RES5 — Rules, Ethics and Skills for Financial Advisory Services — Cheat Sheet

Chapter 4 · quick-revision digest · narrative, key figures & core facts

📖 Overview

🧭 Principles & frameworks

• Provisional representative - the four entry requirements — To be a provisional representative, an individual must satisfy all four entry requirements of FAA-N12 paragraph 1.6: be at least 21 years old; be in the process of relocating, or have relocated, to Singapore; possess at least three years of working experience relevant to the financial advisory service to be provided; and possess at least a Bachelor's degree or equivalent, or a professional qualification. — p. 4C-3
• Reportable misconduct - categories — A financial adviser must report to the MAS four types of representative misconduct: (a) acts involving fraud, dishonesty or similar offences; (b) inappropriate advice, misrepresentation or inadequate disclosure; (c) failure to satisfy the Fit and Proper Criteria (FSG-G01); and (d) other misconduct causing regulatory non-compliance or a serious breach of internal policy warranting demotion, suspension or termination. — p. 4D-2, 4D-3
• Non-sales KPIs - the four — The four non-sales key performance indicators are: KPI 1 - understanding a client's needs (sufficient fact-find); KPI 2 - suitability of product recommendations (reasonable basis); KPI 3 - adequacy of information disclosure; and KPI 4 - standards of professionalism and ethical conduct. — p. 4E-32, 4E-33
• Infraction - Category 1 vs 2 — The ISA unit classifies every infraction as Category 1 or Category 2: a Category 1 infraction is one that has a material impact on the client's interests or impinges on the fitness and propriety of the representative; any infraction that is not Category 1 is a Category 2 infraction. — p. 4E-15, 4E-16
• Representatives' grading table — Under the Representatives' Grading Table, the balanced scorecard grade is set by the percentage X (or number) of cases with infractions in a quarter: grade A (X<5%) gives 100% of specified variable income; B (5%-<10%) gives 75% to <100%; C (10%-<20%) gives 50% to <75%; D (20%-<30%) gives 25% to <50%; and E (X>=30%) gives 0% to <25%. — p. 4E-17
• Competency - minimum entry requirements — For an individual to be an appointed representative, the minimum entry requirements are that the individual is at least 21 years old and (subject to exemptions) holds a minimum academic qualification. — p. 4F-4

⏱️ Key figures, limits & deadlines

📅 Key dates

⚠️ Exam traps (commonly confused)

• Misconduct Report 14 days (N14) vs Sampling method-change notice 7 days (N20) vs Provisional rep validity 3 months (N12): Different clocks: file the Misconduct Report within 14 days of discovery; give 7 days' prior notice to change the sampling method; a provisional rep's appointment is valid up to 3 months from register entry.
• Category 1 infraction (material client impact / fitness) vs Category 2 infraction (everything else) vs One Cat 1 case forces grade E: A Category 1 infraction has material client impact or impinges on fitness and propriety; any other infraction is Category 2. Even a single Category 1 case forces balanced scorecard grade E (0% to <25%).
• Core CPD 6 hours vs Supplementary 24 hours (investment/life) vs Supplementary 10 hours (MRTA/group term): 6 Core CPD hours are additional to the supplementary hours; supplementary is 24 hours for general investment products/life policies but only 10 hours where limited to MRTA or group term life.
• s58(5) penalty (FAA-N14) vs s67(5) penalty (FAA-N26): Both written-direction penalties are identical in shape: a fine up to $25,000, plus up to $2,500 per day for a continuing offence. FAA-N14 cites s58(5); FAA-N26 cites s67(5).
• Provisional rep: 21 + 3 yrs experience + degree (N12) vs Appointed rep: 21 + academic qualification (N26): Both require age 21, but the provisional-rep entry (N12) adds relocation, 3 years' relevant experience and a Bachelor's degree/professional qualification, whereas the appointed-rep entry (N26) requires an A-Level/IB/diploma-level academic qualification.
• N20 balanced scorecard records: 5 years vs N26 representative register: 5 years from end of appointment year: Both retain for at least 5 years, but N20 runs from the record/assessment while N26 runs from the end of the calendar year in which the representative was appointed.
• Exempt person: 30 accredited investors per occasion vs Reps of exempt persons ride the same limit: The Reg 27(1)(d) exemption covers advice on investment products (other than life policies) to not more than 30 accredited investors on any occasion; representatives of exempt persons share the same boundary via s23B(1)(b).
• RES5 pass lapses after 3 years of non-use vs A Module 5 pass is a deemed RES5 pass: A pass in RES5 - including a Module 5 deemed pass - lapses if the individual does not commence, or re-commence within 3 years of cessation, providing FA services as an appointed representative. (Certain other deemed passes tied to OTC-derivatives/spot-FX carry a shorter 1-year re-commencement window.)

