Monday, October 27, 2008 10:25
“Non-vulnerable” deserve a chance at pay-out
In Guest Writers, Main Stories • 1,474 views • 28 Comments
Liyana Low / Writer
Investors who do not fall under the “vulnerable” group should have a chance at getting their money back from the financial institutions. This was the sentiment at Speakers’ Corner last Saturday where about 500 unhappy investors had gathered.
They were questioning the financial institutions’ decision to give priority to “vulnerable” investors. The event, organised by the former CEO of NTUC Income, Mr Tan Kin Lian, is the third to be held at Hong Lim Park.
Among those in the crowd was 49-year-old Kevin Lim.
He said: “Why should the “vulnerable” group get payment when all of us were clearly misled by the banks and the relationship managers who sold us the products?”
The issue of contention here, according to Mr Lim, was that both the non-educated and educated groups of people were equally misinformed by the banks.
Both groups of investors were assured that the structured products were “safe” and “low risk”, and is a good alternative to “fixed deposit” as they offer higher returns.
And since the educated people do not fall under the “vulnerable” category, they are worried that they might be left out by financial institutions in the pay-out.
During his speech, Mr Tan said that heunderstood many investors were unsure about how they will be treated, as they do not belong to the “vulnerable” group.
He is hoping that a fourth petition will help those who do not belong to the “vulnerable” group to get their money back. “The forth petition will be addressed to the chairman of MAS to ask MAS help find a collective solution to the mis-selling of products by the financial institutions,” he said.
But Tan also cautioned that it could be a long time before investors know if they would be compensated, as there are about 10,000 cases to be handled and the financial institutions will take a “case-by-case” approach. Furthermore, many of those affected have still not lodged their complaints.
Mr Tan hopes that MAS will advise the banks to deal with investors’ complaints collectively, rather than go through each case individually.This includes grouping the investors together according to the financial institutions that sold the products and requesting that the institutions hold an open forum with them to discuss how the investors were misled by the information and how they can be compensated for their losses.Taking these steps will reduce the stress on the individual investors in making the complaint and will ensure that fair compensation is given to all the affected investors.
Mr Tan also advised people to be honest when lodging a complaint with the financial institution.
“The most important point is to state how you were misled, and what you were told by the sales representative,” he advised.
“I think I have a case against the financial institution because I fall under the vulnerable category,” said a lady in her 50s who declined to be named. The secondary school graduate was there at Hong Lim Park to find out more about what she could do to get her money back.She said that the relationship manager from Maybank who sold her the product did not tell her that she was buying Lehmann Bonds.
She lost the money that was supposed to fund her son’s education, who is currently doing his ‘A’-levels. In addition, the single mother was diagnosed with stage three breast cancer last year, further worsening her financial situation.
When interviewed, she said, “I do not want any sympathy from anyone. I just want my money back.”
Forms were given out to the investors after Tan’s speech so that they could fill in the necessary information to lodge their complaint.
Volunteers, stationed at various parts of Hong Lim Park, were available to assist with explaining the information needed to fill in the forms.
Michelle,who works as an accountant, was at Hong Lim Park to volunteer and to help fill up the forms for those investors who could not fill them up in English.
She said that most of the people who approached her were lowly-educated people who went to the banks alone when they bought the products.
“So can you imagine how scary it is for them, to be alone in a room, without any mental preparation for all the complicated terms that a relationship manager might be giving them?” she said.
In add
ition, Mr Tan suggested that investors, who are unable to get a satisfactory compensation from the financial institution, could bring their cases to the Financial Industry Dispute Resolution Center (FiDREC), at the cost of $50.
FiDREC, which has the authority to pass judgments that are binding on the financial institutions, will form a panel to consider the complaints. At present, FiDREC can decide on claims of up to $50,000. It can hear larger cases, subject to agreement from the financial institutions.
He added that the decision is not binding on consumersand that consumers will still have the right to take their case to court, they were dissatisfied with FIDREC’s decisions.
But to those investors who wish to take collective legal action, Tan advised them to consider it as the last resort as it could be costly and risky. Investors should measure the cost and the chances of winning the case.
“If you lose the case, not only do you have to pay your lawyers, you might even have to pay the banks for the cost of legal action as well,” Mr Tan cautioned.
