The newly introduced Suitability Assessment Form and Product Highlights Sheet are a boon to the industry and especially to prospective investors. Both documents allow clients greater access to quality product information to help them make informed investment decisions.

Unit Trust Consultants ("UTC") will find the thorough questions on the Suitability Assessment Form of use to understand the client's investment objectives, horizons and risk tolerance. No more guessing games as the UTCs will be able to confidently and easily recommend products that suit their clients.

We have simplified and highlighted the key benefits of both documents in this issue. We must say that the new measure is efficient, structured and most importantly transparent.

Lastly, we would like to wish a Selamat Hari Raya to all Muslims. May you and your loved ones be blessed with peace and joy this festive season.

Yours truly,
Judy Yap
Director, Brand & Communications.

Guidelines to protect investors and Unit Trust Consultants ("UTC")

Earlier this year, the Securities Commission Malaysia ("SC") introduced the new Guidelines on Sales Practices of Unlisted Capital Market Products. With this introduction, UTCs must provide the Product Highlights Sheet ("PHS") at the point of sale. In addition, it is also the mandatory for investors to be provided with a Suitability Assessment ("SA") Form.

The new measure is part of the bigger picture of the Capital Markets and Services (Amendment) Act 2012 that came into effect end of last year to protect prospective investors and grant them access to pertinent information for them to be able to make informed investment decisions.

The PHS provides an opportunity to prospective investors to obtain the relevant information and make comparisons of the different products on offer. It must be pointed out that the PHS differs from a prospectus as it contains only the key information of the product. They include:
  • Product description;
  • Key characteristics of the product;
  • Risks associated;
  • Fees and charges; and
  • Means of exiting the investment.
Importantly, UTCs will also have a better understanding of the client's needs. The SA Form lists comprehensive questions such as objectives and goals for investing, investment horizon, and risk tolerance. This offers an insight to the UTCs for them to recommend products that are most suitable to their client's requirements and circumstances.

Both the prospective investors and UTCs must co-sign the SA Form at the point of sale. The SA form ensures that the rights and interests of the investors and consultants are protected and fair treatment given to both parties.

The SC hopes its new measures and guidelines will expand accountabilities to avoid sales practices such as verbal guarantees of large returns, non-disclosure of the fund's risks or improper and conflicting advice to clients. Besides, investors can always request for the PHS and the prospectus from the UTC, in order to have all the information about the product.

This new measure also protects the UTC's integrity, strengthens governance and enhances product regulation to manage risks. Prospective clients can rest assured as UTCs are accountable and trust that they will act only in your best investment interest.



Source:
Securities Commission Malaysia, FAQ
Securities Commission Malaysia, Capital market laws amended to drive innovation and promote market efficiency, (January 2, 2013)

      

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