FIMM keeping an eye on fund, unit trust sales

The federation continuously monitors sales practices by its members managing UTS and PRS


THE Federation of Investment Managers Malaysia (FIMM) said it continuously monitors sales practices by its members managing unit trust schemes (UTS) and private retirement schemes (PRS).

Last week, the Securities Commission Malaysia (SC) reminded fund management companies (FMC) and unit trust management companies (UTMC) of their obligations to act in the best interest of investors at all times and ensure fair treatment of their clients, in view of the unprecedented and volatile market conditions arising from the Covid-19 pandemic.

FIMM CEO Kaleon Leong Rahan said the circular issued by the SC serves as a timely reminder to investment management professionals on their roles and responsibilities in upholding investor protection at all times.

“Specifically on UTS and PRS, FIMM would like to share that there are inherent investor protection controls.

“They are investment limits, segregation of schemes’ assets, disclosure requirements, cooling-off right, independent oversight by the schemes’ trustees and mitigation of risk through diversification of the schemes’ investments,” he said in a brief email reply to The Malaysian Reserve (TMR) last Friday.

Independent financial consultant and investment analyst Leong Hoe Kit said the regulator could be concerned that FMC and UTMC, including product issuers, distributors and agents, maybe aggressively selling investment products to current and potential investors during the current financial turmoil without ensuring adequate protection of investors’ interests.

“It will be a disaster if the investing public is misled by investment advisors and the financial aid, which is meant to be temporary, ends up being irresponsibly used by the investing public for speculative investments,” Leong told TMR.

The SC is doing its duty as a regulatory body to forewarn fund managers of the “fit and proper” criteria and also of the investment industry’s obligation to ensure that the capital markets operate in a “fair and orderly” manner, he said.

“Personally, I think integrity is a paramount imperative and non-negotiable for any fund manager worth his salt. Additionally, investors, awareness and education are also crucial to protect their own interests and to ensure effective personal financial management,” Leong said.

In its statement, the SC emphasised that good governance, proper conduct and continuous compliance to capital market regulations are imperative to the functioning of capital market intermediaries.

These apply especially to investment management professionals licensed by the SC, who are responsible for the management of investors’ monies.

The regulator said capital market intermediaries need to closely monitor the dealing and trading of funds under management, and ensure that their clients are informed of the potential risks in funds that they intend to invest in.

“Timely communications between the regulator and investors are critical in the current market environment.

“As such, capital market intermediaries are required to promptly alert the SC on any material issues or anticipated adverse circumstances relating to the funds under their management,” the SC said.

With the increased use of online platforms for transactions and certain operations, the SC reminded intermediaries to heighten their cyber risk management protocols and have in place robust business continuity measures to mitigate the impact of potential disruptions in these times of crisis.