I used to work in a famous Japanese car distributor about 20 over years ago. The management happened to be British and they were very ethical in their business. Cars that were damamged in transit were auctioned away to the staff. These cars are shown in “as is where is basis. ” so that the buyer knows exactly the extent of the damage. I wonder any motor firm do it nowadays or there are no damaged cars in transit or worse they repaired it and sell.
Unethical business practices are harder to spot nowadays and by the time you know it you probably had been suckled.

Since ancient times (3000 years ago), the merchants have been found to be greedy and lacking moral character. This practice continues today. The difference is that the bad practice (i.e. cheating and greed) are considered to be acceptable today, under the concept of “caveat emptor”. It seems to be all right now, to “rip off” the unwary customers to make excessive profits. Even the authority condone this practice.

I hope that more people can speak about honesty and ethical business dealings.

Honesty or integrity starts with oneself. If lying starts and continues, it will destroy oneself by and by.

To change, yes, more people need to speak up to bring out into open forced awareness issues of integrity and ethics.

It has to start from the top and not just from the bottom. There is one Confucian saying (pardon me for inaccuracy) that says something like for rulers to rule, they must treat their subordinates as a father would treat a child.

I read a newspaper report that taxis now put up a sign “It is illegal for electronic stores and tailors to tout and overcharge”.

What is touting? Are financial products being marketing at MRT stations considered as touting?

What is over-charging? Many financial products have excessive charges that give poor value to consumers.

Will it be illegal for financial institutions (i.e banks and insurance companies) to tout and over-charge for their financial products?

Why only go after electronic stores and tailors, when the overcharging in financial products is 10 times or more?

You can read the explanation on:

touting
overcharging
profiteering

in my blog
http://www.tankinlian.blogspot.com

Thanks for a piece of well-written article on business ethics. This upright moral value has long lost to our modern society where money is placed the most important achievement in all walks of life.
I agree with Mr Tan that our banks and insurance companies have become extremely aggressive in pushing their products to their naive and gullible customers. Oftentimes, they are pressurized into buying these financial or insurance products because they trusted their recommendations and expertise.
Many kept quiet regarding the losses they made in the past years.
Singapore is far from attaining the title of truly “a financial hub” if the big players are dishonest in their dealings with their long-termed customers. Who won’t shun them? I will!

Hi,

Business ethics is rather a big phase. This topic is often in the last part of any business study, but rarely in the real world. Not long ago, when you were the ceo of ntuc income, your group practices a strange practice. If customers were to go direct under your branch offices, bypassing their agent, they get an additional discount, by signing an agreement. There could be many explanations, i.e. to cut cost, to get better benefit for customers and so on. But, isn’t that unethical? You undercut your brokers. They bring in clients for you, they pay a big amount of deposit up front to be your brokers, and what they get? Could you explain your stand on this one? Sorry for my poor English, I am dyslexia.

Good one Kin Lian! You gave me a lot to think about! :)

While we cannot prevent merchants from following the footsteps of unethical and greedy ways, we do not need to add chaos to any existing chaos. Give your business to only ethical businesses; support ethical professionals and small business entrepreneurs.

I suggest people also watch EVAN ALMIGHTY to get the BIG picture. Where/when governments are corrupt, business practices are encouraged to be of integrity in order to minimise any damage already done. When you have employees under your protective wings, you are the “government” to them.

I believe there is some misunderstanding in the hierarchic social class structure of , 士，农，工，商. Such class structure first appear during 春秋战国 (just before Qin dynasty), following the abolishment of slavery. During that era, food was regarded as the most important resources. A warlord with abundant food will be able to attract more people, (hence more soldier and talents) to his territory. Thus farmers are placed in the higher social class seconded only to government officials. So, in order to promote farming, they discourage people from joining the merchant class. However, the importance of the merchant class cannot be discounted. Without them, there will be imbalance in distribution of food and resources. Thus, the merchant class contributes to the functioning of the economy as well as its stability. An example of a very famous merchant is 范蠡 (Fan Li), often know as 商圣 (merchant sage or god of merchant). He is more well known as the famous strategist for 越王勾践 (Yue Wang Gou Jian) prior to becoming a merchant. Another famous merchant during the Qin era is 吕不韦 (Lu Buwei). He uses his intelligence to help the father of Qin Shi Huang ascend the throne and subsequently became 宰相 (or the prime minister of the state)

The shunning of the merchant class can be traced to the adoption of Confucius’s thinking starting from the Han’s era. Prior to that, it is just a kind of government policy to promote people to go into farming, somewhat similar to Singapore policy of “stop at two” during the 80s and 90s and the current promote more babies policy.

