Kuala Lumpur, Oct 31 – Bank Negara Malaysia will make an announcement soon on revised minimum entry requirements for financial advisory business, Assistant Governor Jessica Chew Cheng Lian said today.
She said the central bank has identified a number of strategic priorities to further develop the full potential of the financial advisory industry to deliver better outcomes to consumers and to increase the level of insurance penetration in Malaysia.
“The bank is also currently working on measures to create a more level-playing field with respect to product offerings among insurance intermediaries,” she said in her keynote address at the Second Annual Conference of the Association of Financial Advisers.
Chew said the bank together with the Securities Commission will continue to coordinate closely in facilitating the ability of financial advisers and financial planners to provide advice on a broad range of financial solutions.
In this respect, further enhancements are expected to be made to regulatory processes to improve efficiency and further ease the regulatory burden on existing players, she said.
“Bank Negara will also improve the alignment between the interests of consumers and financial advisers as it believed how incentives are structured have an important role in shaping the quality of advice that a consumer receives.
“While there are current requirements for potential conflicts to be clearly disclosed to consumers, the effect of such disclosure in alerting consumers to consider how such conflicts may affect any advice received, and to temper their decisions appropriately, may not be adequate to resolve the inherent conflicts that are created when a financial adviser is compensated by product providers.
“At the same time, the vast majority of Malaysian consumers are not currently accustomed to paying directly for advice.
“In moving towards a better alignment of interests, there is an opportunity for fee-based business models to gain more traction, with financial advisers doing more — individually and collectively as an association — to explain how they add value through the advice that they give,” Chew said.
Earlier, at the Second Annual Conference of the Association of Financial Advisers, its President Alfred Sek said the association wants Bank Negara Malaysia and the Securities Commission to ease the strict entry qualifications for financial advisers to encourage more people to join the profession.
“Instead of focusing on degree holders with financial subjects, the regulators should also welcome those with related financial qualifications,” he said.