Singapore’s financial regulator, the Monetary Authority of Singapore ( MAS ), has proposed sweeping changes to how investment products are disclosed and distributed to retail investors in a move aimed at sharpening the clarity of product information and streamlining investor safeguards.

Central to the proposed reforms is an overhaul of the Product Highlights Sheet ( PHS ), a key disclosure document required for investment offerings, including shares, bonds and unit trusts.

Under the new guidelines, financial institutions will be required to adopt a simplified, question and answer format, with clearer labelling for complex products and a strong emphasis on upfront risk communication. Investment-linked policies will now also come under the PHS regime.

In tandem, the MAS intends to streamline the decade-plus-old Complex Products Framework. The financial overseer plans to remove the mandatory financial advice requirement for certain investors, replacing it with a newly introduced Product Knowledge Assessment, a self-administered tool aimed at gauging investor understanding. Targeted safeguards will however remain for more vulnerable clients.

The framework – which was introduced in 2012 to aid retail investors in better understanding the features and risks of a complex product before they invest – classifies capital markets products into complex and non-complex products, and stipulates distribution safeguards for the complex ones.

For complex products, the distributor is required to assess a retail investor’s educational, work and investment experience.

Where the investor is assessed not to have sufficient knowledge or experience, he will have to complete a learning module or receive mandatory financial advice.

“Digitalization has enabled greater self-directed investing, but it must not come at the expense of informed decision-making,” the MAS states. “Our goal is a more effective, disclosure-based regime with the right safeguards for those who need them.”

The regulator is inviting stakeholders to provide feedback on the proposals outlined in its consultation paper by September 1.