3.3 Regulation of Scheme Providers and Oversight Functions

FIMM Combined Examination FCE

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1 Introduction: The FIMM Combined Examination (FCE)

0.1 FCE Exam Facts, Registration Rules and How to Use This Guide

2 Chapter 1: Understanding Collective Investment Schemes in Malaysia

1.1 What a Collective Investment Scheme Is and How Malaysian CIS Are Classified 1.2 Investment-Linked Funds Are Not UTS; Industry Growth and History 1.3 Participants in the CIS Ecosystem: Unit Holders, Managers, Trustees, Distributors and Regulators

3 Chapter 2: Introduction to UTS and PRS

2.1 UTS and PRS as Investments: Mechanics, Unit Calculations and How They Compare 2.2 Types of Funds: By Asset Class, Fund Structure and Investment Objective 2.3 Methods of Investing and Dollar Cost Averaging 2.4 Benefits and Disadvantages of Investing in UTS and PRS 2.5 Understanding Risk and the Risks of Investing in Schemes 2.6 Shariah-Compliant Schemes, Their Risks and the Role of the Shariah Advisory Council

4 Chapter 3: Regulatory Framework

3.1 The Regulatory Framework: The SC, Other Regulators and FIMM's Dual Role 3.2 Legislation, SC Guidelines and FIMM Rules Governing UTS and PRS 3.3 Regulation of Scheme Providers and Oversight Functions 3.4 The Deed, the Prospectus or Disclosure Document, and the Product Highlights Sheet 3.5 Portfolio Constraints: Permitted Investments, Liquidity, Borrowing and Exposure Limits 3.6 Regulations for Other CIS: Real Estate Investment Trusts and Exchange-Traded Funds 3.7 Regulation and Duties of the Scheme Trustee 3.8 Regulation of Marketing and Distribution: Distributor Categories, Collection Points and Agency Structure 3.9 Registration of Consultants: Eligibility, Fit and Proper, Duration, Variation and Revocation

5 Chapter 4 (Part 1): Marketing and Distribution — Disclosure and Transactions

4.1 Servicing Investors and the Contents of the Prospectus and Disclosure Document 4.2 The Product Highlights Sheet, Advertising Standards and Account Maintenance 4.3 The Purchase Process and Suitability Assessment Before Personal Advice 4.4 Cooling-Off Rights, Repurchase of Units, Suspension and Switching 4.5 Financing the Purchase of UTS: Process, Safeguards and the Risk Disclosure Statement 4.6 EPF Transfers and Withdrawals for Investment in Approved Unit Trust Funds

6 Chapter 4 (Part 2): Marketing and Distribution — Distributions, Reporting and Service

4.7 Distributable Income, Distributions and NAV, "Buying" a Distribution and Taxation 4.8 Reporting to Investors: Confirmations, Statements, and Semi-Annual and Annual Reports 4.9 Marketing Principles, Delivering Quality Service and Handling Complaints 4.10 The Effect of Inflation, Taxation and Investment Costs on Returns 4.11 Investment Alternatives to UTS and PRS

7 Chapter 5: Code of Ethics

5.1 Compliance, Ethics and the Structure of the FIMM Code of Ethics 5.2 Core Principle 1: Honesty and Integrity 5.3 Core Principle 2: Professionalism 5.4 Core Principles 3 to 5 and Non-Compliance: Conflicts, Disclosure, Confidentiality and Misconduct

8 Chapter 6: Personal Financial Planning

6.1 Personal Financial Planning: Definition, Features, Five Areas and the Six Steps 6.2 Financial Planner Credentials, Skills, Remuneration, and How a Planner Differs from a Consultant 6.3 The Consultant's Role in Investment Planning and Advising Clients Through the Life Cycle

9 Chapter 7A: Features and Operations of UTS

7A.1 Structure of a UTS, the Trust Deed, the Parties and Modifying the Deed 7A.2 UTS Fees, Charges and Expenses, and the Management Expense Ratio 7A.3 Dealing in Units, Valuation, NAV Calculation and Unit Prices 7A.4 Forward and Historical Pricing, and the UTMC's Holding of Units 7A.5 Unit Splits, Distributions and Their Effect on NAV 7A.6 Measuring UTS Performance: Returns, Performance Tables, Risk Measures and Qualitative Factors 7A.7 Operational Aspects of Shariah-Compliant UTS and PRS and the Shariah Contracts Between the Parties 7A.8 Borrowing to Invest in UTS and the Risks of Loan Financing

10 Chapter 7B (Part 1): The Pension Landscape and the PRS Framework

7B.1 The Malaysian Pension Landscape and the Adequacy of Retirement Savings 7B.2 The World Bank's Five-Pillar Pension Framework in the Malaysian Context 7B.3 Key Players: EPF, KWAP, LTAT, Employer-Sponsored Schemes and Annuities 7B.4 Why Malaysia Needs PRS: Ageing, Longevity Risk and the Benefits of PRS 7B.5 The PRS Framework and the Private Pension Administrator (PPA) 7B.6 PRS Structure, the Trust and Deed, Advantages over Other Products, Eligibility and Contributions

11 Chapter 7B (Part 2): PRS Operations

7B.7 The PRS Default Option and Tax Incentives for Members and Employers 7B.8 The PRS Account Structure (Sub-Accounts A and B) and Vesting 7B.9 PRS Withdrawals: Pre-Retirement, Retirement, Permanent Departure, Incapacity and Death 7B.10 Switching Between Funds and Transferring Between PRS Providers (Portability) 7B.11 Unclaimed Monies, Death of a Member and PRS Nomination 7B.12 PRS Funds: Number, Core and Non-Core Funds, Objectives, Risk Profiles, Asset Classes, Authorisation and Naming 7B.13 PRS Fees, Charges and Expenses 7B.14 PRS Unit Creation, Forward Pricing, Valuation, Distributions, Performance Measurement and Electronic Communication

3.3 Regulation of Scheme Providers and Oversight Functions

Key Takeaways Explain This Topic AI

To be eligible as a Scheme Provider, an applicant must be incorporated in Malaysia, keep the prescribed minimum paid-up capital and shareholders' funds, and hold a Capital Markets Services Licence.

