Minister Lim's reply on whether the Government intends to exclude any financial products and services from the Consumer Protection (Fair Trading) Act

Question No 758 of Notice Paper No 221 of 2008

Name and Constituency of Member of Parliament
Mr Siew Kum Hong, Nominated Member of Parliament

Question:
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.

Answer:
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.