⭐ Core facts

The must-know propositions, distilled. See all 77 facts by topic →

• 'Introducing activity' means introducing any client to an introducee in relation to the provision of a financial advisory service by the introducee, optionally together with recording and forwarding the client's particulars (with the client's consent) and/or providing factual information to the client on investment products. — p. 4A-2
  ⚠ Introducing = connecting client to introducee + factual info only; NOT advising, recommending, marketing CIS or arranging life policies.

• A financial adviser engaging an introducer must institute adequate control systems and procedures to ensure the introducer's proper conduct, including ensuring the introducer does not get involved in providing any financial advisory service beyond carrying out introducing activities, and must ensure none of its employees or representatives arranges introducing activities with an introducer other than on the adviser's behalf. — p. 4A-3
  ⚠ Introducer must never stray into providing a financial advisory service - only introducing activities.

• A financial adviser must enter into a written agreement with the introducer that clearly spells out the scope of introducing activities to be carried out, and must monitor the introducer to ensure it operates within the terms and conditions of that agreement. — p. 4A-3
  ⚠ Written agreement (B1) is disapplied when the FA's OWN employees/reps introduce on its behalf.
• A financial adviser must require the introducer (or its own employee/representative acting as introducer) to disclose to all clients that, when carrying out introducing activities, the introducer is not permitted to give advice or recommendations on any investment product, market any collective investment scheme, or arrange any contract of insurance for life policies, other than to the extent of introducing activities. — p. 4A-3, 4A-5
  ⚠ The introducer must tell clients up front what it CANNOT do (no advice, no CIS marketing, no life-policy arranging).
• A financial adviser must ensure that the introducer (or its employee/representative acting as introducer) does not receive or deal with any client's money or property in relation to carrying out introducing activities. — p. 4A-4, 4A-6
  ⚠ Absolute bar - an introducer must not touch client money or property, with no consent or trust-account exception.
• A financial adviser must maintain a register of the introducers it appoints containing their names, places of business, contact numbers, business registration numbers (or, for individuals, identity card numbers), and dates of appointment and (where applicable) termination. — p. 4A-4
  ⚠ Register (B5) is disapplied when the FA's own employees/reps introduce on its behalf.

• For the purposes of FAA-N10, an 'exempt person' means a person exempted from holding a financial adviser's licence under Section 23(1)(f) of the FAA read with Regulation 27(1)(d) of the Financial Advisers Regulations. — p. 4B-2
  ⚠ This Notice's 'exempt person' is specifically the s23(1)(f) + Reg 27(1)(d) accredited-investor exemption.
• The exemption from holding a financial adviser's licence applies where advice is given on any investment product (other than life policies) to not more than 30 accredited investors on any occasion.30 accredited investors — p. 4B-2
  ⚠ 30 ACCREDITED investors, per OCCASION, products OTHER THAN life policies - each qualifier is a trap.
• An exempt person and its representatives must not represent, or cause to be represented, that it is licensed, regulated, supervised or registered by the MAS, whether verbally or in writing. — p. 4B-2
  ⚠ Cannot claim to be licensed, regulated, supervised OR registered by MAS - verbally or in writing.

• The principal must ensure that any individual proposed to be a provisional representative is at least 21 years old.21 years — p. 4C-3
  ⚠ Age 21 is one of four entry requirements - all four must be satisfied.
• The principal must ensure that any individual proposed to be a provisional representative possesses at least three years of working experience relevant to the type of financial advisory service he will provide.3 years — p. 4C-3
  ⚠ 3 years' RELEVANT experience - general work experience does not count.
• To be a provisional representative, an individual must satisfy all four entry requirements of FAA-N12 paragraph 1.6: be at least 21 years old; be in the process of relocating, or have relocated, to Singapore; possess at least three years of working experience relevant to the financial advisory service to be provided; and possess at least a Bachelor's degree or equivalent, or a professional qualification. — p. 4C-3
  ⚠ All four must be met, and CMFAS exams come AFTER entry (the point of the scheme) — do not confuse with the appointed-representative entry requirements (FAA-N26).

