Financial Advisers Act (FAA) chapter explainers — Complete 2026 guide
The financial advisers act (FAA) governs who may provide financial advisory services in Singapore, the licensing of financial advisers, and the conduct standards they owe to clients. This 2026 chapter explainer is written for directors and counsel who need to know when the financial advisers act applies and what compliance it demands.
Raffles Corporate Services works with a panel of corporate and employment law firms; this article is general information, not legal advice.
What the financial advisers act regulates
The Financial Advisers Act 2001 (FAA) is administered by the Monetary Authority of Singapore (MAS). It regulates the provision of financial advisory services, which include advising on investment products, issuing analyses or reports, and arranging life policies. The Act sets the licensing regime for financial advisers, the representative notification framework, and the conduct of business rules that protect retail clients.
Who the FAA applies to
Licensed financial advisers, banks and insurers providing advisory services, and their appointed representatives all fall within the FAA. A company that advises clients on investment products as a business, or holds itself out as doing so, must hold a financial adviser’s licence or be an exempt financial adviser. Directors of such firms are accountable for the firm’s licence conditions and conduct standards.
Licensing and the conduct standard
Section 6 of the Financial Advisers Act establishes that no person may act as a financial adviser in respect of any financial advisory service without a financial adviser’s licence, unless exempt. Section 27 of the Financial Advisers Act addresses the making of recommendations and creates exposure where a recommendation lacks a reasonable basis, which underpins the duty to ensure advice is suitable for the client.
Exempt financial advisers include banks, merchant banks, finance companies and insurers, which are regulated under their own statutes but must still observe the FAA conduct rules when providing advice. Firms operating technology platforms should also review our guide to MAS technology risk management and outsourcing, because advisory platforms attract operational resilience expectations.
Conduct of business: disclosure and suitability
The FAA and its subsidiary regulations require advisers to disclose remuneration and conflicts of interest, to have a reasonable basis for recommendations, and to give clients the information needed to make informed decisions. The balanced scorecard framework links representative remuneration to the quality of advice rather than sales volume alone.
Cost, timeline and capital
Key numerical thresholds under the FAA regime include:
- Licence application: MAS targets around 4 months to assess a complete application for a financial adviser’s licence.
- Minimum financial requirements: a licensed financial adviser must maintain the prescribed minimum financial resources, with base capital typically S$150,000 depending on activities.
- Professional indemnity insurance: licensed advisers must maintain PI cover meeting MAS minimums.
- Representative notification: appointed representatives must be fit and proper and notified to MAS before they begin advising.
Common mistakes and gotchas
Frequent failures include providing advice before the licence is granted, deploying representatives who have not been properly notified, inadequate disclosure of commissions, and recommendations made without a documented reasonable basis. Because the FAA is conduct-focused, MAS pays close attention to whether the firm’s processes actually protect clients, not merely whether paperwork exists.
Step-by-step: becoming a licensed financial adviser in 2026
- Determine whether the activity is a financial advisory service requiring a licence or whether an exemption applies.
- Establish an entity meeting the minimum financial resources and base capital requirements.
- Arrange professional indemnity insurance meeting the MAS minimum.
- Recruit fit-and-proper representatives and prepare to notify them to MAS before they advise.
- Build disclosure, suitability and balanced-scorecard processes into the advisory workflow.
- Submit the licence application to MAS and maintain ongoing reporting once granted.
Worked scenario: a recommendation without a reasonable basis
An adviser recommends a complex investment product to a retail client without documenting the client’s needs, risk appetite or the basis for the recommendation. The product later underperforms and the client complains. Because the file does not evidence a reasonable basis for the advice, the firm is exposed under the conduct rules, and MAS may treat the gap as a systemic process failure. Robust fact-finding and contemporaneous documentation are the practical defence.
Authoritative sources
See the consolidated statute on Singapore Statutes Online, conduct and licensing material from the Monetary Authority of Singapore, and entity filing guidance from ACRA.
Frequently asked questions
What is the difference between the FAA and the SFA?
The FAA regulates financial advisory services to clients; the SFA regulates capital markets activities such as dealing and fund management. A firm may need to comply with both.
Are banks exempt from the FAA?
Banks are exempt financial advisers, meaning they do not need a separate FAA licence but must still observe the FAA conduct of business rules when advising clients.
Does the FAA apply to robo-advisers?
Yes. Digital advisory services fall within the FAA, and MAS has issued specific guidelines on the provision of digital advisory services.
Where is the official text?
The consolidated FAA is published on Singapore Statutes Online, with regulations, notices and guidelines available on the MAS website.
Related guides
For wider context, see our meeting mechanics, resolutions and quorum, our Employment Pass and S Pass salary thresholds, and MAS technology risk management and outsourcing.
Need help with this? Call, SMS or WhatsApp +65 8501 7133, or email [email protected]. Raffles Corporate Services works with a panel of corporate and employment law firms; this article is general information, not legal advice.