The capital markets services landscape continues to evolve, making it important for professionals to stay up to date with regulatory changes. Together, the changes follow MAS’ Consultation Paper on Draft Notices on competency requirements for representatives. The requirements cover regulated activities under the Financial Advisers Act and Securities and Futures Act.

As a result, the Monetary Authority of Singapore (MAS) revised two Notices. One falls under the Securities and Futures Act 2001 (SFA), while the other falls under the Financial Advisers Act 2001 (FAA).

The revised requirements took effect on 1 April 2024. They apply to representatives conducting 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?

First, it is important to understand who each Notice covers.

       To begin, SFA04-N22 applies to the following:

1. 1. Holders of a capital markets service licence, except venture capital fund managers;
   2. Exempt financial institutions;
   3. Individuals who intend to be appointed representatives of (a) or (b); and
   4. Existing appointed representatives of (a) or (b)

1. Similarly, FAA-N26 applies to the following:

1. 1. Licensed financial advisers;
   2. Exempted financial advisers;
   3. Individuals who intend to be appointed representatives of (a) or (b); and
   4. 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
Introduction 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.	Introduction The introduction of ethics and skills into the CMFAS Exams as part of the RES Module.
RES Module The RES module content is customised for representatives who trade on specific securities and derivatives exchanges.	RES Module The RES module content is customised for representatives who trade on specific securities and derivatives exchanges.
For example, Retail Licensed Fund Management Company (LFMC) representatives who market collective investment schemes must pass the RES3 and CM-EIP modules. However, exemptions may apply. In addition, the revised Notice exempts representatives who serve only accredited, institutional, and/or expert investors from CPD requirements.	Training hours for Institute of Banking and Finance (IBF) certification count towards CPD hours. This applies to appointed representatives under the SFA and 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 an 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 may be exempt from the CMFAS if they serve only accredited investors. They must also conduct dealing activities incidental to their advisory services. In addition, they must 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

Requirements Under Notice FAA-N26

Notice FAA-N26

Under Notice FAA-N26, the Licensed Financial Adviser must ensure that appointed representatives meet the applicable requirements. If, however, a representative cannot attend or complete the required CPD hours, the Licensed Financial Adviser must ensure that the representative fulfils the requirements within 12 months of identifying the shortfall.

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. In addition, they must keep this register for at least 5 years from the end of the calendar year in which they appointed the representative.

Records to Be Maintained Under FAA-N26

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 completed the minimum CPD hours under Part 5 of this Notice within the stipulated period.

Requirements Under Notice SFA04-N22

Notice SFA 04-N22

Under Notice SFA04-N22, a Capital Markets Services Licence holder or Exempt Financial Institution must maintain a register. The register must state:

1. 1. whether its representatives are subject to the CMFAS Exam Requirements relevant to the regulated activities of the representatives.
   2. type of regulated activities conducted by the representative.
   3. the date on which its representative completed the examination.
   4. details of any CMFAS modules that the representative is not required to pass under the Notice.

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SFA04-N22 Register and Examination Requirements

Similar to Notice FAA-N26, the principal must keep the register for at least five years after the end of the calendar year in which it appointed the representative. In addition, the holder of a Capital Markets Services Licence or Exempt Financial Institution must certify that its representatives comply with the CMFAS examination requirements under the Notice.

Furthermore, a Capital Markets Services Licence holder or Exempt Financial Institution must not allow representatives subject to the CMFAS Exam Requirements to begin regulated activities. They must first pass the applicable CMFAS Exam modules.

Best Practices for Exempt Fund Management Companies

Nevertheless, 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 the following best practices internally:

Recommended Internal Training Practices

• • Firstly, provide employees with regular training on the competencies required for their roles, the risks arising from their activities, and proper standards of conduct;

• • Secondly, 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 of an exempt financial adviser who provides financial advisory services to accredited and institutional investors remains exempt from CPD training and the CMFAS examinations under the revised 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

Representatives and regulated entities should ensure that they meet the applicable competency requirements.

Failure to comply with requirements specified by the Authority in a written direction may constitute an offence and may result in significant penalties. Non-compliance with the competency requirements under either Notice may therefore have consequences for 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 remain up to date with the latest regulatory requirements. This can help your organisation maintain an effective and consistent compliance process. You can reach us here or email admin@curiaregis.com to get in touch.