• The appointment of a provisional representative is valid for a period of up to three months from the date when the representative's name is entered into the public register of representatives as a provisional representative.3 months — p. 4C-4
  ⚠ 3 months runs from ENTRY IN THE PUBLIC REGISTER - not from relocation, notification or appointment.

• A financial adviser must report to the MAS four types of representative misconduct: (a) acts involving fraud, dishonesty or similar offences; (b) inappropriate advice, misrepresentation or inadequate disclosure; (c) failure to satisfy the Fit and Proper Criteria (FSG-G01); and (d) other misconduct causing regulatory non-compliance or a serious breach of internal policy warranting demotion, suspension or termination. — p. 4D-2, 4D-3
  ⚠ Four categories: fraud/dishonesty; bad advice/misrepresentation/non-disclosure; fit-and-proper failure; other serious misconduct.
• A financial adviser must submit the Misconduct Report (Appendix 1 of FAA-N14) to the MAS through MASNET not later than 14 days after its discovery of the misconduct.14 days — p. 4D-3
  ⚠ 14 days from DISCOVERY (not from when the act occurred), lodged via MASNET.

• Under Section 58(5) of the FAA, a person who contravenes a requirement in a written direction issued by the Authority (which includes this Notice) is guilty of an offence and liable on conviction to a fine not exceeding $25,000 and, for a continuing offence, a further fine not exceeding $2,500 for every day the offence continues after conviction.25000 SGD — p. 4D-5
  ⚠ $25,000 + up to $2,500/day continuing - the same shape as the s67(5) penalty in FAA-N26.

• Notice FAA-N20 is issued under Sections 38, 39 and 58 of the FAA and requires all licensed and exempt financial advisers to put in place, in their remuneration structures for representatives and supervisors, a balanced scorecard framework and an independent sales audit (ISA) unit. — p. 4E-3
  ⚠ Two mandatory limbs: the balanced scorecard framework AND the independent sales audit (ISA) unit.

• A financial adviser's ISA unit must comprise persons who are independent of the financial advisory services unit, do not directly or indirectly supervise or manage any representative, and are competent to review and assess the quality of financial advisory services against the non-sales KPIs and to determine whether infractions have been committed. — p. 4E-7
  ⚠ ISA unit = independent + not a supervisor of reps + competent to judge quality. All three.

• For the first round of post-transaction checks, the ISA unit must sample a minimum of 10% of the sampling population for a selected representative, 2% for a representative dealing only in rollovers of dual currency investments or structured notes (equities/commodities), and 5% for any other representative. — p. 4E-12
  ⚠ First round: 10% selected rep, 5% ordinary rep, 2% rollover-only rep.
• A financial adviser must apply the same method of determining the sampling population across all representatives and from quarter to quarter, and if it intends to vary the method it must notify the Authority in writing of the reason at least seven days prior to effecting the change.7 days — p. 4E-11
  ⚠ 7 days' PRIOR written notice to MAS to change the sampling method - not 14, and not after the fact.

• The ISA unit classifies every infraction as Category 1 or Category 2: a Category 1 infraction is one that has a material impact on the client's interests or impinges on the fitness and propriety of the representative; any infraction that is not Category 1 is a Category 2 infraction. — p. 4E-15, 4E-16
  ⚠ Category 1 = material client impact OR fitness-and-propriety issue; everything else is Category 2.

• Under the Representatives' Grading Table, the balanced scorecard grade is set by the percentage X (or number) of cases with infractions in a quarter: grade A (X<5%) gives 100% of specified variable income; B (5%-<10%) gives 75% to <100%; C (10%-<20%) gives 50% to <75%; D (20%-<30%) gives 25% to <50%; and E (X>=30%) gives 0% to <25%. — p. 4E-17
  ⚠ A<5%->100%; B 5-<10%->75-<100%; C 10-<20%->50-<75%; D 20-<30%->25-<50%; E >=30%->0-<25%.
• A representative is assigned grade E, entitling him to only 0% to less than 25% of his specified variable income, if he has one or more cases with a Category 1 infraction, regardless of the percentage of cases with infractions. — p. 4E-16, 4E-17
  ⚠ Even ONE Category 1 case => grade E, whatever the infraction percentage.