Hi Chen sj

Many people are willing to go through an agent, if the agent provides valuable service at a reasonable price. The customer will not save a few dollars, by going direct.

I use my stockbroker in this way. Each time, the stockbroker makes a few tens of dollars, but I am happy to pay it, as I save a lot of hassle.

If some other people want to take the trouble to do things on their own and save a few dollars, they should be allowed to do it directly. This choice should be given to the consumer. This is fair and ethical.

The insurance company should not force its customers to go through an agent, who earns a high rate of commission just for filling up a form.

Insurance agents, consultants and bank product salesmen , before they go to work or meet up with clients they leave their conscience, ethics and honesty at home under lock and key to ensure they won’t interfere with their work…Freedom!!!!!!They are free to do anything, cheat steal, rob, lie ,cover up, half truths whatever it takes to close a deal with big commissions. That is what their objective when they see a client .Thinking of helping the client with their needs?Thinking of the cleints’ family needs? Thinking of adequate protection for the cleints? Thinking of the best return for the cleints? You must be kidding.!!!! Tell me, how to achieve MDRT, or COT or TOT when these awards are based on commissions you earned? The fastest and easy route is to squeeze as much out of the customers…You must have heard of this…. cross sell, down sell, up sell,anyhow sell, sell and sell until clients get sold something. Anything about helping the cleints. Robbing is the fastest to get to mdrt..

At roadshows the prospects will be shown a range of products and a tour is conducted around the posters to see which ” fits or attracts the prospect ’s attention”.’ This one good or not. What about this one? It got so many features and the best selling feature is it pays to the next generation. No need worry for grand children……Nothing ,hah!! come , i got more in my computer’.

Anyone can sell to, as you long you have legs, 2 legs , 4 legs , no legs .

The best people to sell to are the frail old women and men who have eye sight problem.. They need a 2 word audio sales presentation. Guaranteed( pow cheak or cheat) and very high return. For the man in the street,

it is the whole life insurance or no need to pay long long and automatic got cash value products . Good or not? Buy one get one free!! Use your cashbacks to pay for the whole life.!! Isn’t it free,eh?No need to pay for your wholelife plan, right? Mr. Prospect, we help you to kill 2 birds with one stone, good or not?

Ethics ? What ethics? got ethics no need to do busyness or sell insolence, hor.

financial consultants often say..”when a client has $5000, you must never be softhearted and say, ‘i advice you to invest $3000, the balance $2000 you keep for rainy-day.’ because, your softheartedness is as good as putting the $2000 into the hands of another financial consultant.”

is this unethical?

Hi,

I supposed the question was not answered. You engaged brokers to get you business, they paid an up front to be your brokers; your brokers get you new clients, when these clients go to any of your branches to renew their terms, your front desk officers offer them discount if they by pass their existing brokers; an agreement was than signed on the spot to protect this act. They go to your branches for renewals, may be because these branches are nearer and can pay for road tax as well, or just because they go for shopping near by. By the way, I am not a broker, I am a paying client. Few years ago, I went to one of your branches, in search for cheaper insurance, your officers rejected my application, because my car was too old (it was eight, the max age accepted was seven). With no choice, I went to a broker; they compared the prices in the market, yours was still the cheaper. They shown me the prices, they still recommended your group; they were willing to do it for me. I don’t see how much they get from that eight years car, their party insurance premium. They got it through; yes, it was ntuc income. The second year, when I went to your branch, I was offered that discount. It is not a matter of filling up a form; it is the value you hold. It is not whether customers willing to do the form filling themselves, it is also not whether you have more branches then your brokers. It is the integrity a company should have.
Some years back, there was this F company; it was the appointed sole agent of a French company for SEA. F company did not make a single sale for quite some time. they received a commission for a sale they did not know from this French company many months later; that sale was not a local one. The buyer by passed F company and had a direct purchase. The French company paid up as they agreed; it was a sale outside Singapore, by no way F company will come to know this sale. This I call integrity. Economic environment change, value we once hold change too.

hi zhummmeng and lulu,

I have the same bad impression you have with those insurance agents. What I mean here is the trust between companies. The insurance industry has their own practice, I dislike all of them. But you engage a business partner, you have the commitment. That’s what I want to say.

