The question of the carve-out is a somewhat technical area, but one worth paying attention to. And I think the events around the Lehman-linked structured products would have raised some legitimate questions about whether MAS is as focused on consumer protection as consumers would like, and if not, whether it is appropriate to carve MAS-regulated products and services out of the CPFTA then.
In addition, this question illustrates a growing trend in Singapore legislation. Increasingly, laws are being drafted such that the principles are set out in the statute itself, but the Minister is empowered to provide for details and exceptions in subsidiary legislation (i.e. regulations), which do not require Parliamentary assent.
This may be efficient from an administrative perspective, but this instance demonstrates how it can, in a way, undermine the debate in Parliament. After all, we are in Parliament debating changes to the CPFTA, and one of the major changes is the inclusion of financial products and services in the CPFTA, and yet they are being exempted from a major plank of the CPFTA empowering consumer protection bodies to take action against errant traders by way of regulations -- something not apparent from the legislation itself, and also something that the MOS, moving the bill for second reading and debate in Parliament, did not disclose. To be clear, I am not saying that there was anything sinister or untoward or improper, but clearly this is not a desirable state of affairs as it does not allow for a comprehensive debate on the changes that will be introduced.
CONSUMER PROTECTION (FAIR TRADING) ACT
(Inclusion of Financial Products and Services)
(Inclusion of Financial Products and Services)
Mr Siew Kum Hong: To ask the Minister for Trade and Industry (a) whether the Government intends to exclude any financial products and services from the Consumer Protection (Fair Trading) Act; (b) if so, how will such exclusions protect and benefit consumers; and (c) how will the new provisions governing a stay of proceedings impact consumers.
Mr Lim Hng Kiang:
The Consumer Protection (Fair Trading) Act or CPFTA was recently amended to include financial product and services. With the amendment, the CPFTA will now also protect consumers against unfair practices in transactions involving financial products and services.
However, financial institutions regulated by the Monetary Authority of Singapore (MAS) will not be subject to two specific provisions in the CPFTA that empower specified bodies (CASE and STB as stipulated in the CPFTA) to take action against errant traders. This is because MAS, as the regulator, is in a better position to enforce compliance with the law by taking formal regulatory actions against these institutions for regulatory breaches as well as require them to improve their internal compliance processes and procedures. There is therefore no need for a specified body to replicate MAS’ enforcement role. All other CPFTA provisions will apply to these financial institutions, and consumers will continue to have the right to seek civil remedies through the CPFTA.
Section 6 of the CPFTA allows the parties to a court action against a trader for an unfair practice, the option of applying to stay the proceedings when a specified body has applied to a court for a declaration or injunction relating to the same unfair practice. Consumers benefit from this provision as it allows them to rely on the outcome of the specified body’s action. For example, if the court agrees with the specified body that the trader had engaged in an unfair practice, the consumer need not re-argue in court the issue of whether the practice was unfair. The result of the specified body’s action may even prompt the trader to settle with the consumer. This process will allow both parties to save on the cost and effort of consumer actions.
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