In the ever-evolving landscape of capital markets services, staying abreast of regulatory changes is crucial for professionals aiming to provide top-notch service. After 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, the Monetary Authority of Singapore (MAS) have decided to revise 2 Notices under the Securities and Futures Act 2001 (SFA) and Financial Advisers Act 2001 (FAA) respectively which will take effect on the 1^st of April 2024. These amendments are intended to ensure that companies fulfil their responsibilities and oversee that designated representatives engage in structured continuous professional development training (CPD) to maintain their suitability and adhere to minimum entry and examination standards. In this article, we will explore the key facets of the 2 Notices as mentioned below, shedding light on the implications and steps representatives need to take.

What are the 2 Revised Notices?

• 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 does this Notice apply to?

SFA04-N22 applies to:

1. Holders of a capital markets service license, other than 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)

FAA-N26 applies to:

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
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 ought to pass the RES3 and CM-EIP modules (excluded investment products), unless exempted.  [	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.
The revised notice will provide an exemption for CPD requirements from representatives who only serve accredited investors, institutional investors and/or expert investors as well.	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’ will apply to exempt private banking representatives from specialized units serving high net worth individuals from having to meet the minimum academic requirements laid down in section 100(2) of the Financial Adviser’s Act (FAA).
	Advisory representatives will be exempted from the CMFAS if they service only accredited investors, conduct dealing activities that are incidental to their provision of financial advisory services and if they have passed (or exempted) the Client Advisory Competency Standards (CACS) examination.
	An appointed representative providing the financial advisory services to accredited and institutional investors are exempted from CPD training and the CMFAS examinations.

Steps to take

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. Licensed Financial Advisers must ensure that in the event they have been informed of an appointed representative being unable to attend or complete their CPD  hours, the onus is on the Licensed Financial Advisory firm to ensure that the appointed representative fulfills the requirements within 12 months of the appointed representative being aware of their inability to fulfil their requirements. Moreover, Licensed Financial Advisers are required to maintain a register to keep records for each of its appointed representatives. This register must be maintained for at least 5 years from the end of the calendar year in which the appointed representative was appointed by the Licensed Financial Adviser.

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

In accordance to Notice SFA 04-N22,,a holder of a Capital Markets Service License or an Exempt Financial Institution must maintain a register stating:

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. 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 the Notice FAA-N26, the register prescribed under the Notice SFA 04-N22 must be maintained for at least 5 years after the end of the calendar year in which the Appointed Representative is appointed by the principal. 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 allow its representatives who are subject to the CMFAS Exam Requirements to commence carrying out any regulated activity unless they have passed the applicable modules of the CMFAS Exam.

Moreover, even if an Accredited/Institutional Investor Licensed Fund Management Company (A/I LFMC) is not regulatorily required to carry out ongoing training as per the notice, they can adopt best practices internally such as:

• To ensure that regular training is provided to employees on the competencies required for their roles, 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.

Things to take note of:

• In the revised notice, the exemption of CPD requirements extends to LFMCs that serve not only Accredited and Institutional Investors but also extends to include LFMCs that serve Expert Investors which was not included in the previous notice. In the revised notice, Capital Markets Service License holders who serve Accredited and Institutional Investors are also exempted 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 module CM-CMP (Capital Markets- Capital Market Products) in lieu of the module CM-EIP or CMSIP(Capital Markets- Specified Investment Products), or both modules and in terms of CPD hours, an individual will have to complete 6 hours of Core CPD and 3 hours of Supplementary CPD hours.

Non- compliance

Any person who fails to comply with any requirements specified in a written direction issued by the Authority shall be found guilty, carrying the potential for substantial fines and reprimands. Such consequences can significantly impact both the regulated entity and the individuals involved.

How can we help?

Our team based in Singapore offers regulatory and compliance support to organizations aiming to comply with MAS requirements across different regulatory areas, including the competency levels of appointed representatives. Contact us to ensure that your compliance training frameworks are up to date and in accordance to the recent updates imposed by the regulators.