Lulu,
you know insurance agents have this maxim, ” if you don’t do it others will, so let’s do it”…If you don’t rob your cleints other agents will rob. Isn’t it the same cleints also get robbed in the end? Another one i heard “why let other company earn, why can’t we do it and let our company earn”.
A more extreme case ,” if i don’t rape the girl others will rape her anyway “.
This is the guiding principle of insurance agents. Let’s do it

OFF-TOPIC: Unfortunately HARD SELL works only once. Meaning….you don’t get repeat orders or referred-by-word-of-mouth sales. When a customer see that you’re only selling him/her what they really require, they will see more value in the service given, and will be more likely to recommend others to you. I do not see why some businesses actually promote aggressive selling. It isn’t the same as persistent responsible ethical selling/service. You can still hit quotas without aggressiveness as long as you’re disciplined enough to meet ### number of people a day or week.

ON-TOPIC: A more worrying trend in the insurance (or “financial planning”) industry is the misrepresentation. Some policies are binding even after the policy-buyer divorces, and frequently insurance agents do not point this out to their clients. Such tactics is unethical.

P.S. You can only buy insurance from an agent and not directly from the insurance company because they are ‘MLM’.

Are consumers knowledgeable about financial products or for that matter, financial planning? There might be some but they probably make up of about 5%. That leaves 95%.These 95% are like sotong, clueless, blur, pretend to know,
desperately need help, naive, gullible, some howlian they think they know,and all these people they inevitably become victims of the foxy unscrupulous insurance agents or consultants .
MAS talked about helping them to make informed decision through disclosure and transparency. Yes, information is easily available but can consumers assimulate them and process them to make informed decision?
No way at all can consumers ever make independent decision. They need the guidance of an honest and competent adviser. Too much info to crunch.
Now , if this is the situation and is this figure large enough to justify MAS intervention to ensure that the 95% have access to proper ethical and responsible advise.
Admittedly there had been some ‘ interventions’ but has the industry changed that consumers are better off today. My answer is NO. Consumers are bleeding from financial losses , under insurance and inappropriate advice.It is still the caveat emptor. You die your business .
What MAS issued in the past were “notices and guidelines”
As you can see from the wording they do not appear to carry full weight of law or as impactful as law. Afterall guidelines only, mah. Can follow , follow if not find ways to go around it.Don’t follow also no one knows, the most just get some scolding or warning or called up for explanation, hor!! Why shoot you own foot? The rest are not following , why try to be too smart. Why make our agents difficult? They make easy money we also make, right or not? Other companies can have cashback products why can’t we. If we don’t follow we lose out. Don’t care whether ethical or not . MAS never says anything, waht. If the consumers want it, if they want to be suckers, we are not wrong.. It is caveat emptor.They have to find out properly.They make decision, right? We just sell what they want.,
This is the financial industry and in particular the insurance sector’s attitude .This seems to be the acceptable norm.It has pervaded down to the frontline insurance salesmen and women who are taking advantage of this lackadaisical supervisory management… The result is the consumers continue to be abused and cheated by insurance salesmen or consultants who have given their conscience.
It is puzzling why MAS is leaving to industry to self regulate when other service industries are stringently regulated. The law society is so regulated until it is so stifling. Punishment meted out sometimes seemed disapportionate to the infringements . And here in the insurance industry , daily crimes and breaches of the FAA are committed and yet eyes pretend not to see. and ears cannot hear. You can catch hundreds if not thousands every day anytime by taking audits and interviews with public or mystery shoppings.
What is the agenda of the ‘regulator’?

Hi, sellers should provide more value to products (say in the form of intangibles like service) and buyers should maximise the value of products purchased. Failing which sellers would be guilty of irresponsible selling and buyers of irresponsible buying.

It is important to regulate “selling”.

