The financial watchdog is closing in on insurance agents who have been putting out misleading online advertisements to target customers.
One ad widely available on YouTube offered critical illness cover with the extraordinary offer that policy holders could "claim up to 500 per cent" if diagnosed with over 100 types of illnesses. It also tells customers that they can get a full refund of all premiums that they have paid if they do not make any claims.
But relevant information such as the name of the insurer or how the policy works was not disclosed. Potential customers are instead asked to key in their personal details at a website so that the sellers can contact them.
A 30-year-old compliance officer of a financial company told The Sunday Times that he responded to the ad because he was curious about how any insurer could offer such a product. "I was surprised when the person who called me back introduced herself as an agent from AIA. I asked her about the policy in the ad. But she didn't want to give any details over the phone and kept insisting on meeting me so she could explain the product."
When he made his own checks after declining the meeting, he found that the ad had grouped features of different products into the same video. "In doing so, potential customers can be misled into thinking that they can enjoy all these benefits in a single policy," he noted.
AIA, for example, has a critical illness plan that has a surrender value similar to the total amount of premiums paid, but this "refund" feature kicks in only after more than 30 years, according to a policy proposal seen by The Sunday Times. And "the 500 per cent claim" benefit is available only for another policy. Under this, the insured can make such claims only if he is struck by five different types of critical illnesses, with each occurring at least a year from the last claim.
A spokesman for the Monetary Authority of Singapore (MAS) said such anonymous ads run afoul of its regulations, which require all product ads to provide a fair and balanced view of the investment product. Ads must also not contain false or misleading facts, and the marketing messages must be approved by the senior management of the financial institution.
On the latest case which involved agents soliciting customers' personal data, the spokesman noted that such cases involved the agents engaging service providers to put out such ads to obtain leads from people who respond to these social media ads.
Such cases are prohibited because the MAS allows only financial institutions to enter into such arrangements. Even so, the companies have to exercise close oversight of their agents' marketing activity, including requiring them to get the green light before undertaking any such promotions or to use only material approved by the insurer.
"MAS will take action against financial institutions and representatives who breach our rules," the spokesman said. Penalties can include fines of up to $25,000. The spokesman added that, as regulator, MAS has engaged financial institutions to strengthen their oversight and surveillance of their agents' marketing activities and will work with the industry to issue further guidance on the use of social media.
An AIA Singapore spokesman told The Sunday Times: "We take seriously our responsibility to our customers and we are currently investigating this matter as a priority." It added that its representatives are "strictly forbidden" from using unapproved marketing materials and deploying sales practices that do not abide by official guidelines.
"All content offering financial planning advice and AIA products is closely monitored and approved by AIA. We hold all AIA insurance representatives to the highest standards. "Swift action would be taken against those found not to be upholding these standards."
Source: The Sunday Times © Singapore Press Holdings Limited. Permission required for reproduction.