According to Mr Yong S.C., 57 – a volunteer in charge of helping investors from Hong Leong with their complaint forms – people now at least have a better understanding of what they can do to get their money back as compared to previous weeks.
Through these sessions, he hopes that both the vulnerable and non-vulnerable groups of investors will be able to get fair compensation.
The fourth gathering at Speakers’ Corner will take place next Saturday.
Pictures by Ma Xianrong.
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28 Comments
Donaldson Tan
gemami
PM made a statement in today’s ST echoing earlier call by MAS for the banks to do the right thing.
He said that the banks know it’s in their interest to resolve the matter quickly because they need to salvage their reputation – using the term ‘Reputational Risk’ … which means if they do the right thing, their customers will remember them for a long time. Likewise, if they do the wrong thing, customers and potential customers will remember them for a long time.
After coming out from hiding and making such a statement, I think it is a very welcomed statement which will in some way compell the banks to resolve the issue as quickly as possible.
It would have been better if PM had elaborated more on what the govt would do if the matter is not resolved quickly enough.
It is important for TKL to keep the pressure so that all affected investors are given a fair hearing in the shortest possible time.
Let hope the banks do the right thing.
Donaldson Tan
It is interesting to note that Straits Times has 2 headings for the same article. The article is written by Chua Chin Hon, China Bureau Chief.
1. Resolve claims fairly: PM
http://www.straitstimes.com/Breaking%2BNews/Singapore/Story/STIStory_295337.html
2. It will be handled ´fairly´
http://www.straitstimes.com/Breaking%2BNews/Singapore/Story/STIStory_295167.html?vgnmr=1
I wonder what the true purpose of the headings is for. TKL must continue to provide leadership for a united front. It is this pressure that will ensure retail investors get their rightful compensation.
Just like PM Lee, I had mentioned about reputational risk banks faced in handling the complaint cases. It is also the same risk that puts bank in a difficult position should they win the class suit if the retail investors were to pool their case together against the banks. Thinking along the line of the nash equilibrium, a class suit is most likely to result the banks to offer out-of-court settlement with reasonable compensation for every retail investor.
LuiKong
The key as to whether the product is misrepresented is in the prospectus. If you had been given the prospectus before buying the product, you are deemed to have apprised yourself with the nature and the risk of the product. As stated in the prospectus, you are to consult your lawyer, accountant, etc if you do not understand the content of the prospectus. Saying that you do not understand the jargons and language used in the prospectus is not an excuse.
If you were not given the prospectus before it was sold to you, then the product could have been misrepresented to you by the RM or sales person.
nobody will admit they mis-buy
“Non-vulnerable”? hahahaha, many of the investors are smarter than you think. They know how to push blame to everyone except themselves….
In the time like this, everyone will claim they were mis-sold or mis-lead, nobody will tell you they mis-bought.
Even very seasoned investor will tell a “story” to claim that they were mis-sold. Why? because I can get early redemption without penalty, plus already earned the interest for last two years, nothing to lose.
If someone ask me, why you complain when you know what you buying? I will reply because TKL says the banks mis-sold investors the products and told us to complain.
Steps to claim ignorance of the risk and was mis-sold:
1. Deny everything – just sign because RM told me to (who can counter-check my statements anyway, afterall, it was two years ago).
2. Never received prospectus or brochure (who would check anyway, I can just conveniently dump them in the rubbish chute last night)
3. Was told by RM I can get back my capital and got higher interest than fixed deposits and it was no risk. (even if I lied, so what, no documents to prove this)
4. Claim I dunno anything, just think it is fixed deposit and sign because RM ask me to sign. No documents given, nothing.
Repeat steps 1-4 until bank gives in under public pressure.
Anyway, they are not subjecting me to lie-detector test right? So, just whack lah, who knows? maybe under public pressure, the banks just refund me in full and I get away for knowingly making a mistake due to my own greed and carelessness.
isa
1) I think they should relax the vulnerable group requirement. A person of 50years of age should be the min age considered as at these age, they do not have the earning power/capacity to perform for another 20-30years to accumulate enough for retirement.
