The Monetary Authority of Singapore
For the Parliament Sitting on 26 February 2021
U – Prime Minister’s Office
That the total sum to be allocated for U – Prime Minister’s Office of the Estimates be reduced by $100.
Name and Constituency of MP
Ms Jessica Tan Soon Neo, East Coast GRC
Question
1. Covid-19 has provided the impetus for many Singaporeans and businesses to adopt and use e-payments. Can MAS give an update on whether Singapore residents have been more receptive to e-payments in the past year. What steps has MAS taken to ensure that the less digitally savvy among us are not left behind.
Name and Constituency of MP
Mr Dennis Tan Lip Fong, Hougang SMC
Question
2. All banks should provide the option to our seniors for use of PIN-only bank debit, ATM or NETS card for non-contactless use.
Name and Constituency of MP
Ms Sylvia Lim, Aljunied GRC
Question
3. Scams affecting bank customers especially seniors are more prevalent; MAS efforts to increase customer protection; Returning victims' monies frozen by police in Singapore bank accounts - can banks work with police for more expeditious court orders for return of customers' monies, where facts are clearly-established?
Name and Constituency of MP
Mr Murali Pillai, Bukit Batok SMC
Question
4. Being an international financial centre, Singapore-based banks have to remain vigilant in the fight against money laundering. There has been an exponential increase in dollar value of white collar crime that has happened in Singapore in the recent past. Internet scams and cryptocurrency fraud are on the increase globally too. What anti-money laundering (AML) steps have been taken by the MAS to strengthen Singapore's banking system from the scourge of money-laundering?
Name and Constituency of MP
Mr Derrick Goh, Nee Soon GRC
Question
5. Mr Derrick Goh: Covid-19 will continue to impact jobs and livelihoods of many this year. The Straits Times article in Nov 2020 quoted that the Insurance industry noted many individuals are cashing out on their endowment and life policies before maturity, incurring losses due to financial difficulty in servicing the insurance premiums. The industry expects this trend to accelerate as government support measures taper off. Can MAS provide an update on the trends of the number of people surrendering insurance plans and the amount of losses due to premature termination of these policies that are meant to meet their life goals such as retirement? Would MAS consider regulating the trading of insurance policies to ensure transparency and fair dealing for individuals who could be in financial difficulty and need to cash out?
Name and Constituency of MP
Mr Desmond Choo, Tampines GRC
Question
6. Mr Desmond Choo: How can MAS drive environmental and social outcomes through listed companies' board disclosure for green investment and gender diversity?
Name and Constituency of MP
Mr Leon Perera, Aljunied GRC
Question
7. Mr Leon Perera: Requiring better sustainability reporting for SGX companies.
Answer by Mr Ong Ye Kung, Minister for Transport, on behalf of Mr Tharman Shanmugaratnam, Senior Minister and Minister in charge of MAS
1. Mr Chairman, let me start by addressing the issue of public trust, which is the bedrock of the financial services sector. I will then talk about two important medium term developments for the sector – e-payments and promoting greater social good, such as sustainable development.
Trust in financial services
2. First, it is absolutely important for us to preserve and enhance the trust in our financial system.
3. Ms Sylvia Lim asked if banks can work with the police for more expeditious return of monies belonging to victims of scams. This is indeed a concern, especially when scams cases are on an uptrend.
4. The banks have various measures to protect consumers. There are various caps, daily transaction limits, ATM withdrawal limits, contactless payments limits.
5. But the most important safeguard against online fraud - Ms Sylvia lim asked whether there could be a cooling off period, but it’s not very practical. A cooling period applies in circumstances where you make an impulsive purchase and want to return it for a refund. But for day to day transactions there are practical limits to impose a cooling off period. The most important safeguard is to practice good cyber hygiene and take personal precautions. For consumers, this means updating security patches and anti-virus software on electronic devices; and never giving away online banking login credentials such as User IDs, OTPs and PINs, to anyone. This includes not responding to seemingly legitimate requests for your personal and banking information via your email or SMS. No matter how genuine they look, never give that away.
