The Answer in 60 Seconds

An introducer under MAS Notice FAA-N02 can: introduce prospective clients to licensed financial advisers (FAs) or insurance brokers, provide factual product information, and earn introduction fees from the licensed entity. An introducer cannot: provide financial advice, recommend any investment product (a term that includes a life policy), conduct fact-finds, or hold client funds. A licensed Financial Adviser (FA) under the Financial Advisers Act 2001 can: conduct full fact-finds, provide regulated financial advice, recommend specific products, and earn commission / fees from product placements. Insurance brokers are registered with MAS under the Insurance Act to act on behalf of clients in placing insurance with insurers, and are subject to the FAA where they advise on life policies. The distinction matters because: introducers operate under lighter regulatory burden but with strictly limited scope; FAs, and brokers when they advise on life policies or other investment products, operate with full FAA obligations including fact-find documentation, suitability assessment, and disclosure requirements. For Singapore SMEs evaluating insurance procurement channels, understanding which type of entity you're working with explains both the scope of service and the regulatory protections that apply.

The Sourced Detail

The Singapore financial advisory and insurance distribution landscape includes multiple entity types operating under different regulatory frameworks. Understanding the framework helps SMEs make informed procurement decisions.

The MAS regulatory architecture

Two statutes frame insurance distribution in Singapore:

  • The Financial Advisers Act 2001 (FAA) governs financial advisory activities, including advising on life policies and other investment products and arranging life insurance, through a set of licensing categories and consumer-protection provisions.
  • The Insurance Act 1966 governs the insurance industry - both insurers and insurance intermediaries, including registered insurance brokers.

Under the FAA, MAS issues a series of Notices (FAA-N02, FAA-N03, FAA-N16, and so on) that set the detailed conduct rules.

The introducer framework (FAA-N02)

MAS Notice FAA-N02 governs the appointment and use of introducers by financial advisers.

An introducer can:

  1. Introduce prospective clients to licensed FAs or brokers
  2. Provide factual product information, without recommendation or advice
  3. Earn an introduction fee from the licensed entity

An introducer cannot:

  1. Provide financial advice, a regulated activity reserved for licensed financial advisers and exempt financial advisers such as banks, insurers and registered insurance brokers
  2. Recommend any investment product, a term that includes a life policy, or rank such products
  3. Conduct fact-finds or suitability assessments
  4. Hold client funds or premium
  5. Bind cover or place insurance directly

An introducer must also disclose its status as an introducer - not an adviser - to the people it introduces. The framework exists to enable gateway and intermediation models: a party can connect SMEs to licensed advisers, and provide factual orientation, without taking on the full FAA advisory licence.

The Financial Adviser framework

Under the Financial Advisers Act 2001, a financial adviser is a firm that carries on a business of providing financial advisory services, either under a financial adviser's licence or as an exempt financial adviser such as a bank, insurer or registered insurance broker. The individuals who advise on its behalf are its representatives.

A licensed FA or representative can conduct fact-finds with prospective clients, provide regulated financial advice, recommend specific products on the basis of suitability, and earn commission or fees from product placement.

With that scope come obligations: documented fact-finds, a suitability assessment for any recommendation on an investment product (the reasonable-basis requirement of MAS Notice FAA-N16), and the disclosure requirements of FAA-N03.

The insurance broker

An insurance broker is registered under the Insurance Act and acts on behalf of the client in placing insurance - in contrast to an insurance agent, who represents the insurer. That orientation is the defining feature: the broker's duty runs to the client. Where a broker advises on life policies, the FAA obligations apply on top. Major Singapore brokers range from global firms to local specialists.

The licensed adviser distinction

A licensed adviser that is not tied to any single insurer can advise on products from more than one insurer. A tied agent, by contrast, represents one insurer and distributes that insurer's products.

Covarage's framework

Covarage carries on no regulated activity. Covarage:

  • Introduces SME prospects to licensed advisers
  • Provides factual information with its sources, which include regulators such as MAS
  • Does not recommend specific products
  • Does not conduct fact-finds
  • Does not hold premium or client funds

The commercial model follows from that scope: the platform is free for SMEs while in early access, with no premium markup. The rationale is division of labour - Covarage engages SMEs broadly on factual, educational terms, while the licensed adviser handles the regulated advisory activity where the full consumer protections apply.

