MPU3353 – Personal Financial

Planning in Malaysia

Topic 2 - Regulatory Controls &

Practices Affecting
Financial Planning
 Learning Objectives

Explain the controls & regulations affecting

personal financial advisors imposed by:
- Bank Negara

- Bursa Malaysia & Securities Commission

- Insurance Act

- The profession in Malaysia

2-2
 Financial Advisors (FA)

 FA’s form a new category of intermediaries

 Possess specific professional qualifications
and expertise to provide independent advice to
individuals on the various financial products,
including that of insurance, to meet their
financial requirements.

2-3
 Relevant Regulations and
Guidelines
 Insurance Act 1996
 Capital Market Services Act 2007,
 Financial Services Act 2013 and
 Islamic Financial Services Act 2013,
 Anti Money Laundering and Anti Terrorism Financing Act 2001, Guidelines on
Investor Protection Guidelines,
 Guidelines on Anti Money Laundering by the Securities Commission,
Guidelines on the Offering of Structured Products by the Securities
Commission,
 Guidelines on Introduction of New Products by Bank Negara
 Securities Commission – Guidance Notes on secondary trading of FCY
denominated debentures and FCY denominated Islamic securities.
 Malaysia Deposit Insurance Corporation Act 2011

2-4
 Insurance Act 1996

An Act to provide new laws for the licensing

and regulation of insurance business,
insurance broking business, adjusting
business and financial advisory business
and for other related purposes

2-5
 Capital Market Services Act
2007
 The Capital Markets and Services Act 2007
(CMSA) came into force on 28 September
2007.  

 The Act was to regulate and to provide for

matters relating to the activities, markets and
intermediaries in the capital markets.

2-6
 Capital Market Services Act
2007
A key CMSA measure benefiting capital market intermediaries
is the introduction of the single licensing regime.

Under this measure, intermediaries hold a Capital Markets

and Services Licence as opposed to multiple separate
licences, which effectively reduces administrative and
compliance costs, and ultimately saves time.

2-7
 Capital Market Services Act
2007
There are two main types of licensing applications, namely-
New Capital Markets Services Licence (CMSL) – granted to a
principal
New Capital Markets Services Representative’s Licence (CMSRL) –
granted to a representative to enable him to carry on any one or more
regulated activities on behalf of his principal
These 2 types of licenses can perform the following regulated activities:

• Dealing in securities
• Dealing in derivatives
• Advising on corporate finance
• Fund management
• Investment advice
• Dealing in private retirement scheme
• Financial planning

2-8
 Financial Services Act 2013

Consolidates the regulatory and supervisory

framework for Malaysia’s banking industry, insurance
industry, payment systems and foreign exchange
administration matters.

Insurance and takaful companies holding composite

licenses shall not carry on both life insurance/family
takaful business and general insurance/general
takaful business.
2-9
 The Islamic Financial Services
Act (IFSA) 2013
 IFSA aims to promote compliance with Shariah
principles. To achieve this, it entrenches BNM’s
role as Shariah regulator, imposes stringent
requirements on Shariah governance
mechanisms and caters to the specificities of
Islamic financial products and operations which
are based upon various types of Shariah
contracts. 

2-10
 Anti-Money Laundering Act
2001

The Anti-Money Laundering Act 2001 (AMLA) was

gazetted on 5 July 2001.
AMLA provides comprehensive new laws for :
the prevention, detection and prosecution of money
laundering,
the forfeiture of property derived from, or
involvement in money laundering and
the requirements for record keeping and reporting of
suspicious transactions for reporting institutions.
2-11
 Banking and Financial Institutions
Act, 1989 (BAFIA)

The BAFIA is a comprehensive act and extends

comprehensive powers to Bank Negara Malaysia
(BNM) to supervise a larger spectrum of financial
institutions, with the direct responsibilities to regulate
and supervise all licensed institutions (commercial
banks, finance companies, merchant banks, discount
houses and money brokers)

2-12
 Regulatory Framework for
Licensing of FAs

 To promote the orderly development of the

financial planning industry and to enhance
consumer protection in the insurance
industry,

 Bank Negara amended the Insurance Act

1996 and Insurance Regulations 1996 to put
in place the regulatory framework for the
licensing of FA’s in October 2005.
2-13
Consumer Protection