If salesman goes around to sell products, they are likely to make the sale by misleading the customer. The regulation of selling should include the following:

1. The product is inherently fair to consumers (e.g. the manufacturer cannot make false claims)

2. Suitable information is provided to the customer (i.e. the information has to be verified by an expert)

3. The selling process has to meet standards of good conduct.

If the other conditions are not met, the selling should be considered as “touting” and the product should be suspected to be bad for consumers.

Again Kin Lian, you offer nothing but valuation info! That’s a good definition of what “touting” is.

A salesperson who does not go around selling products is not any less likely to make sales by misleading the prospect; selling from a retail space for instance is not any more better regulated than if salespersons are allowed to do direct sales. Ultimately, a company’s reputation is at stake if its sales representatives do dishonest selling, for instance, claiming that a product has received awards or endorsements by professional bodies or associations. Some claims by salespersons are also a matter of opinion rather than misrepresentation, for instance if a salesperson says that a product adheres to requirements set by professional bodies or associations, it is up to prospects to judge for themselves, and eventually, to purchase or not. Salespersons also engage in different marketing and promotion activities, so as long as they are courteous and do not harass prospects some standard of good conduct is met.

A salesperson who does not go around selling products is not any less likely to make sales by misleading the prospect; selling from a retail space for instance is not any more better regulated than if salespersons are allowed to do direct sales. Ultimately, a company’s reputation is at stake if its sales representatives do dishonest selling, for instance, claiming that a product has received awards or endorsements by professional bodies or associations when it has not. Some claims by salespersons are also a matter of opinion rather than misrepresentation, for instance if a salesperson says that a product adheres to requirements set by professional bodies or associations, it is up to prospects to judge for themselves (or to authenticate when the claim is made that a product has received awards or endorsements by professional bodies or associations) and eventually, to make a purchase or not. Salespersons also engage in different marketing and promotion activities, so as long as they are courteous and do not harass prospects some standard of good conduct is met.

I agree with you Silentwind. I can tell you of my own experience with an organisation whose sales people misrepresented a product called MxxTV (Sports channel). Their sports channel (as of 2 months ago) has no football nor golf. What they had were channels pertaining to dog-racing and tree-climbing (or something similiar). Customers realise this only when the technicians have installed everything. We didn’t bother to go to CASE (cos I called at least 5 departments telling them the whole story and I had the matter settled with no further costs to us).

CASE only acts for people who pay. Any surprise here?

In some countries, the Government and consumer association take an active stand against businesses that market their products through dishonest means.

For example, the New York Attorney General took a case against Citigroup for the marketing of the “auction rate securities” that were sold to retail investors. Citigroup agreed to buy back these securities from the public and to compensate those who made a loss.

I hope that our Government ministry or consumer association can take a similar approach against dishonest marketing or touting.

Hi gtiong (#9)

I agree with you that some merchants have made big contribution to society.

The point of my article is the need to observe business ethics. I hope that most merchants and traders adopt business ethics and charge prices that are fair to consumers. They will gain the trust and respects of the consumers.

I also hope that society can promote the ethics of fairness, rather than the pursuit of weath though unethical means.

I agree with what is said. Business sould be carried out keeping ethics in mind and a regulation by the government is very important to keep this under control. This inethical behavior is spread in the noble professions like medicine and teaching…medine wherin these in ethical practises include the trade of body parts like kidney , teachers trade exam papers….Is this going to be t he face of todays society????????

Kelly, if the company stated that the product/service was a ’sports’ channel, they haven’t misrepresented if the channel has no golf or football but only races and climbing. Racing and climbing are considered sports. But if the company stated that the product/service was a ’sports’ channel with golf and football, and you made a subscription to it and received no such channel, then misrepresentation (or worse) has been made.

We seem to have lost our values. Ethics is no longer our guiding maxim. It is subordinate , it is pushed to the back seat when it comes to money. look at the insurance agents and all other professions once considered respectable and noble have now succumbed to greed. It is about how much and how fast can I drain or rip off the customers.
Insurance agents only want to sell whole life and endowment. They only sell and push products that give high commissions. They don’t consider the needs of the customers. They become greedy and unethical and some even prostitute their trade for more money. Come to think of it, the life insurance trade is no difference from other trades like prostitution, ah long, drug trafficking, gambling whiich have few commonalities, immoral, illegal, unethical, unscrupulous, harmful and cheating the customers out of their money. Insurance agents can come under the same genre with the other illicit trades where ethics and honesty are absent and money and greed the over riding considerations.

