24/04/2026
🔥🔥Insurers ❌restrict agent🔥🔥involvement in cash trust schemes ahead of regulatory oversight By Emir Zainul / The Edge Malaysia 21 Apr 2026, 03:00 pm.
The SC is beginning to assert its oversight on a segment that has long been in a regulatory grey area. This article first appeared in The Edge Malaysia Weekly on April 13, 2026 - April 19, 2026.
SEVERAL insurance companies have explicitly barred their agents from “engaging in or promoting” cash trust schemes as regulators step up enforcement of these products, which are often marketed with the promise of high or guaranteed returns.
Internal circulars issued across the industry show what looks like a coordinated move to prohibit agents from offering cash trust schemes amid growing regulatory concern about their legality, structure and potential risks to investors.
These circulars, sighted by The Edge, reflect a shift from general caution to firm restrictions as the Securities Commission Malaysia (SC) begins to assert its oversight on a segment that has long been in a regulatory grey area.
The notices issued in March and April, by insurers such as Hong Leong Assurance Bhd, Prudential Assurance Malaysia Bhd, Great Eastern Life Assurance (Malaysia) Bhd and Tokio Marine Life Insurance Malaysia Bhd, warn that such schemes are often associated with “high or guaranteed returns”, may involve unlicensed activities and carry the risk of misleading representations.
The industry’s response suggests that regulated financial institutions are moving ahead of formal rules to insulate themselves from any potential fallout. Insurers, whose agency networks often double as distribution channels for a range of financial products, appear particularly sensitive to the risk that agents’ involvement could mislead customers into believing such schemes are regulated.
The circulars explicitly warn that even informal referrals or information-sharing could be construed as endorsement. One circular highlights the personal consequences for agents, noting that any involvement could affect their “personal reputation, customer trust and long-term career growth”.
“Promoting, referring, recruiting for or engaging in any business or occupation related to cash trust investment schemes is strictly prohibited,” one insurer says in an internal memorandum to its agency force, echoing similar directives across the industry.
The circulars stress that the insurance companies do not run cash trust schemes and caution that any involvement by agents could create the false impression of company endorsement.
One directive notes that “most of these schemes are not regulated” by the SC or Bank Negara Malaysia, while another warns that participation could expose agents to disciplinary action, regulatory scrutiny and reputational damage.
The wording in these circulars is broadly consistent. Agents are barred not only from participating in such schemes but also from using company branding, communication channels or agency networks to promote external investment products.
Agency leaders, in turn, are tasked with ensuring compliance across their teams. The clampdown by insurers comes as regulators move to close long-standing gaps in oversight.
According to the circulars, the SC has recently “intensified its regulatory and enforcement actions” against cash trust schemes. Straddling the regulatory divide Cash trust products, which allow clients to place funds with a trustee company to be managed on their behalf, occupy an unusual position in Malaysia’s financial services ecosystem.
Unlike bank deposits, these products are not covered by deposit insurance protection. At the same time, they have historically fallen outside the direct supervisory remit of both Bank Negara and the SC, leaving the products in what market participants often describe as a regulatory “no man’s land”.
In practice, some cash trust schemes have been marketed as low-risk instruments capable of generating steady returns, sometimes exceeding 10% annually, through investment activities or money-lending arrangements.
The structures can resemble deposit-taking or pooled investment schemes, but without the licensing requirements imposed on banks, fund managers or unit trust operators.
Some also impose lock-in periods of three to five years, with penalties for early withdrawal. Earlier this year, the Ministry of Finance said the SC was finalising a framework to clarify licensing requirements for cash trust schemes that invest in capital market products.
It also said the regulator had begun investigating several trust companies suspected of conducting regulated capital market activities without a licence, although the details were not publicly disclosed.
The framework follows amendments to the Capital Markets and Services Act 2007, effective Jan 1, 2026, which expands the SC’s authority to determine which trust-related activities fall within the scope of regulated capital market services.
The framework is expected to focus on trusts that invest in instruments such as securities, bonds and unit trusts, while broader coordination with other authorities remains under discussion.