2-14
 Other Requirements

Compliance with Code of Conduct

The FA and its representatives must always
adhere to :and the Code of Ethics issued by MFPC
(Malaysian Financial Planning Council)
the circulars/guidelines and other directives
issued by Bank Negara
Rules and Regulations on the conduct of
financial advisory business or sales of insurance
products in Malaysia.
2-15
 Malaysian Financial Planning
Council (MFPC)
Role of The MFPC:
National Body responsible for unifying Financial Planning Practices
and strengthening the accountability, conformance to laws, regulations
and ethics in the profession.
Development, advancement and representation of Financial Planning
Professionals, Practitioners and Financial Service Providers.
Certification body for setting technical competency, practice and
examination standards for those in the Financial Planning Profession.
Provides and enforces a code of ethics and compliance requirements
to ensure the public is served professionally.
Promote public awareness of the value and importance of financial
planning.

2-16
 The Federation of Investment
Managers Malaysia (FIMM)
 FIMM is recognised by the Securities
Commission (SC) Malaysia as a self-regulatory
organisation (SRO) to regulate its own
members in the unit trust industry
 FIMM is accountable for ensuring its members
namely its Unit Trust Consultants (UTCs) and
Private Retirement Scheme Consultants
(PRCs) are competent and act in the best
interest of the investing public
2-17
 FIMM Members
 Unit Trust Consultant  (UTC) : an individual who is
duly registered with the Federation of Investment
Managers Malaysia to market and distribute unit trust
funds.
 Corporate Unit Trust Adviser (CUTA) : an institution
or organisation or a corporation that is licensed by the
Securities Commission for the purpose of carrying out the
regulated activities of financial planning and dealing in
securities restricted to unit trusts

2-18
 FIMM Members

Institutional Unit Trust Adviser (IUTA):

an institution or organisation or a
corporation that is licensed by the Securities
Commission for the purpose of carrying out
dealing in securities restricted to unit trusts
and is duly registered with the FIMM to
market and distribute unit trust funds.

2-19
 FIMM Members

PRS Consultants : individuals who are attached

to an entity registered with FIMM to :
market and distribute Private Retirement
Schemes
conduct and the delivery of reasonable advice or
basis for recommendations to individuals and
employers.

2-20
 Market Structure and
Participants
Bank Negara Malaysia (BNM)
BNM is the central bank of Malaysia.

Established as a statutory body on 26 January 1959 as

the Bank Negara Malaya
its main purpose is to issue currency, act as banker and
adviser to the Government of Malaysia and regulate the
country's financial institutions, credit system and monetary
policy.
Monetary policy involves the control of interest rates and
money supply
2-21
 Market Structure and
Participants
Securities Commission (SC) Malaysia
The SC is a statutory body established on 1
March 1993 under the Securities Commission
Act 1993.
It is a self-funding statutory body with
investigative and enforcement powers. It reports
to the Minister of Finance and its accounts are
tabled in Parliament annually
2-22
 Market Structure and
Participants
The SC's many regulatory functions include:
Supervising exchanges, clearing houses and central
depositories;
Registering authority for prospectuses of corporations
other than unlisted recreational clubs;
Approving authority for corporate bond issues;

Regulating all matters relating to securities and futures

contracts;
Regulating the take-over and mergers of companies

2-23
 Market Structure and
Participants
 Regulating all matters relating to unit trust schemes;
 Licensing and supervising all licensed persons;
 Encouraging self-regulation; and
 Ensuring proper conduct of market institutions and
licensed persons.

Underpinning all these functions is the SC's

ultimate responsibility of protecting the investor.

2-24
 Market Structure and
Participants
Bursa Malaysia  
 An exchange holding company approved
under Section 15 of the Capital Markets and
Services Act 2007.
It operates a fully integrated exchange,
offering the complete range of exchange-
related services including trading, clearing,
settlement and depository services.
2-25
 Bursa Malaysia

Bursa Malaysia offers 2 choices for companies

to list:
Main Market for larger and more established
companies to raise funds.
ACE Market for smaller companies with growth
prospects. 

2-26
End of Lecture

2-27