemptions may apply.	Training hours to receive the Institute of Banking and Finance (IBF) certification will be counted as CPD hours. This applies to appointed representatives under the SFA and the FAA for the same principal.
Additionally, the revised notice exempts representatives who serve only accredited, institutional, and/or expert investors from CPD requirements.	Training hours conducted by the Central Provident Fund (CPF) will be counted as CPD hours. This applies to appointed representatives under the SFA and the FAA for the same principal.
	If a Licensed Fund Management company (LFMC) representative markets collective investment schemes and provides financial advisory services, they must pass the RES5 and relevant product knowledge module.
	The ‘Grandfathering exemption’ applies to private banking representatives from specialized units serving high net worth individuals. It exempts them from the minimum academic requirements under section 100(2) of the Financial Advisers Act (FAA).
	Advisory representatives can skip the CMFAS if they service only accredited investors, conduct dealing activities incidental to their financial advisory services, and have passed (or been exempted from) the Client Advisory Competency Standards (CACS) examination.
	The notice exempts an appointed representative providing financial advisory services to accredited and institutional investors from CPD training and the CMFAS examinations.

Steps to Meet the Competency Requirements for Representatives

Notice FAA-N26

The Licensed Financial Adviser has the responsibility to ensure that their appointed representatives have fulfilled the requirements set out in Notice FAA-N26. If a Licensed Financial Adviser learns that an appointed representative cannot attend or complete their CPD hours, the firm becomes responsible for ensuring compliance. The representative must then fulfil the requirements within 12 months of becoming aware of the shortfall. Moreover, Licensed Financial Advisers must maintain a register recording each appointed representative. They must keep this register for at least 5 years from the end of the calendar year in which they appointed the representative.

The Licensed Financial Adviser must keep on record:

• • the type of financial advisory services provided by the representative;

• • details of the representative’s academic qualifications and how he or she has met the minimum academic requirement set out in Part 3 of this Notice;

• • details of the representative’s fulfilment of the relevant minimum examination requirements set out in Part 4 of the Notice, or its exemptions; and

• • supporting evidence that the representative has completed the minimum hours of CPD training under Part 5 of this Notice, within the stipulated period

 Notice SFA 04-N22

Under Notice SFA 04-N22, a holder of a Capital Markets Service License or Exempt Financial Institution must maintain a register that states:

1. 1. whether its representatives are subject to the CMFAS Exam Requirements relevant to the regulated activities of the representatives.

1. 1. type of regulated activities conducted by the representative.

1. 1. the date on which its representative completed the examination.

1. 1. in respect of such representative who is not required to pass certain modules of the CMFAS Exam under this Notice, to state the details thereof, if any

Like Notice FAA-N26, the register under Notice SFA 04-N22 must be kept for at least 5 years after the end of the calendar year in which the principal appointed the representative. In addition to that, a holder of the Capital Market Service License or Exempt Financial Institution must certify and ensure that its representatives comply with the CMFAS Exam Requirements set out in this Notice. Furthermore, a holder of a Capital Markets Service License or exempt financial institution must not let representatives subject to the CMFAS Exam Requirements begin any regulated activity. They must first pass the applicable CMFAS Exam modules.

Best Practices for Exempt Fund Management Companies

Even if an Accredited/Institutional Investor Licensed Fund Management Company (A/I LFMC) is not required to carry out ongoing training under the notice, it can adopt these best practices internally:

• • To ensure the company provides regular training to employees on the competencies their roles require, the risk implications of their activities, and standards of proper conduct;

• • An employee’s technical knowledge, skills, expertise and changes in the markets and regulations are taken into account;

• • Employee training needs are assessed at the outset and at regular intervals or when their role changes; and

• • To ensure that employees undertake sufficient training during each year to meet these conditions.

Key Notes on the Competency Requirements for Representatives

• • Notably, the revised notice extends the CPD exemption beyond Accredited and Institutional Investors to also cover LFMCs that serve Expert Investors — a category the previous notice did not include. The revised notice also exempts Capital Markets Service License holders serving Accredited and Institutional Investors from the CMFAS examinations.

• • An appointed representative from an exempt financial advisor providing financial advisory services to accredited and institutional investors are exempted from CPD training and the CMFAS examinations continuing from the earlier notice.

• • For a Capital Markets Service License Holder dealing in Capital Market Products, an individual may pass the CM-CMP module (Capital Markets – Capital Market Products) instead of CM-EIP or CMSIP (Capital Markets – Specified Investment Products), or both. For CPD hours, the individual must complete 6 hours of Core CPD and 3 hours of Supplementary CPD.

Non- compliance

Anyone who fails to comply with the requirements the Authority specifies in a written direction is guilty of an offence, which can carry substantial fines and reprimands. Failure to meet the competency requirements for representatives outlined in either Notice can result in these consequences, significantly impacting both the regulated entity and the individuals involved. 

How Curia Regis Can help?

Our team based in Singapore offers regulatory and compliance support to organizations aiming to comply with MAS competency requirements for representatives across different regulatory areas. Contact us to ensure that your compliance training frameworks are up to date and in accordance to the recent updates imposed by the regulators, so your operational response stays seamless. You can reach us here or email admin@curiaregis.com to get in touch.