MAS will be putting out proposals for consultation next month. 44 Financial products have become more innovative and complex to cater to investors along a wider spectrum of financial sophistication and risk appetites. While this is good, it does mean we need to empower consumers to navigate this complexity, understand the riskreturn trade-offs, and compare and choose products most suitable to their financial objectives. 45 I will highlight three initiatives in this direction. •  Complexity-risk framework. MAS proposes to introduce a new tool to aid consumers in comparing inherent complexities and risks of investment products. •  Product highlight sheet (PHS). PHS requirements were first introduced in 2010 to govern sale and marketing of more complex investment products like asset-backed securities and structured notes. MAS is proposing to extend requirements for PHS to offers of equities, bonds, and hybrid securities. MAS has gathered feedback on the proposals and will announce our final decision soon. •  Web aggregator. MAS working closely with the industry and consumer groups to develop a web aggregator so consumers can compare term insurance, whole life, and endowment products. The online portal is targeted for roll-out in early 2015. 46 There are also initiatives to improve the quality of financial advice to consumers. The majority of retail investors obtain financial advice from and purchase investment products through financial advisory (FA) firms. Thus, it is critical that FA firms and their representatives offer quality financial advice to help consumers make appropriate financial decisions.

Shortly, the thrust of the design of these two exercises will be made public, although certain features are already known, such as the minimum capital ratio that will be required in the accounting review phase and which stands at 8% of common equity tier 1 capital (CET1), according to the definition established in the Community Regulations, including the envisaged timetable for the application of the various deductions. Evidently, the exercise aims to strengthen confidence in the European financial system through transparency and reinforcing the solvency of those banks that need it. Nonetheless, the Spanish experience, in particular that from the exercises performed in 2012 under the financial assistance programme, shows that the proper metric for measuring attainable credibility is not based on the estimated capital needs resulting from the exercise, but on the application of a sufficiently rigorous methodology enabling all potentially vulnerable segments of the European banking system to be evaluated consistently, particularly those whose reflection in the financial information published is of greater complexity. It is moreover important that, as announced in the public communiqué released, the measurements of capital made should be consistent with the regulatory framework in force which, in Europe, essentially comprises the recently enacted Community Directive and Regulation on capital requirements. BIS central bankers’ speeches  3  Thanks to the reform undertaken and the measures applied by banks, the Spanish banking system is, generally, in a reasonable position to face these exercises.