A Scheme Provider may receive only the fees permitted in the deed and disclosed in the prospectus or disclosure document.

A PRS Provider must follow PPA instructions on a member's pre-retirement withdrawal, transfer to another provider or nomination.

Anyone performing a fund's oversight function, whether an individual or a committee member, must not also be a member of the Shariah adviser appointed for the same fund.

A Shariah committee must consist of at least three individual Shariah advisers.

Last updated: October 2026

The Central Role of a Scheme Provider

Scheme Providers receive investors' money, process transactions and manage the funds. Their overarching duty is the proper, diligent and efficient operation of the scheme, in good faith and in investors' best interests . The rules come mainly from the CMSA, the PRS Regulations and the UTF and PRS Guidelines.

Key Duties

A Scheme Provider must, among other things:

Publish on its website : offering documents (prospectus, disclosure document and PHS); circulars, notices, fact sheets and announcements; scheme reports; the latest NAV per unit ; and distributions declared with their income/capital composition in percentages.

Make the deed, financial records and other records available to the Trustee, persons authorised by the Trustee or the auditor appointed by the Trustee.

Not misuse its position to gain an advantage for itself or others, or to cause detriment to investors.

Convene meetings of unit holders or members when a change may materially affect their interests.

Receive only fees permitted in the deed and disclosed in the prospectus or disclosure document.

Take reasonable steps to replace a Trustee as soon as practicable when the CMSA requires it (for example if the Trustee ceases to exist or becomes ineligible).

Keep adequate records giving a complete and accurate view of each scheme.

Avoid conflicts of interest ; where unavoidable, put safeguards in place so the scheme is not disadvantaged.

Extra duties of a PRS Provider towards the PPA

The PPA is the central repository of member data. To support it, a PRS Provider must:

provide information and meet the PPA's reporting requirements;
notify the PPA promptly of changes to schemes, funds or the disclosure document;
help open private pension accounts, including scanning and uploading forms; and

follow PPA instructions when a member asks the PPA to make a pre-retirement withdrawal , transfer to another PRS Provider , or act on a nomination after the member's death.

Approval and Eligibility

The CMSA requires schemes to be managed by approved Scheme Providers. The SC can attach conditions and revoke approval for breaches. A Scheme Provider is a company that establishes a scheme, issues or offers its units, and operates and administers it under the deed, offering document and Guidelines.

Eligibility criterion Detail
Incorporation An entity incorporated in Malaysia
Capital Minimum paid-up capital and shareholders' funds as prescribed, at all times
Licence A CMSL meeting the SC Licensing Handbook

Resources Adequate qualified staff; adequate systems and processes; risk management systems to identify, assess, mitigate, control and monitor risks

Authorising a Scheme

A Scheme Provider needs:

authorisation to establish the scheme , including approval of the Management Company and the Trustee;
registration of the deed and any supplementary deed; and

registration and lodgement of the UTS prospectus or PRS disclosure document.

After the SC registers the scheme, deed and prospectus/disclosure document, the deed is signed under seal by the Scheme Provider. Authorisation can be revoked if the application contained false or misleading information or a material omission, the provider fails to follow SC directions or the Guidelines, or revocation is needed to protect the public or investors.

Oversight Functions

The UTF and PRS Guidelines (and, for Islamic funds, the Guidelines on Islamic Capital Market Products and Services) require oversight functions to protect investors.

Oversight function Key responsibilities and rules

Board of Directors Ensures policies and procedures support a sound compliance framework; independent directors safeguard unit holders' and members' interests

Individual and/or committee Ensures chosen strategies are properly implemented; monitors and evaluates fund management performance; approves brokers or dealers on a best execution basis; approves cross-trade policies. An individual must be independent of the functions overseen; a committee may include some non-independent members if it can still work effectively. Neither may be a member of the Shariah adviser for the same fund.

Shariah adviser Advises on Shariah matters including documentation; ensures compliance with Shariah rulings endorsed by the SAC; reviews compliance and investment transaction reports; reports in the fund reports whether the fund was managed in line with Shariah; applies ijtihad (intellectual reasoning)

Shariah committee Must consist of at least three individual Shariah advisers

Compliance Ensures compliance with all requirements; maintains a compliance manual and code of conduct for staff; reports directly to the board regularly (or to a compliance committee if one exists); for Shariah schemes, the compliance officer needs basic knowledge of Shariah

Internal audit Reports on the adequacy, effectiveness and efficiency of management, operations, risk management and internal controls

Audit committee Under the PRS Guidelines, a PRS Provider's internal audit reports to an audit committee, which reviews the audit framework, ensures audit findings are resolved, and reviews fund reports, the provider's annual report, related-party transactions and conflicts of interest

Exam Pointers

A Scheme Provider's only legitimate fees are those in the deed and disclosed in the offering document.

Approval of a Scheme Provider is by the SC ; FIMM registers the Provider as a Distributor for marketing purposes.

Three Shariah advisers minimum for a Shariah committee.

The audit committee requirement is specific to PRS Providers in the study guide.