It is interesting to note that prostituition is only illegal when the girls do not pay for their license. Same for cigarettes – it’s not illegal when you (again) pay for import tax, etc. (No, no “we” have not lost our values – some may have! )

Silentwind – the actual VERBAL answer to questions asked,”Yes, it has football etc.” We didn’t look for the service; our doors were knocked on and usually we don’t even bother because there’s an unspoken unwritten rule in our family that we do not entertain anyone without an confirmed appointment. Anyone who has access to our home has keys. That day 1 of my siblings was curious enough to go see who knocked! Mistake!

The organisation was apologetic and called on 3 seperate occasions to apologise after that. So I am satisfied of a proper closure although it doesn’t change the fact that there was a misrepresentation.

Yes Kelly,
the insurance agents are not licensed to prostitute their services, to cheat , to mis-sell , to misrepresent, to engage in unethical practices but they are all doing them. Are they not engaged in similar activities like the prostitutes ah long , drug traffickers etc.etc?
MAS license calls for fit and proper character ( honest and competent) and that they put their customers’ interest first and that their recommendations are on reasonable basis .Do insurance agents meet them? None of these criteria. So where do you put these insurance agents? Naturally, you put them together with the thieves, ah long , prostitutes and drug peddlers and wholelife and endowment product peddlers, and all who are engaged in illegal trades.

You might think there was a misrepresentation but in such a case it’s hard to prove. People make slips in verbal communication. I hypothesise that when asked if the channel had football he said ‘yes’ immediately because (i) the channel does have football, but in a package/plan that you did not sign up for or (ii) to the best of his knowledge that point in time, the channel did have football (maybe because it used to show football matches). Real misrepresentation, or misrepresentation that can be proven, is usually documented. If the contract, subscription plan or order form did state that you’d be receiving football games on the plan you signed up for, then there was misrepresentation. If it did not, then it was courteous of them to have apologised 3 times. What you’ve brought to this thread seems to me merely a case of ‘over-promising’ or ‘under-delivering’, not ‘misrepresentation’. Misrepresentation’s serious, m’am.

Anyway, I do agree that a lack of ethics is prevalent but all the examples here, even the essay itself, is neither the end nor short of it. There are more serious issues relating to human rights and ethics in Singapore, including the right to life and the more realistic right to privacy, and the lack of ethics in sales is only, to use a cliche, the tip of the iceberg. Let me add a few points to the previous comment. Misrepresentation that is documented, like in a contract, can be considered criminal breach of trust or even fraud, but there isn’t much to worry if you suspect inaccuracies are made in a pitch. One, if an intentional lie was made, then the salesperson would have to live with it. Imagine his pain, especially if he didn’t make the sale. Two, if caught making an inaccuracy, unintentional or not, then he’d come across as a fool. There was once this chap who came knocking trying to sell me an electronic lock for a couple of hundred dollars. It was an impressive product (even if it also came across as a gimmick) until he said the police were endorsing the product and would be getting his company to distribute it in a crime roadshow. I suspected that an inaccuracy, in fact I almost laughed in his face, but I really would have bought the lock if I had ready cash on me.

The salesperson and his pitch are besides the true value of the product, and I’d already attached a high value to it at first sight.

Silentwind you are right – any verbal communications is “hard to prove”. The misrepresentation was not recorded in any way but there is also no need to “prove” anything as I am not escalating the case to court. There’s no need for me to call on eye-witnesses even. But I will explain it here more clearly so people can understand better.

This is only half the story. It took them 5 visits to our house (they always had some glitch that prevented installation of MXXTV) before we found out to our dismay that the product wasn’t what we were actually sold. There was no clause in the contract for causing us inconvenience. Fine….

I would have laughed it off too if the organisation did not insist on charging my family for something we didn’t order. I told the organisation we were given durian when we ordered mangosteens, how did they expect us to pay for durian?

