SINGAPORE — Ten financial advisory firms have been fined S$909,302 in total after they were found guilty by Singapore’s competition watchdog of infringing the Competition Act by forcing their competitor to withdraw an offer to halve commissions on insurance products.

The 10 companies are Avallis Financial, Cornerstone Planners, Financial Alliance, Frontier Wealth management, IPP Financial Advisors, JPAR Solutions, Professional Investment Advisory Services, Promiseland Independent, RAY Alliance Financial Advisors and WYNNES Financial Advisor. The firms faced penalties of between S$5,000 and S$405,114.

The Competition Commission of Singapore (CCS) issued the infringement decision and imposed the penalties on Thursday (March 17). The CCS said that the group had engaged in an anti-competitive agreement to pressurize their competitor, iFAST Financial (iFAST), into withdrawing its offer of a 50 per cent commission rebate on competing life insurance products sold on the Fundsupermart.com website. The company, iFast, had launched its offer on April 30, 2013, but withdrew it a few days later.

ccording to Mr Toh Han Li, chief executive of CCS, iFAST’s offer was an innovative one that allowed it to reach out to a wide client base through an established online platform, save on distribution costs, and pass on these cost savings to consumers through a significant commission rebate.

“The parties’ (the 10 financial advisors) conduct to collectively pressurize iFAST into withdrawing the Fundsupermart offer prevented the life insurance market from shifting to a more competitive state,” Mr Toh said.

“This case is rather different from past cases and involves denial of market access by competing players… Agreements between competitors to collectively pressurise a competitor to withdraw an offering can constitute anti-competitive conduct. Businesses should instead determine their own individual responses to competition.

“CCS will enforce the law, where necessary, to ensure that new and innovative players can access markets and compete fairly,” Mr Toh said at a media conference.

CCS found that the actions of the group were likely to have an adverse effect on competition in the market. The firms’ commercial relationship with iFAST in its unit trust business contributed significantly to iFAST’s revenues and placed them in a position to exert pressure on iFAST, CCS said.

CCS noted that iFAST’s offer was particularly attractive to customers because it is not general industry practice for financial advisers to provide commission rebates to policyholders. iFAST, CCS noted further, had a wide client base of over 50,000 through Fundsupermart.com and could also reach out to other visitors to Fundsupermart.com. Some of the firms were worried that their customers would switch to iFAST or ask for similar rebates. Had iFAST’s offer remained on the market, the other companies might have had to make similar or new offers to respond to the competitive threat of commission rebates from the iFAST offer, CCS added.

iFAST declined to comment. The 10 companies can lodge an appeal with the Competition Appeal Board against the order within two months.

Mr Christopher Teo, CEO & Director at Professional Investment Advisory Services (PIAS), “We noted the decision of CCS and will deliberate on an appropriate next step.”

Mr Tay Huai Eng, CEO of IPP Financial Advisors said: “We are very disappointed with the final decision made by CCS and will be assessing our next course of action with our legal advisers. We never intended to be part of any cartel, or to participate in any anti-competitive conduct which goes against the spirit of free competition – something we strongly believe in. In this instance, when we communicated with iFAST on their offer on Fundsupermart.com, we were merely acting as a corporate customer carefully seeking clarification with our long-term service provider, iFAST.

“We are of the view that IFAST is not a bona fide competitor as they had prior agreements with us and we were concerned that they had breached their promises and as they were also in possession of thousands of our clients’ records in order to provide us the service. Unfortunately, CCS viewed this as a breach of provisions in The Competition Act in their assessment. We have, and will always place the interests of our customer above all else and stay true to the spirit of fairness.”