This is with the view of facilitating greater efficiency in the provision of appropriate services by financial planners and financial advisers in response to consumer needs and demands as well as to pave the way for greater convergence in the financial planning industry. I would strongly encourage financial planners licensed by the Securities Commission to take advantage of the opportunity to apply for a financial adviser licence or become a financial adviser’s representative through this greenlane approval process and expand your current business scope. Some of the measures implemented earlier to promote the development of financial advisers include facilitating the transformation of the tied agency force into financial advisers’ representatives by allowing tied agents to continue receiving renewal commissions during the transition period of five years. These measures are indeed a reflection of Bank Negara Malaysia’s serious effort and commitment to continuously promote the development of financial advisers as a new distribution channel for financial products and services. Moving forward, the financial services intermediary sector which includes financial advisers, would be gradually deregulated and liberalized to pave the way for self-regulation with the expectation of continuous improvement in service standards. We believe that professional pride and aspiration of intermediaries such as financial advisers will provide the necessary self-discipline to ensure orderly development of the sector. In this regard, Bank Negara Malaysia and the Securities Commission are working together with key industry players in formulating a workable self-regulatory regime for the financial advisory and planning industries.

The progressive easing of underwriting standards that was needed to support housing demand could only persist as long as housing prices were rising rapidly. But for home prices to rise rapidly, underwriting standards had to be progressively relaxed in order to generate more buyers. When home prices began to slip beginning in 2006, the dynamic swung into reverse. The collateral values supporting borrowing and spending began to fall. As banks’ and other financial intermediaries’ credit losses began to mount, credit availability became impaired and this exacerbated the downward pressure on home prices and on borrowing and spending. Not only did households that had overextended themselves have to cut back; others also retrenched because they were also affected by declines in wealth and heightened uncertainty about the economic outlook and their job prospects. It is not surprising that the workout from the excesses of this type of boom would take a long time. Just as it took several years for the boom to begin and run its course, so it would take years, not months, for households and financial intermediaries to adjust their balance sheets and behavior to the new environment. Households had to raise their saving rates in order to rebuild their balance sheets. Financial intermediaries had to replenish their capital to replace losses via loan charge-offs and other credit impairments. Both adjustments would need to occur before the economy could grow rapidly.