Silentwind your “lock” siuation was also one such misrespresentation, Having the lock exhibited at an anti-crime roadshow does not mean the Singapore Police Force endorses it (or going to endorse it) even if the sales person says it’s been endorsed or going to be endorsed. You are right to spot this. Proof? No proof but you are the customer and I think bosses believe their customers more than they do their employees (unfortunately or fortunately depending on whose shoes you’re in). Over-promising has always been a form of misrepresentation and is unethical no matter whether you look at it at from up, down, left and right, keke

Looking back in history, 1 organisation was ordered (by court) to sell their mobile phones (promoted) at the price which was erraneously TYPED into their webpage. Do these people “pay” for their mistakes? Yep….they’ve paid for it already. What a slip-up but slip-ups are no BIG NO NOs in businesses, all the more for people to be careful about what they promise of their products.

It is not wrong/unprofessional at all to say,”I’ll check on my end first.” or “I am not sure of this, manufacture of xxx may have changed – I will get back to you asap on this.”

My ex-employer is another example of being unethical. When asked to give black and white that xxx product is really xxx, my ex-employer told the customer they can’t give it but they can SAY it. What sort of logic is that?

Zhummmeng I was stating it from the legal point of view. Or rather the government’s point of view. A loan shark is legal only when he’s licensed. Example of legalised loansharks – BANKS (they give loans just like loan sharks)! It’s a money-world.

Zhummeng as you have already described they’re (legalised trades, etc) is not without flaws. Unethical practices are not limited to insurance agents alone; even some of the things school teachers do nowadays are unethical. Eg. Not fully investigating incidents and finger-pointing an otherwise innocent student.

It’s not the trade/business/professional at fault, it’s how people conduct their businesses/sales and how the government has not successfully curbed unethical conducts that is the issue. The only “curb” I see now is that it’s harder to qualify as an insurance agent, and so more agents are wary of throwing it all away with just one unethical act. More can be done by the government.

By the way, thank you Silentwind and Zhummmeng, it’s just wonderful to have a share of minds here!

No, Kelly, I did not consider the salesperson who tried to sell me a lock to have made misrepresentation of any sort. It was an extravagant claim designed to persuade me to make the purchase, but it only made me amused.

Quote: ‘By the way, thank you Silentwind… it’s just wonderful to have a share of minds here!’

You’re most welcome. Can see you really enjoyed yourself.

I see your point – you must be much more benevolent than me! :) I view extravagant claims to be as good as lies, and lies are misrepresentations to the products/service being sold. Some things are black and white to me, no grey. I guess I take such unethical sales tactics in a more negative light.

Selling is about lying and suppressing truth …and at the best only half truth . The lies and any manipulation of truths and lies can be found out quickly if the product is tangible. Not intangibles like life insurance …it will be years down the road when the truth is discovered…It will be too late. Damage already done.The buyer is devastated.
The insurance agents maybe dead or at the 18 level hell. How to get them for redress? unless you plan to go there to seek revenge or to report to the King of Hades.
Solution is selling is to be regulated too. This sounds a little bit silly, isn’t it?

“Selling is about lying and suppressing truth …and at the best only half truth . ”

This sentence can be right….it can also be wrong.

Why do I say lying is RIGHT? If someone asked you if she was fat and you lied, that’s ok! If you’re talking about suppressing your chicken rice recipe from non-family members, no one has objections too. If you want to soften the impact of a broken heart, you may lie too.

WHY I SAY LYING IS WRONG

I’ve seen real estate agents selling houses that had plumbering problems and the new owners didn’t complain because the agent already informed them. They had the house at a very good price which could allow them to spend on repairs. No complaints because the truth was told. If they were kept in the dark and found out the plumbering problems much later cos the agent didn’t tell them, no one’s gonna be surprised if the new oners get angry,

I cannot imagine politicians lying in order to sell their ideas…it’s just all wrong. “Everyone’s doing it” doesn’t mean you’d also have to stoop to unethical ways.