6. The Anti-Scam Taskforce under The Association of Banks in Singapore (ABS) has a specific workstream focusing on educating the public against scams.
7. The Anti-Scam Centre under the Police, works closely with banks to freeze the bank accounts of recipients of scam monies to enable police investigations. However, once prosecution commences, it will be the Courts that decide when the seized monies can be returned, depending on the factors such as whether seized monies remain relevant for the purposes of investigation or trial. The Monetary Authority of Singapore (MAS) understands and shares Ms Lim’s concern, and this is something we will have to consult the Police to see what is possible.
8. Mr Murali Pillai asked about fraud prevention and anti-money laundering (AML) efforts in the commodities trading sector.
9. MAS is working closely with other government agencies on this. This includes strengthening banks’ credit risk assessment on firms in the sector, and digitalising trade financing to reduce fraud risk.
10. ABS, with the support of various Government agencies, has issued a code of best practices to enhance commodity financing standards in Singapore.
11. It covers trading companies’ corporate governance, risk management and disclosure practices. Banks will use it to set standards for lending and will fully implement by July this year.
12. MAS is also working with ABS to establish a secure central database for banks to access records of trade finance transactions in Singapore. This will enhance transparency of transactions and mitigate the risk of duplicate financing.
13. Mr Derrick Goh asked about surrendering of insurance plans and secondary trading of insurance policies.
14. In 2020, despite the economic recession, the number of policies surrendered hit a five-year low of 153,000, representing 0.9% of total in-force policies.
15. This is partly due to the industry’s COVID-19 relief measures, which allow customers to defer paying for premiums of up to six months.
16. The applications for premium deferment have since fallen sharply by 80% between Q2 and Q42020.
17. We should note not all policies surrendered are due to financial hardship. Some policyholders choose to terminate their policies because they no longer serve their needs.
18. Whatever the case may be, it will benefit the policyholder to be able to sell the policy in secondary market, which typically fetches a higher value.
Electronic payments for greater convenience
19. Let me now talk about a couple of key developments in the financial sector, starting with e-payments. Ms Jessica Tan has asked for an update and expressed some concerns.
20. Let me state at the outset, we cannot be dogmatic about it. We are promoting e-payments because it is efficient, convenient and green, but we are not aiming to become a cashless society. Cash will continue to be a familiar and convenient way to transact as Ms Jessica Tan has experienced.
21. The adoption of e-payments by Singaporeans has been steadily increasing in recent years. The COVID-19 pandemic and the rise of e-commerce has accelerated this trend.
22. Registrations for PayNow for example, rose by 1.6 million last year, bringing the total number of registrations to 4.9 million.
23. This means that 80% of residents and businesses are now on PayNow. This has driven PayNow transaction volumes to over $5 billion for the month of December 2020, which is double the volume a year ago.
24. We expect this growth to continue, as users can now also send and receive PayNow transfers via non-bank e-wallets such as GrabPay and Singtel Dash.
25. Adoption of QR payments by merchants has also surged. There are 200,000 SGQR labels islandwide, with 120,000 deployed in 2020 alone.
26. As more people switch from cash to e-payments for their day-to-day transactions, the usage of cheques has fallen. The ratio of cheque volumes relative to e-payment volumes has dropped from 32% in 2016 to 18% in 2019 and 12% last year. The absolute number of cheques used fell by a record ten million in 2020.
27. Similarly, the ratio of ATM cash withdrawals to e-payments has also been falling, from 47% in 2016 to 24% in 2019, to 17% last year.
28. These ratios should decline further as more people get use to accepting e-payments.
29. There are Singaporeans who are less familiar or face difficulties with e-payments. We will not leave them behind.
30. The “Seniors Go Digital” initiative helps seniors acquire skills to transact digitally. Seniors can receive personal lessons at SG Digital Offices around the island, where digital ambassadors will guide them to use and navigate e-payment applications. And I believe the Ministry of Education is still pressing ahead to equip every child with a bank account and a digitally-enabled bank account.
31. Furthermore, it is important that cash continue to be widely accepted in Singapore. There will continue to be ATM and cash withdrawal points across our island. Today, there are 4,100 of these touchpoints, compared to about 3,700 five years ago.
