The 10 firms were fined between S$5,000 and S$405,114 by the Competition Commission of Singapore in what is the first case of anti-competition in the financial services sector.
In the first case of anti-competition in the financial services sector, the Competition Commission of Singapore (CCS) on Thursday (Mar 17) penalised 10 financial advisers for collectively pressurising a competitor to withdraw an offer from the life insurance market.
They were ordered to pay fines totalling about S$900,000, after being found guilty of engaging in anti-competitive behaviour.
On Apr 30, 2013, iFAST Financial had offered a 50 per cent commission rebate on life insurance products on its online platform, Fundsupermart.com. But the offer was withdrawn a few days later, on May 3.
Investigations by the CCS later revealed that on May 2, a group of financial advisory firms had decided to pressure iFAST into withdrawing the offer from its portal.
At a media briefing on Thursday, CCS said the 10 financial advisers, who were all members of the Association of Financial Advisers, had infringed the Competition Act by engaging in an anti-competitive agreement to pressurise iFAST to withdraw its offer.
They were fined between S$5,000 and S$405,114. CCS said these companies were served notice on Thursday morning and they have two months to file an appeal. The commission added that it calibrated the penalties based on each firm’s turnover, while taking into account aggravating or mitigating factors.
The 10 advisers are: Avallis Financial; Cornerstone Planners; Financial Alliance; Frontier Wealth Management; IPP Financial Advisers; JPARA Solutions; Professional Investment Advisory Services (PIAS); Promiseland Independent; RAY Alliance Financial Advisers; and WYNNES Financial Advisers.
Those hit with the biggest fines include PIAS, IPP and Financial Alliance.
The decision follows a Proposed Infringement Decision issued by CCS on May 28, 2015, and had received written and oral representations from eight of the parties. The issues raised in the representations were duly and carefully considered by CCS before it issued its Infringement Decision on Thursday.
Financial Alliance called the decision “unfortunate”, and said it is assessing the situation and its options. iFAST declined comment when contacted by Channel NewsAsia.
The case is the first involving market access and restriction of market access. CCS said it will step in to ensure new and innovative market players can come in and compete fairly.
FUNDSUPERMART OFFER AN “INNOVATIVE ONE”: CCS
The 10 companies provide financial advisory services and distribute various financial products, including life insurance products and unit trusts.
On the other hand, iFAST is both a securities dealer and financial adviser, which distributes investment products like unit trusts to investors. It also offers investment products through a business-to-business distribution platform.
CCS said the advisers’ conduct to prevent a competitor from providing a lower-cost offer to consumers was likely to have an adverse effect on competition in the market.
They also found that the advisers’ commercial relationship with iFAST in its unit trust business contributed significantly to iFAST’s revenues and placed them in a position to exert pressure on iFAST.
CCS’ chief executive, Toh Han Li, said: “The Fundsupermart offer was an innovative one that allowed iFast to reach out to a wide client base through an established online platform, save on distribution costs and pass on these cost savings to the consumer through a commission rebate.
“The Parties’ conduct to collectively pressurise iFAST into withdrawing the Fundsupermart offer prevented the life insurance market from shifting to a more competitive state.”
“Agreements among competitors to collectively pressurise a competitor to withdraw an offer from the market can be anti-competitive. Businesses need to independently determine their own response to competition,” he added.
Source: Channel News Asia | 17 March 2016