P.S. Actually selling is already regulated, For example people who go from door to door or on the streets – they are ‘governed’ by the laws for direct selling. The local penalties for unethical selling, however, may not be tough enough,

Kelly,
It is the exactly the excuse of insurance agents, “Everyone is doing it”..why can’t we do it too? In another way the agents’ excuse is ” If I don’t sell him this, other agents will also sell him, I might as well sell him this lousy product.”. or another excuse is “not that i want to sell to her the auntie wants it , waht.”. You see the blame shifting?
These are very common reasons insurance agents used to absolve themselves of unethical selling. Well, insurance agents are great manipulators and they so well trained with their tongue that even the birds can be lured down from the tree.
The public need to be wary and careful when dealing with insurance agents. They are not the gentle, caring and sincere agents you think. They are great actors too.
What you see may not be what you get most of the time. They sell to you what will benefit them and not you. They are subtle and they cover up their sly and cunning motive with their phoney antics.
To know the truth the consumers need to consult an independent , qualified and honest financial adviser to have their policies reviewed. I am not surprised the review will uncover the rubbish, the truth and unscruples of the insurance agents.. This is the way consumers can safeguard their interest and to ensure they don’t fall into the phoney and fake display of sincerity and caringness.
The agents are very clever to hide their dishonesty, incompetence and sinister motives.
Take heed . It serves you well to put every insurance agent under suspect.

Hi zummmeng and others,

I think that the responsibility for good insurance products should be shouldered by:

> the insurance company who created the “bad products”
> the regulator, who allow the “bad products” to be offered in the market.

A good product is one that meet the needs of an identified group of customers and is fairly priced (and not over-charged).

If the regulator is more active inensuring that fair products are offered in the market, then the insurance company will be forced to keep to the rules, and then the agents will have the good products to sell.

The agent may still sell the product to the wrong people (turning a good product into a bad one). The insurance company should have the means to identify it, and rectify the mistake. They cannot just leave the matter to be unpoliced.

Conclusion: It is important for the insurance company to observe good business ethics.

Mr. Tan,
you are right that not all products are suitable for all people. I believe that MAS has recognised this and will require insurance companies and manufacturers to state the market that the products are targeting at. But the question is will this be enforced at company level and will MAS police and take audit and enforce it; to fine the company or insurance agents who flout this .
On the other hand i notice that there are many products out in the markets that are not even suitable for ANYBODY and yet they escaped the so called ‘close scrutiny of MAS’. Example of very bad products are the cash backs or refund anticipated endowment products. Almost all the companies have this product.These products don’t do any good to consumers in term of protection and saving. Worse, the man in the street and the poor make up the largest of the customers or victims. How were they sold this product? it must have been done by dubious, unethical and unscrupulous means.No honest and ethical and competent advisers or agents would ever sell this product if they are concerned for the financial well being of their clients.
Adding salt to injury, there are insurance agents or consultants who hoodwink customers into buying a cashback product and use the refunds to pay for another product, a whole life limited premium product under the guise of “buy one get one free”. This is getting absolutely out of hand. This is churning. Does MAS know about this? The suckers are the consumers who don’t even know what they have bought.Their trust of the agent and the brand name of the company have been unethically exploited to the fullest and despicably.
MAS must do something if it wants to make the financial industry a safe market place for the ordinary folks who are usually less savvy, innocent,clueless, naive and idiotic lest they become preys of the predatoring , conscienceless insurance salesmen and women.
MAS MUST regulate directly and don’t leave this to the companies. The companies will not shoot their own foot. In fact they are in cahoot with their agents to fleece their customers. They cannot be trusted.
Insurance agents must be regulated even more stringently by raising the requirement of higher educational and skill sets and be licensed and audited frequently. Selling must be banned and disclosure standard should be similar to that of the pharmaceutical industry.

>>>>Zhummeng: The (insurance) companies will not shoot their own foot….. Take heed . It serves you well to put every insurance agent under suspect.

Thank you Zhummeng for this reminder. I am also an insurance agent…..GOTCHA!!! I was kidding – sorry – I love to kid around! :)

I never trusted insurance agents except for 2 who are very good friends of mine. Both of them are very straight-forward. Both of them do not know each other but both said about the same thing, “The more premium you pay the better the coverage….Can you keep up paying premium long-term? If not, I suggest you pay for lower premiums or don’t buy at all.” My answer was a NO NOT GONNA BUY INSURANCE and I tell you, there were no hard feelings. We are still friends to this day because of their straightforwardness and frankness and also partially I am not their customer. I have friends of mine who go to them because I don’t twist my testimonials.