32. As for PIN-only bank cards requested by Mr Dennis Tan, the local banks do offer customers the ability to disable the contactless feature of their ATM and debit cards, or the option of ATM cards without the contactless feature at all. We are not aware of bank initiaitves to do away with PIN numbers. We will remind the banks to explain this option to customers who may need it.
Promoting the larger social good
33. Another significant development in the financial services sector is the evolution of its role in promoting the larger social good. In this regard, Mr Desmond Choo and Mr Leon Perera asked about disclosures and sustainability reporting.
34. We share the members’ desire to see companies providing high quality reports on their efforts to promote sustainability and in social contribution. We also want to see continued improvements in how companies disclose their broader social and environmental impact, on top of their financial performance.
35. Such disclosures are important, especially given the heightened social and environmental consciousness amongst investors. It will facilitate capital flows towards investments more aligned to investors’ preferences, objectives and standards.
36. Since 2016, Singapore Exchange Regulation (SGX RegCo) has required SGX-listed companies to disclose material environmental, social and governance (ESG) risks and opportunities that could influence the decisions of investors. These include information such as greenhouse gas emissions, skills and gender diversity of senior management and board members.
37. In addition, the Code of Corporate Governance requires listed companies to disclose their board diversity policies, one aspect of which is gender diversity, and the progress in implementing the policies.
38. For financial institutions, MAS has set out its expectations with respect to the governance, management, and disclosure of environmental risks. These disclosures are in accordance with international reporting frameworks, such as recommendations by the Financial Stability Board’s Task Force on Climate-related Financial Disclosures (TCFD).
39. Notwithstanding, in certain areas, as pointed out by Mr Leon Perera, such as in the area of environmental sustainability, current corporate disclosures are still not where they need to be, because international standards are still evolving.
40. The basic problem is that there are various sustainability disclosure standards globally. This reduces the reliability, consistency and comparability of ESG disclosures across jurisdictions and even sectors. That undermines the purpose of the disclosures, which is to facilitate capital allocation decisions across competing investments.
41. MAS and SGX RegCo are therefore carefully studying international initiatives on harmonising sustainability disclosure standards. One major initiative happening is that significant international standard setters are coming together to develop unified global standards. And we will monitor the developments closely.
42. SGX RegCo will be consulting this year on enhancements to its sustainability reporting requirements. It will incorporate recommendations from the TCFD. In the meantime, MAS and SGX RegCo will continue to work with the Singapore Institute of Directors to help boards raise their sustainability reporting standards.
Conclusion
43. Mr Chairman, to conclude, let me say this: as an international financial services centre, Singapore can contribute to the global climate change movement by mobilising capital towards low greenhouse gas emission solutions and climate-resilient development
44. These can be investments in renewable energy generation, battery technology, carbon efficient food production methods and so on.
45. The ability to achieve this, and not disclosures alone, is what will move the needle and make a significant impact that is beyond Singapore.
46. Some observers have noted that in the recently announced Green Plan, not all the initiatives and targets are new. It is a fair and accurate observation, and in fact it is only right that the Green Plan comprises existing and new initiatives.
47. Because as a nation we have been implementing strategies to preserve our environment, and combat climate change for many years. What the Green Plan does is try to consolidate and synergise all that we are doing and planning to do, and elevate their importance.
48. Each initiative under the Green Plan is a major multi-year undertaking. For MAS, our strategy is to develop Singapore into a leading centre for Green Finance and that was announced in November 2019. If we can successfully mobilise capital and new investment into the green economy, we can bring about a virtuous cycle of economic growth, creation of jobs and opportunities, that are environmentally sustainable.
49. In the coming years, we will need to work very hard with the industry and all our partners, to build environmental risk resilience into the financial system, of which quality disclosures will play a decisive role; expand green finance solutions and markets; and leverage innovation and technology, and tap on international expertise even as we develop our own. The work is cut out for MAS and the financial services sector.
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[1] 2.7 million of these are bank accounts linked to mobile phone numbers, and 1.9 million are linked to NRIC numbers or FIN numbers.