MAS Seeks Feedback on Enhancements to Product Highlights Sheet Requirements and Complex Products Framework (Ends 1 Sept 2025)

Executive Summary

The Monetary Authority of Singapore (“MAS“) is seeking feedback on proposals to enhance the requirements for the Product Highlights Sheet (“PHS“) and to streamline the framework for complex products.  Its proposals are set out in the Consultation Paper on “Enhancements to Product Highlights Sheet Requirements and the Complex Products Framework“.

Part I: Enhancements to the PHS

1. 1. 1. Revised PHS templates – design and content enhancements
      2. Alignment of PHS-related legislation
      3. New PHS requirements for Investment-Linked Policies (“ILPs“)

Transition period: Six months from the effective date of legislative amendments for financial institutions to implement the PHS requirements.

Part II: Enhancements to Complex Products Framework

1. 1. 1. Enhanced disclosures and simplified nomenclature for complex products
      2. Streamlined distribution safeguards for complex products

Transition period: Six months starting from the effective date of the amended Notices to implement the new requirements for the Complex Products Framework.

This Update provides a summary of these key proposals. Comments may be submitted via the FormSG link by 1 September 2025. Please feel free to reach out to our Contacts if you wish to find out more about this development and/or for submission of feedback on the Consultation Paper.

Part I: Enhancements to the PHS

Existing requirements regarding PHS

Financial institutions are required to provide investors with a PHS for certain offers of investment products such as shares, bonds and units in a Collective Investment Scheme (“CIS“). These requirements are set out under the Securities and Futures Act 2001 (“SFA“), Securities and Futures (Offers of Investments) (Exemption for Offers of Straight Debentures) Regulations 2016, Securities and Futures (Offers of Investments) (Exemption for Offers of Post-seasoning Debentures) Regulations 2016, and various MAS Notices and Guidelines depending on the type of product. For details, please refer to Section 2 of the Consultation Paper.

Revised PHS templates – design and content enhancements 

1. 1. Key design enhancements. Proposals include:

• • • Placing key product features on the first page for immediate visibility;
    • Incorporating colours, font designs and icons to capture reader attention; and
    • Use of diagrams, simple language and numerals for better understanding.

MAS plans to revise the presentation of the PHS, for instance:

• • • Display a yellow-coloured heading band across the top of the first page of the PHS, bearing the words “PRODUCT HIGHLIGHTS SHEET” as a default;
    • Introduce the use of a red-coloured heading band across the top of the first page of the PHS, bearing the words “PRODUCT HIGHLIGHTS SHEET” for the PHS of specified investment products (“complex products“); and
    • Require the disclosure of the investment strategy and fees payable in the form of diagrams for the PHS of CIS (excluding REITs), and ILP sub-funds. 

1. 2. Prescribed content enhancements include the following:

• • • Simplified and standardised introductory statements for all PHSes;
    • Complexity disclosure statements tailored to product type;
    • Requirement to disclose financial ratios of issuers and guarantors for the PHSes of Equity Securities, Hybrid Instruments, Debt Securities, Post-Seasoning Bonds and Exempt Bonds (for which MAS has proposed general principles to guide issuers’ choice of the financial ratios to be disclosed;
    • Requirement to disclose asset and revenue profile of issuers and guarantors for the PHS of Equity Securities, Hybrid Instruments and Debt Securities, for such offers made in or accompanied by a prospectus only; and
    • Removal of the requirement to disclose business strategies and future plans for the PHS of Hybrid Instruments. MAS also seeks views on the relative utility to retail investors of information in this segment vis-à-vis other segments in the redesigned Hybrid Instruments PHS template.

Alignment of PHS-related legislation

Currently, the PHS requirements for Debt Securities, Hybrid Instruments and Equity Securities are set out in Guidelines. MAS proposes for them to be set out in legislation. MAS  also proposes to improve consistency in existing PHS requirements across various investment products:

1. 1. Prescribing the form and content of PHSes in mandatory forms on MAS’ website instead of in SFA Regulations to allow for more flexibility in making necessary template changes in the future;
   2. Removing the existing differentiation in page limits for PHSes for asset-backed securities, structured notes, CIS (excluding REITs) and ILP sub-funds with and without use of diagrams, given the redesigned PHS templates for these investment products intend to embed the use of diagrams to present information as far as possible; and
   3. Prescribing that the PHSes for Post-Seasoning Bonds and Exempt Bonds must give a fair and balanced view of the debentures, and must not be false or misleading, to align with the PHS requirements for other investment products.

New Requirements for ILPs 

Key proposals include: 

1. 1. Introduction of the use of a red coloured heading band across the top of the first page of al ILP-PHS, bearing the words “PRODUCT HIGHLIGHTS SHEET”, and to include a prominent statement directing investors to refer to the complexity classification and disclosures of each selected sub-fund. MAS also seeks feedback on whether ILPs should be classified as a complex product and be indicated as such in the ILP-PHS.

1. 2. Requirement for ILP-PHS disclose the information in Annex A in the template set out in Annex B9, which sets out:

• • • Five key sections covering an overview of the components of an ILP, key risks and features, fees and charges, and exit mechanisms. The ILP-PHS also includes one section on “Important questions to ask a financial adviser before you purchase the product”;
    • Instructions on the mandatory disclosures to be made in sections on key risks and features, fees and charges, and exit information. These instructions are set out in purple font at the beginning of these sections; and
    • Examples to provide guidance on how the disclosures can be presented and illustrated. The examples are not meant to be exhaustive or prescriptive.

