Overview
On 3 November 2023, the Monetary Authority of Singapore (“MAS”) issued its response to the Consultation on Proposed Changes to the Complex Products Regime (originally published in November 2021) and indicated its intention to conduct a broader review of the framework and product disclosure requirements.
On 1 July 2025, MAS issued a consultation paper titled “Enhancements to PHS Requirements and the Complex Products Framework”, on proposed reforms to the Product Highlights Sheet (“PHS”) and the Complex Products Framework. The consultation will close on 1 September 2025.
The consultation paper is structured in two parts:
Part I : Enhancements to the PHS
A. Design and content enhancements to PHS templates
B. Alignment of PHS-related legislation
C. New PHS requirements for Investment-Linked Policies (“ILPs”)
Part II : Review of the Complex Products Framework
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- Enhanced disclosures and simplified nomenclature for complex products
- Streamlined distribution safeguards for complex products
- MAS’s response to feedback on classification of specific products
Part I: Enhancements to the PHS
A. Design and Content Enhancements to PHS Templates
MAS conducted a behavioural study to consider how the existing PHS templates can be enhanced to improve effectiveness and improve their role in consumers’ financial decision-making.
As such, MAS proposes that revised PHS templates:
- Place key product features on the first page for immediate visibility;
- Incorporate colours, font designs and icons to capture reader attention; and
- Use diagrams, simple language and numerals to facilitate better understanding
MAS proposes replacing the current yellow side-strip that appears on each page of a PHS with a single yellow coloured heading band bearing the words “PRODUCT HIGHLIGHTS SHEET” placed across the top of the first page. The yellow band will remain the default indicator for non-complex products. However, to enhance visual signalling, a red heading band will be used for complex products.
For consistency, all warning statements will also be displayed in a highlighted text box with visual representation corresponding to the product’s risk classification (i.e. yellow as the default, while red is used for complex products).
In addition, MAS recommends that diagrams be used to illustrate key aspects of collective investment schemes (excluding REITs) and ILP sub-funds.
MAS proposes five key enhancements to the prescribed content in PHS:
- Introductory Statements:
Simplified, standardised introductory statements across all PHSes. Complex products will be indicated, with further explanations and additional statements provided for offers of Post-Seasoning/Exempt Bonds to state prospectus exemptions.
- Complexity Disclosure Statement:
Include a standardised statement under “Who is this product suitable for?” to alert investors to pay closer attention and seek advice if needed.
- Financial Ratios:
Required for specified products (Equity Securities, Hybrid Instruments, Debt Securities, Post Seasoning and Exempt bonds). Issuers determine financial ratios but must explain their meaning and ensure consistency. Includes a warning on relying solely on historical ratios.
- Issuer’s (and guarantor’s) Asset and Revenue Profile:
Issuers (and guarantors) to disclose revenue and asset breakdowns by companies’ main activities and geographical markets for the most recent financial year. This applies to prospectus-based offers.
- Business Strategies and future plans of Issuer:
MAS proposes removing the “business strategies and future plans” from Hybrid Instrument PHSes, as it did not affect investors’ understanding of the product’s key features and risks.
B. Alignment of PHS-Related Legislation
MAS proposes to formalise PHS requirements for Debt Securities, Hybrid Instruments, and Equity Securities (currently in guidelines) by incorporating them into legislation, aligning them with those for asset-backed securities, structured notes, CIS (excluding REITs), and ILP sub-funds.
Key proposals include:
- Amending relevant regulations (i.e. the Securities and Futures (Offers of Investments) (Securities and Securities-Based Derivatives Contracts) Regulations 2018 and the Securities and Futures (Offers of Investments) (Collective Investment Schemes) Regulations 2005) for offers made with a Prospectus.
- Introducing legislative changes to the Securities and Futures Act for offers made with an Offer Information Statement (“OIS”).
- Improve consistency in existing PHS requirements across products with the following measures:
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- PHS templates to be prescribed on MAS’ website instead of in the Securities and Futures Regulations, to allow easier updates.
- Removing differentiated page limits. An 8-page limit will be imposed for all relevant PHSes, regardless of diagram use.
- PHSes for Post-Seasoning and Exempt Bonds must present a fair and non-misleading view, consistent with other investment products.
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C. New PHS Requirements for ILPs
MAS proposes introducing a separate Product Highlights Sheet (“ILP-PHS”) for ILP products, distinct from the existing sub-fund PHSes. The ILP-PHS aims to improve consumer understanding of ILPs’ overall design, risks, features, and fees.
The proposed ILP-PHS will include:
- Five key sections covering key components, risks, fees, exit options, and a list of important questions for financial advisers before purchase.
- Use of diagrams and standardised disclosures, with guidance notes and examples for clarity.
- A red-coloured heading band bearing the words “PRODUCT HIGHLIGHT SHEET” on the top of the first page, with a statement directing readers to sub-fund complexity classification and disclosures.
Part II: Review of the Complex Products Framework
The complex product framework was introduced in 2012 to assist retail investors in better understanding the features and risks of a complex product before transactions. MAS has reviewed the Complex Products Framework regularly and proposed the following refinements.