MAS is aware of churning. But more needs to be done by MAS. MAS need “mystery shoppers” to randomly “test and report”. For this, money is needed and somehow I have a feeling those not even involved in buying insurance will be involved. :/

>>>>Kin Lian: I think that the responsibility for good insurance products should be shouldered by:
> the insurance company who created the “bad products”
> the regulator, who allow the “bad products” to be offered in the market.

Fully agree!

I am perturbed by insurance agents who encourage vehicle mechanics and their customers to inflate values of vehicle repairs, etc. You can say the insurance industry has agents who are cheaters, and the very same agents who encourage inflation. If insurance companies cannot see that, then it is also their loss in the long-run. Once a license of an insurance agent is unplugged, there’s one lesser unethical insurance agent. And the number of unethical agents ousted from the industry will keep increasing, finally leaving only ethical agents to make their money. I am so imaginary! lol

Dear Mr. Tan Kin Lian,

I have an enquiry to make regarding the Effect of Deduction after reading your blog. I took out my policy and I am pretty stunned to see the amount that is written under the effects of deduction.

My annual premium is $3,000 and assuming that I live till 65, it will be a full 44 years. I was 21 when I signed the plan.

Looking at it, Total premium paid is $132,000, total distribution cost is $5468, Non-Guaranteed Cash Value at 5% is 205,600 and at 9% 691,800. Effects of deduction is $882,776. I was not told about the effects of deduction when I signed up the plan and looking at it, I am pretty much being shortchanged for the amount of money that I put in.

Kindly advise on what should I do.

REPLY

You can write a letter of complaint to the deputy managing director in charge of market conduct in MAS, as shown below.
http://app.sgdi.gov.sg/listing_expand.asp?agency_subtype=dept&agency_id=0000008384-

The agent has a duty to disclose and explain this important point to the policyholder. It is shocking that the Effect of Deduction is higher than the Cash Value (assuming an investment yield of 9%). The charges are so high, it amounts to daylight robbery.

http://www.tankinlian.blogspot.com

Here is an example of a product that over-charges customers to such a blatant extent, that it amounts to daily robbery.

http://tankinlian.blogspot.com/2008/08/effect-of-deduction.html

gtiong(#9), thank you for letting us know an interesting part of the history. That is really enlightening!

Mr Tan, I, neverthless, totally agree with the point of your article. Your introductory paragraph, however, does seem to cast a shadow over merchants in general, which is why I guess gtiong#9 gave a clarification. If you were to write to another forum, I hope that you can leave it out. This will make your article stronger!

QUOTE BEGIN
24) Tan Kin Lian on August 11th, 2008 7.37 am
Hi gtiong (#9)

I agree with you that some merchants have made big contribution to society.

The point of my article is the need to observe business ethics. I hope that most merchants and traders adopt business ethics and charge prices that are fair to consumers. They will gain the trust and respects of the consumers.

I also hope that society can promote the ethics of fairness, rather than the pursuit of weath though unethical means.
QUOTE END

Dear Mr. Tan Kin Lian,

I hope you could take my comments as objective as possible. You dis-allowed me from posting opposing views in your blog, which is a rather sad thing. Opposing comments provide more balance views on the particular subject.

I think this article is too idealistic…you took a very narrow view on what you think is a problem…In fact it is highly questionable that what you think as a “problem” is indeed a problem.

For example:

you think if a company makes huge profits, they are not charging consumers fairly…and they are not so ethical.

but how much is huge? how much is then fair ?

what’s wrong with creating huge wealth (huge profit margins) by doing business, if your customers are happy to pay for your products/services?

Creating Weatlh is what drives most people…creating huge wealth is a dream of many…anything wrong with that? anything wrong with achiving that by selling products/services that give huge margins?

In my opinion it is TOTALLY WRONG to suggest that earning huge profits = non-ethical business behaviour.

As long as no monopoly, no price fixing, and there are lots of competiions, I believe people are happy paying the prices…and we cannot condem the businesses as practising non-ethical behaviours for earning huge profits (margin) out of it.

Luxury goods, like LV bags, i believe are earning huge profits….do they over-charged customers? is it a “daily robbery”?

Subjectively, in my opinion, yes, LV bags clearly over-charged customers..but I don’t feel they are anywhere near to “daily robbery”. I don’t see anything wrong with making huge profits from products or services, as long as your customers are delighted with your products or services..