What it means for SMEs

Working with an introducer, an SME should expect factual information about products and frameworks and an introduction to a licensed entity - but no product recommendation and no fact-find. The introducer must disclose that it is an introducer, not an adviser.

Working with a licensed FA or broker, an SME should expect a product recommendation. Where the product is a life policy or other investment product, the FAA also requires a documented fact-find and a suitability assessment, with the FAA regulatory protections and complaint-resolution routes that come with regulated advice.

When each model fits

The introducer model fits initial market education - an SME researching the insurance landscape - and gateway scenarios, such as an industry association connecting members to licensed advisers.

Going direct to a licensed FA or broker fits where the need is already a complex or specialised placement requiring industry expertise, or where there is an established advisory relationship.

The complementary role

The introducer and the licensed adviser are not competitors - they are complementary stages. The introducer provides market education, factual orientation, and the gateway function; the licensed adviser or broker provides the regulated advice and the product placement, with the fact-find and suitability assessment the FAA requires for life policies and other investment products. For the SME, the result is lower friction at the point of initial engagement, with the full regulatory protections applying once regulated advice begins.

Regulatory oversight

MAS regulates FAA compliance, conduct under the FAA Notices, and market conduct generally. For consumer and small-business complaints, the Financial Industry Disputes Resolution Centre (FIDReC) provides a dispute-resolution route - including for eligible small businesses, which fall within FIDReC's scope.

Contractual scope

An introducer relationship is documented through an introduction-fee arrangement between the introducer and the licensed entity. An FA or broker relationship is supported, for life policies and other investment products, by the fact-find and suitability documentation the FAA requires.

Comparison summary

ConsiderationFAA-N02 IntroducerLicensed FA / Broker
Regulatory frameworkFAA-N02 NoticeFAA licence (FA) or Insurance Act registration (broker)
Scope of activityIntroduction + factual infoFull regulated advisory
Product recommendationNo, on any investment productYes
Fact-findNoYes, for life policies and other investment products
Suitability assessmentNoYes, for life policies and other investment products (per FAA-N16)
Hold client fundsNoYes (subject to specific framework)
Bind coverNoYes
Earn commissionNo (introduction fee)Yes
FIDReC scopeLimitedYes

Common Mistakes / What Goes Wrong

  1. Confusing introducer scope with adviser scope. It mismatches what the SME expects.
  2. An introducer providing advice. A direct regulatory breach.
  3. An introducer not disclosing its introducer status.
  4. No FA fact-find before giving advice. A compliance breach.
  5. No suitability documentation for a recommendation on a life policy or other investment product. A compliance breach.
  6. No transparency on commission or fee. A consumer-protection failing.
  7. Complaint-resolution routes (FIDReC) not used where they are available.
  8. A complex placement handled without the right expertise.
  9. No industry expertise for a specialised exposure.
  10. No periodic review as the business evolves.

What This Means for Your Business

For Singapore SME founders evaluating insurance procurement:

  1. Know which type of entity you are dealing with - introducer or licensed FA / broker. It sets what to expect.

  2. The introducer model fits initial education and the gateway role.

  3. For regulated advice and product placement, work with a licensed FA or broker.

  4. Expect transparency on commission and fees.

  5. Expect suitability documentation for any recommendation on a life policy or other investment product. It is also what supports a later dispute.

  6. For a complex or industry-specific placement, use a specialist broker.

  7. For dispute resolution, FIDReC is available where the SME is within its scope.

  8. Review cover periodically with a licensed adviser as the business evolves.

The introducer and the licensed FA / broker play complementary roles. Understanding the framework lets an SME engage each at the right stage.

Questions to Ask Your Adviser

  1. Are you operating as an introducer, or as a licensed FA / broker?
  2. For my SME profile, what scope of advice and recommendation can you provide?
  3. What commission or fee disclosure applies?
  4. For dispute resolution, what routes are available to me?
  5. For my industry, what specialist expertise should I be looking for?

Related Information

Published 5 May 2026. Source verified 5 May 2026.