Enhanced Disclosures and Simplified Nomenclature for Complex Products
To improve investor understanding, MAS proposes renaming Excluded Investment Products (“EIPs”) and Specified Investment Products (“SIPs”) as “non-complex” and “complex” products, respectively. This change will be reflected in updated MAS Notices.
The underlying framework remains unchanged. EIPs will be prescribed as non-complex, while all other capital markets products will be considered complex.
Issuers must clearly state whether a product is non-complex or complex when offering to retail investors. For products without an existing classification (e.g. foreign-listed), distributing financial institutions must assess complexity using their own system—or treat the product as complex by default.
MAS also proposes new requirements that distributing financial institutions must, prior to any sale or transaction of a complex product:
- Highlight the product’s complex nature;
- Provide a link to the PHS, if applicable;
- Remind investors to review the product information and consider seeking financial advice if needed; and
- Document investor acknowledgement of the product’s complexity, receipt/access to the PHS, and their decision to proceed.
Streamlined Distribution Safeguards for Complex Products
- MAS proposes to combine the existing Customer Knowledge Assessment (“CKA”) and Customer Account Review (“CAR”) into a single CKA applicable to both listed and unlisted complex products. Criteria remain unchanged, and an investor who satisfies any of them is deemed to possess adequate knowledge or experience.
- MAS also introduces Product Knowledge assessment (“PKA”) as an alternative means to evaluate an investor’s knowledge in a complex product. The CKA and PKA will be collectively termed as “knowledge and experience assessment (“KEA”)”. The PKA assesses investors’ understanding of key features and risks of specific complex products. It is designed by financial institutions and once passed, validity remains indefinitely for that product type.
- Investors may choose to be assessed under either the CKA or PKA. Investors who do not meet the CKA criteria, should be assessed under the PKA. Financial institutions may also choose to offer the PKA to investors who currently meet/would meet the CKA criteria.
- If an investor passes the PKA or CKA, financial institutions are not required to provide financial advice before allowing the investor to proceed with a transaction. Where the investor fails to demonstrate understanding, the institution must inform them that the product may not be suitable, recommend reviewing offer documents, and suggest obtaining financial advice. If the investor still wishes to proceed, they must give explicit acknowledgment before the transaction can be carried out.
- Financial advisers need not perform the KEA during advised transactions, as the advisory process already involves a financial needs analysis and explaining product features. For non-advised transactions, investors may proceed without receiving financial advice if they successfully complete the PKA. Where they do not, financial institutions must address the identified knowledge gaps, provide appropriate risk disclosures, and may only proceed with the transaction upon obtaining the investor’s explicit acknowledgement.
- MAS proposes mandatory full financial advisory for Selected Clients (e.g. those with limited financial literacy or language barriers) before they can transact in complex products. If a Selected Client wishes to invest in a complex product against advice, MAS proposes requiring senior management approval as well as compliance with safeguards under the MAS’ Notice on Recommendations on Investment Products (FAA-N16).
- Financial institutions are required to assess whether an investor qualifies as a Selected Client as part of their Know Your Client (“KYC”) process. This requirement applies to both new and existing clients, including those who previously passed CKA or PKA.
- Investors who have already passed the CKA, CAR, or completed the approved learning module before the new framework takes effect will be deemed to have sufficient knowledge indefinitely. These investors will not be required to undergo further assessments. MAS also proposes that learning modules are no longer required to assess investors’ knowledge.
MAS’s Response to Feedback on Classification of Specific Products
In November 2021, MAS had sought views on the classification of hybrid securities and debentures with certain features. Based on feedback and proposed enhancements to the complex product framework in this paper, MAS will maintain perpetual securities and preference shares as non-complex products. In contrast, debentures with variable returns and those convertible to equity will be re-classified as complex products.
A copy of the Consultation Paper as well as its Annexes A through D, are available at the MAS’ website at https://www.mas.gov.sg/publications/consultations/2025/cp-on-enhancements-to-phs-requirements-and-complex-products-framework
The MAS’ media release on the Consultation paper, dated 1 July 2025 is available at: https://www.mas.gov.sg/news/media-releases/2025/mas-proposes-to-enhance-product-highlights-sheets-and-streamline-framework-for-complex-products
Please let us know if you have any queries or comments on the Consultation paper which you wish to raise with the MAS before the closing date of 1 September 2025.
If you have further enquiries, please feel free to contact Krithika Gunasingham (krithika@globalaw.com.sg) or Sivarajan C Sivalingam (siva@globalaw.com.sg) or contact us at:
GLOBAL LAW ALLIANCE LLC
3 Phillip Street, #09-05 Royal Group Building, Singapore 048693
Tel: (65) 6533 0800 Fax: (65) 6535 6678
The content of this Memorandum is not intended to be exhaustive and does not constitute a complete analysis of the laws relating to this complex area. Its content, therefore, should not be construed to constitute legal advice. Please contact us if you require any further assistance.