2) The segregation of vulnerable and non-vulnerable group serves two purposes:-
i) Give the compensation to the ones that are really in need first.
ii) Segregation reduces the power of the total. Divide and Conquer. The group become smaller and it is easier to deal with directly.
kero
At least I hope people will be much, much more cautious about investing from now onwards. And have the will to say a firm “no” when inappropriately advertised to. You bet this won’t happen again… once bitten twice shy, the government will chastise everyone for “not learning” from a high-profile crash and those who have saved will be there to support them next time.
another perspective
About time that banks factor in business risks such as “vulnerable claims” from
non-vulnerable customers …..
In the future … make customer sign paper to declare themselves not vulnerable lor …
Everyone must learn something from this saga lah. Otherwise our MPs cannot come out of their caves to say things like this is good for national building and unifying the country blah blah …. and let’s move on.
gemami
we are not talking about ‘just any products’.
we are talking about a product that we now know has been mis-sold. whether the group falls under the vulnerable or non-vulnerable category must then be a secondary consideration when the banks take steps to ‘do the right thing’.
the onus should not fall on the investors to prove whether they are ‘vulnerable’ or not. instead, it must be the banks who must prove that the product was not mis-sold.
even if there is a small percentage of mis-selling, the banks must then acknowledge that the possibility of the product being mis-sold even to non-vulnerable investors is real. compensation should then be assessed accordingly and paid to all investors.
in short, it is the banks that must prove that they had not mis-sold and not the other way around.
Anonymous
how can it be mis-selling when you clearly know you’re getting a potential 5%pa by investing into those products vs the miserly less than 1%pa deposit interest rate the banks are paying you?
between risk free rate of 0.5%pa and 5% is a whopping 4.5%pa difference….something must be in it for someone to pay you so much more
the investors were greedy for the 5%pa yield and forgot there’s such a thing called risk and murphy’s law
even if there’s only a 0.0001% chance of a failure, it’s still a 0.00001% chance
and unfortunately, that 0.0001% came true for those investors
too bad..move on
but unfortunately, singaporeans will take this opportunity to cry mis-selling, it’s not their fault, they want their money back,…dishonesty and no integrity to admit when it’s their greed to have put all their money into something they didn’t understand
in my opinion, the investors should be segregated into two lots
the low IQ, defined as the intellect of a 6-year old and the rest of the world
which camp do you fall into?
chorus
Where there’s money you can be sure we’ll all be out in full force and full voice! Hah.
to chorus on October 27th, 2008 10.29 pm
No so, only 1000 or less at Hong Lim Park, where are the other 9000? The impact would be more dramatic if the whole of Hong Lim Park is filled to capacity!
Donaldson Tan
As stated in the prospectus, you are to consult your lawyer, accountant, etc if you do not understand the content of the prospectus. Saying that you do not understand the jargons and language used in the prospectus is not an excuse.
– Luikong (#4)
Yes. It is flawed to have relationship managers to take up the role of financial advisors. What’s the point of having relationship managers to provide financial advisory when there is conflict of interest and the prospectus attempts to deny the responsibility of relationship managers in how they effect their sales. This would suggest that banks and other financial institutions are already aware of the conflict of interest prior to the sale.
gemami
10) Anonymous
I fully understand that it can sometimes be very difficult to get people to see things from your points of view. It gets even more frustrating when people chooses not to understand.
I have found that it is good, at times like these, to take a step back to see what is it that the people do not understand.
In your case, if you may allow me to offer my humble opinion, it is your stand that that the points of contention – the wording of the contract and the ‘tell-tale’ signs of higher returns – are plain and clear, for all who know how to read, to see. And, by such logic, you pointed out that it is the investor’s fault for not making the effort to understand fully what he is getting himself into – even if the risk is 0.0001%, there is risk. you made a decision to invest, you pay for your mistake. period.
The reason I see why the debate rages on is because of these points of contention. Logically, there is no contest with the manner in which you have argued your case.
However, the situation here defies logic. We have the banks and FIs cleverly crafting their prospectuses and putting in place a scheme to sell the product with maximum impact given to amplify the gains and down-playing the risks to the extent that seemingly there is NO risk.
