For instance, MAS has set up our regulatory sandbox regime to facilitate testing and experimentation of cutting edge technology or innovative business models within defined parameters and duration. Certain sandbox participants benefit from caseby-case regulatory exemptions following our review. We are exploring the feasibility and scope for a more nimble and flexible regulatory approach; one that is modular and risk-appropriate or even an activities-based regulatory approach towards certain innovative business models, as opposed to a strictly entity-based regulatory framework. We are also devoting resources in our work on “SupTech” or Supervisory Technology. MAS has been beefing up our surveillance and analytical capabilities, including the setting up of a dedicated unit for SupTech within our Data Analytics Group. The aim is to transform our supervisory and market surveillance work to be more digital and effective, This will also allow MAS to be more effective in our supervisory engagement with each of your firms. In addition, we will be employing more advanced techniques such as network analysis, or text and voice analytics to support our investigation and enforcement actions. Conduct gaps Let me now cover my final remarks around conduct gaps. In an increasingly digital environment and as more Singaporeans become technology savvy, financial advisers should evolve to provide more holistic wealth and risk management advice. A successful transition will require maintaining a deep level of consumer trust that representatives will act in the best interest of their clients.

On the issue of trust, recent episodes of large-scale movement of representatives have cast the industry in an unfavourable light. Such mass recruitment of representatives by one firm gives rise to heightened market conduct risks, with respect to aggressive sales tactics and improper switching. MAS has worked closely with LIA on measures to address these risks and we will be issuing a public consultation soon to promote responsible recruitment practices in the financial advisory industry. Meanwhile, LIA members have agreed that they, as well as their Financial Advisory (FA) subsidiaries will go ahead to adopt a number of these measures. This is a positive step. Briefly, these measures include: (a) Capping a representative’s sales targets and sign-on incentives in the first year after the representative joins the new FA firm. This reduces the pressure on representatives to engage in 4/5  BIS central bankers' speeches  aggressive sales tactics to meet inflated sales targets; (b) Spreading sign-on incentives over a minimum period of 6 years, to create longer- term alignment between the representative and his new FA firm. This will foster better quality aftersales services to customers; (c) Reducing the entitlement to sign-on incentives if the persistency of the policies serviced by the representative at his previous firm falls below industry norms, to deter improper switching; and (d) Requiring the FA firm to undertake enhanced monitoring of its representative’s sales transactions to verify that the sales and advisory process has been properly conducted, which will include customer call-backs conducted by an independent external party.