• Where a representative is remunerated by variable income only, the financial adviser measures only 60% of that variable income against the non-sales KPIs; where the representative is on a fixed salary plus a variable income component, all of the variable income is measured against the non-sales KPIs.60 % — p. 4E-9
  ⚠ 60% measured for variable-ONLY reps; ALL variable income measured when there is also a fixed salary.
• A financial adviser must keep records of its balanced scorecard processes, assessments and determinations for at least five years, and must maintain for at least five years a register of all representatives who provide financial advisory services only in rollovers of dual currency investments or structured notes.5 years — p. 4E-28
  ⚠ At least 5 years for balanced scorecard records and the rollover-only rep register.

• The four non-sales key performance indicators are: KPI 1 - understanding a client's needs (sufficient fact-find); KPI 2 - suitability of product recommendations (reasonable basis); KPI 3 - adequacy of information disclosure; and KPI 4 - standards of professionalism and ethical conduct. — p. 4E-32, 4E-33
  ⚠ All four KPIs are NON-sales: needs, suitability, disclosure, professionalism - never sales volume.

• Notice FAA-N26 is issued under Sections 23(2) and 67 of the FAA, takes effect from 1 April 2024, and cancels the earlier Notice FAA-N13 on the same subject with effect from 1 April 2024.2024-04-01 — p. 4F-2
  ⚠ From 1 Apr 2024 FAA-N26 REPLACES (cancels) the old competency Notice FAA-N13.

• For an individual to be an appointed representative, the minimum entry requirements are that the individual is at least 21 years old and (subject to exemptions) holds a minimum academic qualification.21 years — p. 4F-4
  ⚠ Age 21 + a minimum academic qualification (unless an exemption applies).

• The minimum examination requirements for an appointed representative are a valid pass in RES5 and a valid pass in the relevant product-knowledge CMFAS Exam modules, depending on the type of financial advisory service and the products concerned. — p. 4F-7
  ⚠ RES5 (rules/ethics) PLUS the product-knowledge modules relevant to what you advise on.

• A pass in RES5 ceases to be valid if the individual did not commence providing financial advisory services as an appointed representative within three years after passing, or ceased and did not re-commence such services as an appointed representative within three years after cessation.3 years — p. 4F-13
  ⚠ RES5 pass lapses if not used (commence or re-commence) within 3 years.

• Every appointed representative must undergo continuing professional development (CPD) training relevant to the financial advisory services he provides and obtain and retain supporting evidence that he has completed the minimum CPD hours within the stipulated period. — p. 4F-15
  ⚠ CPD must be RELEVANT and evidenced; the representative keeps the proof.
• By the end of each calendar year (apart from the first year of first appointment), an appointed representative of the same principal for the whole year must complete a minimum of 6 Core CPD hours (in ethics or rules and regulations accredited by IBF/SCI, or a CPF-related course) plus the supplementary CPD hours specified in Table 3.6 hours — p. 4F-16
  ⚠ 6 CORE hours (ethics/rules or CPF) are ON TOP of the supplementary hours - not the total.
• The minimum supplementary CPD requirement is 24 hours for a representative advising on or arranging investment products or life policies, other than mortgage reducing term assurance (MRTA) or group term life policies.24 hours — p. 4F-16
  ⚠ 24 supplementary hours for general investment products/life policies; MRTA/group term is only 10.

• A financial adviser must certify that each appointed representative meets the minimum entry requirements, ensure each meets the CMFAS Exam requirements before commencing any type of financial advisory service, and ensure each meets the CPD requirements within the stipulated period. — p. 4F-21
  ⚠ Exam requirements must be met BEFORE the representative commences any financial advisory service.
• A financial adviser must maintain a register for each appointed representative (recording services provided, academic qualifications, examination fulfilment or exemptions, and CPD evidence) and must keep those records for at least five years from the end of the calendar year in which the representative was appointed.5 years — p. 4F-22
  ⚠ 5 years from the END OF THE CALENDAR YEAR of appointment - not from cessation.

Quick-revision digest · All 77 facts by topic → · source-linked; verify against the study text before exam use.