The recent worries among our finfluencer blogosphere is that our posts or videos are in contravention of the Financial Advisers Act 2001 ("FAA") enacted by the Singapore Parliament. I think let's not mince our words here, given the crafting of the regulatory stipulations and Monetary Authority of Singapore ("MAS"), most bloggers and YouTubers can be interpreted to be giving out "financial advices" albeit all of us trying to argue that it is for education or entertainment purpose or just "ownself talking to ownself" online. Budget Babe has a good post here-"Finfluencers do NOT need to be licensed in Singapore" with regard to the above topic. Nevertheless, I think that there are some essential technical points that needs to be considered in greater details.
1. MAS stance on finfluencers is not entirely assuring as the wordings crafted are at quite high level thus subjected to various forms of interpretations.
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| Extract from MAS FAA FAQ No.12 |
If one is giving one's own opinion on a certain stock, then is this a financial advice? I do not think it is crystal clear based on the crafting. So let's discuss more on what are the activities that constitue financial advisory in point 2 below.
2.Type of activities regulated under the FAA- See FAQ 2 of FAA Frequently Asked Questions
(i) Bonds
A debt security that investors buy from a company, with the company returning the bond amount plus interest within an agreed-upon period.
(ii) Certificates of deposit
A debt security that requires regular interest payments and repayment of the principal amount.
(iii) Equity shares
A security that doesn't have a fixed maturity date, and when an investor owns a company stock, they become a partial owner of that company.
(iv) Convertible bonds and preference shares
Hybrid securities that combine features of both equity and debt securities.
(v) Unit Trusts/Mutual funds
An instrument that provides buyers with investment plans that involve less risk due to their diversified portfolio.
Note: For formal defintion of Securities, one can refer to Section 2(1) of the Securities and Futures Act 2001 from Singapore Statutes online.
If we further refer to MAS Guidelines on Provision of Financial Advisory Service Paragraph 3.1 (updated 10 July 2019), it mentioned that even if one expresses an opinion on the merits of buying, selling or holidng a particular product or a class of investment products, this will still be a financial advice.
Hence, most of the stuff we blogged about can arguably (to some extent) have some semblance under the activities regulated under the FAA. We can argue the other way till the cows come home to justify that it is purely "education or entertainment" but the fun fact remains that the definition crafted is not exactly clear cut explicit and we are still caught in it.
3. The 2 Stage Tests Prescribed by MAS in The Guidelines on Provision of Financial Advice and determination of whether a Blogger/You Tuber is giving out Financial Advice.
First and foremost, if the stipulation (in the context of our unique blogging scene) is ambigious and can be interpreted both ways, I need to emphasise again that then, it does not give assurance or comfort to any of us especially if we got hauled up to court. So there is no point being defensive about it. Instead, I think we can go straight to the 2nd stage of the "2 Stage Tests" prescribed by the MAS under the 2nd paragraph of FAQ 12 of the "FAA Frequently Asked Questions" as a litmus test to determine whether a blogger/You Tuber is giving out financial advice.
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| Extract from MAS FAA FAQ No.12 |
The second stage of the 2 Stage Tests is the one that I personally find it clearer with regard to whether one is caught under the FAA and requires a license to operate. This 2nd stage under Paragraph 3.8 to 3.9 of the "Guidelines on Provision of Financial Advisory Service" offers very detailed examples of whether a person is carrying on a business of providing financial advice:
3.1 Examples (Extracted from Para 3.8-3.9)- Scenario 1
X blogs as a hobby, and posts on wide-ranging topics including food and travel. He posts on finance-related matters only intermittently, and there are prolonged periods when he does not post any finance-related content. He does not derive any income from his website. X is less likely to be considered to be carrying on a business of providing financial advice given that he does not provide such advice on a systematic and continuous basis and receives no remuneration from it.
3.2 Examples (Extracted from Para 3.8-3.9)- Scenario 2
Y posts more regularly and exclusively on finance-related matters. He is paid a monthly fee by an advertising provider for allowing the provider to place an advertisement on his website. The fee is determined by the number of clicks on Y’s website during the past month, but Y has no control over which specific advertisement will be seen by his readers. Y receives no other form of remuneration from his blog. Although Y posts regularly and receives remuneration from his website, this is not derived as a result of his provision of financial advice or the investment decisions of his readers. Y is therefore less likely to be considered to be carrying on a business of providing financial advice.
3.3 Examples (Extracted from Para 3.8-3.9)- Scenario 3
Z has an arrangement with an investment product distributor, under which he is remunerated for recommending its products. Z is more likely considered to be carrying on a business of providing financial advice, as not only does he provide financial advice on a continuous and systematic basis, he is also remunerated for doing so.
Parting Thoughts
For myself and many other bloggers/YouTubers, we will thus fall under the above depiction of the 2nd Stage of the 2 Stage MAS tests of scenario 2, hence highly unlikely to be deemed as a person providing financial advisory service.
Saying that, for those bloggers/Youtubers accepting product or service sponsorship or huge recurring advertisment fees for promoting a product, they will be deemed to be providing financial advisory service under scenario 3- hence I guess this is the group that needs to try to argue that they are only providing factual education or entertainment and not expressing any form of opinions under 1st Stage of the 2 Stages Test. This latter group will nonetheless get into technical issues headache as aforesaid discussed in my Point 1 and Point 2 due to the intentional high level vague crafting of the FAA statue.
Anyway, just sharing my personal thoughts.....above for "education and entertainment" purpose only😓
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