MAS will amend the relevant Notices to reflect the new PHS requirements:

1. 1. MAS Notice 318 on Market Conduct Standards for Direct Life Insurer as a Product Provider to include the issuance of an ILP-PHS (Annex C5);
   2. MAS Notice 307 on Investment-Linked Policies to include the ILP-PHS template (Annex C6); and
   3. MAS Notice FAA-N16 on Recommendations on Investment Products to include the provision of the ILP-PHS (Annex C7).

Part II: Enhancements to the Complex Products Framework 

The complex products framework was introduced in 2012 to help retail investors better understand the features and risks of a complex product before they invest. The framework consists of:

1. 1. Classification of capital markets products – well-established capital markets with features generally understandable by retail investors are defined in MAS Notices as Excluded Investment Products (“EIPs“). Products that are not EIPs are considered complex products, defined in MAS Notices as Specified Investment Products (“SIPs“).
   2. Distribution safeguards for SIPs – 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.

MAS proposes the following refinements:

Enhanced disclosures to clearly indicate that a product is complex. MAS proposes requiring distributing financial institutions to perform the following prior to any transaction of a complex product: (i) Clearly highlight to the investor that the product is complex; (ii) where the PHS is required to be prepared, provide the PHS or access to the PHS (e.g., via a weblink); (iii) remind investors to review the product information, understand the features of the product, and seek financial advice if needed; and (iv) document that investors have acknowledged the complex nature of the product, verified receipt of the PHS or access to the PHS (where applicable), and their decision to proceed with the transaction. 

Simplified nomenclature e.g. to describe key product features and risks more plainly. MAS proposes amending the current terms used for classifying products from “EIP” and “SIP” to “non-complex products” and “complex products” respectively, in the relevant MAS Notices. 

Streamlined distribution safeguards more targeted to the specific type of product, and investor needs.

1. 1. Currently, investors who wish to transact in complex products (i.e., SIPs) are required to go through a financial advisory process, unless they: (i) meet the Customer Knowledge Assessment (“CKA“) and Customer Review Account (“CAR“) threshold which assesses the investors’ financial knowledge and investment experience in complex products; or (ii) satisfactorily complete the relevant learning module provided by an independent body to demonstrate understanding in complex products. MAS proposes to combine the criteria for CKA and CAR into a single set of criteria that is applicable to both listed and unlisted complex products.

1. 2. MAS proposes to introduce the product knowledge assessment (“PKA“) as an alternative to the CKA. Financial institutions will have flexibility to craft the PKA to cover the essential characteristics, features, and risks associated with the complex product. Financial institutions will be required to address knowledge gaps when questions are answered incorrectly. A pass in the PKA for a particular product type, will be valid perpetually for that product type.

MAS also seeks comments on an effective way to categorise product types for the administration of the PKA, considering that the same set of questions may be used for products with similar features.

1. 3. Requiring financial institutions to administer the knowledge and experience assessment for execution-only transactions, where investors will be given the choice to be assessed based on the CKA criteria or the PKA. For advised transactions, financial advisers need not perform a separate knowledge and experience assessment if they have accounted for the investor’s product knowledge and experience in the course of assessing the product’s suitability.

1. 4. Validity of pass outcome in the knowledge and experience assessment to be perpetual. Investors who fail the PKA for a particular product type will need to undergo the PKA again before transacting in that product type subsequently.

1. 5. MAS seeks feedback on the removal of the: (i) learning module as a means to assess investors’ knowledge of complex product; and (ii) mandatory advisory requirement for investors who are deemed to lack adequate knowledge and experience in complex products (i.e. do not meet the knowledge and experience assessment).

1. 6. When dealing with investors who are deemed to lack adequate knowledge and experience in complex products, financial institutions must: (i) notify the investor that the product may not be suitable for him/her; (ii) remind the investor  to read the offer documents carefully to understand the product features and risks; and (iii) encourage the investor to obtain financial advice (or offer to provide financial advice if licensed to do so).

1. 7. Enhance safeguards for Selected Clients^[1] transacting in complex products, by including the following requirements in the Notice on Sale of Investment Products (SFA 04-N12) and the Notice on Recommendations on Investment Products (FAA-N16):

• • • Require financial institutions to assess and document if an investor is a Selected Client as part of its know-your-client (KYC) process; this requirement will apply to existing and new investors;

• • • Mandate financial advice for Selected Clients intending to transact in complex products (execution-related advice would not be considered as fulfilling the requirement);

• • • Selected Clients may only transact in complex products if it is recommended by a financial adviser. If the Selected Client chooses to proceed against the recommendation, the financial institution processing the transaction will be required to meet the requirements set out in paragraph 41V of the updated Notice on Recommendations on Investment Products (FAA-N16).

MAS also proposes to retain the requirement for the financial adviser to obtain senior management’s approval before processing the transaction, and retaining senior management approval requirement for Selected Clients.

If you have any queries on the above, please reach out to our Team members set out on this page or contact KM at [email protected].

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^[1] A “Selected Client” is a client who meets any two of the following criteria: (i) is 62 years of age or older; (ii) is not proficient in spoken or written English; or (iii) has below GCE “O” or “N” level certifications, or equivalent academic qualifications; other than a client who meets any two of the criteria and has been assessed by the financial institution to possess adequate investment experience and knowledge to transact in the investment product recommended.