Self-Regulatory Organisation

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The Federation of Investment Managers Malaysia (FIMM) was recognised by the Securities Commission (SC) Malaysia as a self-regulatory organisation (SRO) via a gazette order on 20 January 2011. This empowered FIMM to regulate its own members. With this new mandate, FIMM will play a larger role in ensuring that the unit trust industry continues to grow, at the same time making certain that investors’ and the public’s interests remain as its main priority.


What is an SRO?

A recognised self-regulatory organisation shall ensure that in exercising any of its powers or in carrying out any of its functions, such power or function shall be exercised or carried out in the public interest having regards to the need for the protection of investors. FIMM, as an SRO will regulate its members, to protect investor’s rights through the establishment of rules that promotes ethics and integrity.

Self-regulation is characterised by professional conduct and competence, fairness, transparency, accountability and public participation. 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. UTCs / PRCs are personally accountable for their practice through adherence to codes and standards whilst maintaining competence and conduct.

As an SRO, FIMM will:

  • Uphold public interest by enhancing market integrity, market efficiency and investor protection
  • Register all members and organisations that wish to market and distribute Unit Trusts and PRS
  • Promote Investor education and awareness programmes to create an informed investing community
  • Balance the regulation over its members with the advocacy of their interests and the investing public
  • Demonstrate proactive monitoring of the industry behaviour and fair and consistent disciplinary measures must be taken against any misconduct or non-compliance
  • Provide industry expertise in the development of the unit trust industry
  • Enhance industry’s sales practices and distribution standards by formulating a robust sales regime with adequate supervision and monitoring mechanism
  • Improve professionalism among UTCs and other distributors
  • Increase standards of testing and selection, qualifying examinations and trainings to maintain the high standards of entry, professional credibility and expertise
  • Introduce a Continuing Professional Development (“CPD”) framework to keep distributors aligned with the latest industry developments

FIMM as a Self-Regulatory Organisation

FIMM started as the Federation of Malaysian Unit Trust Managers (FMUTM) on 7 August 1993. As at 6 September 2012, FIMM has 42 members; all unit trust management companies (UTMCs) are members of FIMM, which acts as a common platform for discussing issues related to unit trusts and Private Retirement Scheme industry. The recognition of FIMM as an SRO, is a significant milestone in its history as it will play a dual role of an industry body and public interest body, while advocating the growth of the Unit Trusts and Private Retirement Schemes (PRS) in Malaysia.

As an industry player, FIMM is in a better position to understand and respond quickly to changing market conditions and the needs of the industry that will ensure the sustainable growth of the industry. FIMM’s mission is to build the highest level of trust, integrity, standards and ethics for investor security, growth and knowledge in the investment management industry. Aligning this capability with the protection of public interests by incorporating values of ethical behaviour and integrity in its regulations, the result is an industry ingrained with a business culture necessary to maintain public confidence.


FIMM Responsibilities

Enhancing Professionalism

FIMM is fully committed in ensuring an adequate education framework is in place as it is critical to the development of the unit trust market and Private Retirement Scheme (PRS). FIMM has driven several initiatives to raise the level of competency and knowledge of its Unit Trust Consultants (UTCs) and Private Retirement Scheme Consultants (PRCs) to better serve the investing public. To ensure that UTCs remain competent, it conducts “fit and proper” assessment of UTCs and PRCs, and due diligence reviews on the applications for registration of institutional distributors.

In ensuring professionalism, new entrants to the industry undergo an examination and must continually demonstrate competency and enhance their knowledge by keeping abreast with the industry developments. The introduction of the Continuing Professional Development (CPD) Programme assures market intermediaries are equipped with the right skills, knowledge and are able to play an advisory role in assisting investors making informed decisions about their investments.

Formulating Robust Sales Practices

FIMM has formulated robust sales practices to ensure sustainable growth of the unit trust industry through ethical business conduct. This is part of the industry wide governance framework to maintain public confidence in the integrity of unit trust and PRS industry which is essential to the growth of the industry. Investors must have confidence in the integrity of the investing framework and in FIMM, in order for them to continue to invest their hard earned money in unit trust funds and PRS.

As an SRO, FIMM is committed towards the establishment and enforcement of financial, operational and sales practice standards. To this end, a surveillance framework to monitor and supervise members has been set up. This involves putting in place a compliance audit framework which conducts regular audits on the marketing and distribution practices of its distributors as outlined in the Code of Ethics and Standards of Professional conduct, and also SC and FIMM guidelines. If there are misconducts or non-compliance, FIMM will initiate disciplinary proceedings and action will be taken against those found to have breached the code. Raising the ethical standards will lead to better protection of investor and public’s interests.

Investor Protection

Investor protection refers to the effort, activities to observe, safeguard, and enforce the rights and claims of a person in the role of an investor, which may include providing advice, assistance and avenue for complaints. By definition, an investor is a person who allocates capital with expectations of future financial returns. E.g. Investors in unit trust funds or PRS. Initiatives by FIMM to ensure investor protection:

  • The Continuing Professional Development (CPD) framework introduced in January 2010, is a mandatory requirement for consultants to acquire knowledge and achieve professionalism through a series of activities such as training, seminars and workshops.
  • Expanded education and financial literacy campaigns are organised nationwide to enhance investors’ knowledge. In addition to engagement with industry stakeholders such as, through dialogues there are also other means of reaching out to investors through educational articles in mainstream media and radio campaigns.
  • Increasing efficiency and enhanced services: FIMM works closely with Employee Provident Fund (EPF) to streamline processes for investors to invest in unit trust funds via their (EPF) members’ savings. Its E-PPA (Elektronik-Pilihan Pelaburan Ahli) marked the successful implementation of an automated system that significantly improved the processing efficiency of EPF member’s withdrawal and reinstatement submission. The Complaints Bureau provides an avenue for lodging of complaints and a framework for dealing with them in a timely and efficient manner.


FIMM – an avenue for lodging complaints

Complaints from the investing public provide valuable feedback to FIMM and helps in the development of the industry. Furthermore, such complaints could lead to discovery of misconduct, non-compliance and insight into the public’s needs and expectations. By Laws relating to the procedures for disciplinary proceedings sets out how FIMM deals with such complaints arising from misconducts of UTMC and its distributors. The investing public can be assured that appropriate disciplinary proceedings will be taken against the offenders if it is found to have merit.

In line with this, investors must know of their rights and responsibilities. Investors should also be aware of the requirements when they sign and acknowledge the Pre-Investment Form (PIF) for first time investors (effective from 15 February 2010); UTCs need to clearly explain the terms and conditions of investing in the unit trust fund, while investors should ask questions to better understand the product, risks and fees involved.

In summary, FIMM as an SRO is significant as confidence on the unit trust and PRS industry is key and in achieving this, we strive to discharge our duties with the protection of investors in mind. The recognition of FIMM as an SRO is not achieved by FIMM’s strength alone but with the collective support its industry players. In navigating the development of the unit trust and PRS industry towards greater financial strength and resilience, FIMM will continue to strengthen distribution practices, enhance the professionalism of its members, and ensure a robust regulatory framework is in place that reflects its commitment towards investor protection. This will likely lead to investors having more faith in the integrity of the unit trust investment framework as well as PRS that will lead towards a sustainable growth for the investment management industry.

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