Speech by Mr Louis Ng Kok Kwang, MP for Nee Soon GRC, at the Second Reading of the Financial Services and Markets Bill (Bill No. 4/2022)
Sir, this Bill consolidates and increases MAS’s powers. In doing so, it empowers MAS to take a comprehensive, sector-wide approach to risk management and enforcement action.
I thank MAS for holding a public consultation in preparation for this Bill in January 2020 and for incorporating some of the feedback into the Bill.
I have three points of clarification to raise.
Explanation of MAS’s Prohibition Order decisions
My first point is on the checks and balances against MAS’s issuance of prohibition orders, or POs.
The Bill allows MAS to issue POs to persons based on MAS’s Fit and Proper Criteria.
POs are extremely powerful. They restrict things as significant as shareholdings and as granular as business activity. They can end livelihoods and shut down companies. Given the drastic nature of this enforcement action, it seems fair that MAS should at least explain the basis of such actions.
My question is this: Why does the Bill not require MAS to publish an explanation for its imposition of POs?
Clause 11 requires MAS to only give notice for and publish the PO. But it is entirely optional for MAS to explain its decision.
In my view, MAS should be required to explain the rationale of its decision. It should at least state the category of Fit and Proper Test criteria that the person has failed.
To begin, it seems only fair that we tell people why they are being punished.
In addition, it would strengthen the mechanisms of accountability. The Bill imposes two checks on MAS’s issuance of POs.
First, MAS is obligated to hear out the subject of the PO. Second, the person can write an appeal to the Finance Minister.
In both cases, the process of justice would be strengthened if the person knows for what they are being punished or. For example, if MAS explains that it’s PO is being issued due to a person’s lack of financial soundness rather than due to dishonesty, that person could then present relevant evidence to the contrary.
Publication of Appeal Advisory Committee reports
My second point is also about accountability in the issuance of POs.
Appeals are one key accountability mechanism for POs. The Bill requires the Minister considers the written report of an Appeal Advisory Committee when deciding on these appeals.
Can Minister share why the Committee’s Written Report is not required to be published for the public?
The Committee has broad, disruptive powers. They can summon anyone to give evidence on oath and to produce any documents deemed necessary.
The Committee’s work thus affects not only the person issued the PO, but also potentially a whole array of other people.
Given the extensive impact of the Committee’s work, it is not clear why their report should be shrouded in secrecy.
Publication of their written report would provide important context on the Minister’s decision and ensure that these inquiries are held in a professional, appropriate way.
Notification of POs issued and varied
My final point is on notices provided to financial institutions for POs issued and varied.
MAS has stated that it will directly notify a person who is subject to the PO as well as the person’s employer of the PO issued.
Can Minister clarify whether MAS will also notify the individual’s employer if the individual’s PO is later varied?
In addition, how will MAS help ensure that financial institutions are notified in a timely manner when their service providers are issued a PO or have their PO varied?
After all, financial institutions typically conduct due diligence checks of their service providers only at specific junctures. Until they conduct such checks, they may not know that their service providers have been issued a PO or have had their PO varied.
It will be helpful to financial institutions if MAS can ensure PO issuances and variations are promptly communicated to financial institutions.
Sir, notwithstanding these clarifications, I stand in support of the Bill.
Watch the speech here.