The Monetary Authority of Singapore (MAS) has enhanced requirements for advertisements and publications on capital markets products. The enhanced requirements also apply to advertisements by holders of capital markets services licences and by financial advisers. The new requirements will apply to advertisements and publications disseminated or published on or after 10 December 2018.
In general, the new requirements will apply to advertisements and publications targeted at retail investors. Where capital markets products, insurance products or financial advisory services are offered to non-retail investors pursuant to any licensing or prospectus exemptions, the new requirements on advertisements and publications will not apply to most of these cases.
Enhanced substantive requirements
In addition to the prior requirement that advertisements and publications not be false or misleading, the new requirements also stipulate that they must provide a fair and balanced view and present information in a clear manner. Detailed guidance as to what these general requirements entail is provided in schedules.
The guidance in the schedules states that an advertisement or publication would be false or misleading if it contains the following (among other things):
- Information that is inaccurate or inconsistent with the nature or risks of the products to which it relates;
- Any exaggerated statement which is calculated to exploit an individual’s lack of experience and knowledge; or
- A graph or chart that does not prominently disclose the limitations and difficulties in respect of the use of that graph or chart.
The guidance in the schedules also states that an advertisement or publication will not provide a fair and balanced view if, for example, it does any of the following (among other things):
- It contains a statement on the benefit of holding the advertised capital markets products but does not provide an unbiased description of the associated risks;
- It gives the impression that the investor can profit from investing in the advertised capital markets product without any risk; or
- It contains historical information on the advertised capital markets products but does not state that past performance is not indicative of future performance.
An advertisement does not present information in a clear manner if, for example, it contains jargon or technical terms but does not define or explain them in a manner that is easily understood by a reasonable person who may rely on the advertisement.
Enhanced requirements as to form
The new requirements specify minimum font sizes for the main text of the advertisement and for the footnotes to the main text. In general, footnotes need to be at least half the font size of the main text to which they refer.
The advertisement or publication must also state that it has not been reviewed by the MAS.
Enhanced process mandated for approval of the advertisement
Advertisements or publications must be approved by each member of senior management, who must each be satisfied that the advertisement or publication complies with the regulatory requirements. The reasons for satisfaction must be recorded in writing. Approval may be delegated to a committee or an individual to whom the same approval requirements will apply. If delegated to an individual, that individual must be unanimously appointed by all the members of senior management.
Advertisements directed at accredited or expert investors that must comply
As noted above, some advertisements even if directed at accredited or expert investors and not retail investors, will still need to comply with the enhanced requirements set out above. Advertisements for a financial adviser or an exempt financial adviser providing a financial advisory service on units in a collective investment scheme will need to comply with the above enhanced requirements even when they are directed at accredited investors or expert investors. Where they are about providing a financial advisory service on life policies, they will need to comply with the enhanced requirements even if they are directed at accredited investors.
Regulations and guidelines
The new requirements as discussed above have been set out in the following regulations and guidelines:
- Securities and Futures (Licensing and Conduct of Business) (Amendment) Regulations 2018;
- Securities and Futures (Offers of Investments) (Shares and Debentures) (Amendment) Regulations 2018;
- Securities and Futures (Offers of Investments) (Collective Investment Schemes) (Amendment) Regulations 2018;
- Securities and Futures (Offers of Investments) (Business Trusts) (No. 2) (Amendment) Regulations 2018;
- Financial Advisers (Amendment) Regulations 2018; and
- Guidelines on Maintaining Records of Approval for Advertisements or Publications.