To understand the ‘down-playing’ of the risk factor, I would liken it to someone telling you to put your money in POSB – nothing to worry about, it has the govt’s backing and should the bank collapse — ha! has! added – unimaginable right?
Sales statements like this point clearly to the fact that the intent to mislead is apparent; thus, mis-selling or misrepresenting – both the product of dishonesty.
sobri
I’m thinking of all thiose RMs who believed in the products they were selling, that they too invested substantial amount of their own money.
They cannot claim mis-selling, and neither can they file a claim against their own banks.
How many of them actually made up the 10,000 unfortunate investors?
Worse still, they are now cast as the evil-doers in this incident.
Do they have any hero to fight for them? Of course one can say that they have reaped the bonuses from the sales. But they too have lost a lot, and they sold the products with genuine belief of the worth.
Mee Siam Mai Hum missing man
I strongly firmly believe all investors should be refunded!
Reasons:
1. It was clear there is mis-selling.
2. Due to Blind Trust culture, even the educated have fallen into the trap.
Have we considered the sales tactic used?
Does it mean an educated person can NEVER be given false impression?
If so, why are educated people in this world still need to engage lawyers to fight cases where they have been cheated? In short , being educated does mean they cannot be victims. The System needs to prove beyond reasonable doubt that educated people need not be compensated.
so, People, lets make this the last Blind Trust sad incident to happen to us by ALWAYS QUESTIONING everything that you have any doubt. When you are the Customer, please please! QUESTION EVERYTHING! DEMAND for Black and White of what the ’salesman’ PROMISED, SAID, SUGGESTED, INDICATED. Its your RIGHTS as a CONSUMER! But you can give up this right and allow to be a VICTIM and then cry and cry for help later!
QUESTION EVERYONE, on EVERYTHING! Get Black and White evidence!
After this, you may choose to sign on the dot. Remember Salesmen are salesmen. They are nice to you, talk nice to you, appear like decent people and honest and man of integrity and sincere. But ultimately they want your sales. Else why a totally stranger smile at you like your father or mother? Come on!
In a pro-business environment, the responsibility lies in the Consumers. Poor thing! So, lets Demand proof. Never accept verbal words. Take it with 10 pinches of salt. Consumers are rarely lawyers or contract specialists. Its very difficult to fully understand all the fine lines. So, as the smaller fish, we need to protect ourselves and do the right thing.
I urge businesses make contracts clearer and fairer else when all consumers demand black and white in everything you said, believe me, your sales will drop.
In this Singapore RECESSION, STI at 1600, you better wake up your ideas!
regards
Kang Ah Loo
xtrocious
To anonymous (October 27th, 2008 6.27 pm )
Yes, investors should be aware of what they are investing in…
However, if the facts were hidden or not fully revealed to them, then can they still be said to be investing with open eyes?
And are such complicatedly structured products even meant for retirees and other people with very low risk tolerance?
Yes, there is always the risk of something bad happening – that’s life – but to mis-state the chance of it happening is already wrong…
James
I wonder how does one differentiate between “vulnerable” and “non-vulnerable” ?
I think the crux of the issue is if the product pushers were giving out false information. If that is found to be true, the each and every customer should be compensated to the fullest extent, without discriminating against their age, ethnicity, intelligence or supposed ‘vulnerability’ rating.
minibombed
Minibond Series U-44 & Series U-53 -
For this investment, you need to place your money with us for 5 years.
We will give you 5% interest per year. But if there is a credit event*, you lost all your money.
Credit event* – we reserve the right to classified anything we deemed to our advantage as credit event.
In addition, we will not be responsible for what our relationship managers said to you.
They have every right to tell you half truth, full lies, half lies.
Once you have signed on the dotted lines, we are protected from all liabilities.
However, in an event of dispute, we being honest and honourable people will give a fair compensation to customers from the vulnerable group.
A customer must have ALL the following attributes before he can be qualified as vulnerable.
1 At least 95 years old
2 Never being to school
3 Head of an organization with not less than 50,000 staff and assets not less than $500 million
4 Birthday is on the 31st April every year
5 Knows how to jump down 10,000 m from an airplane without a parachute
patriot
The Function and Role of Government in any country are invariably the same, that is, Government is the Master Regulator, it keeps justice, peace and happiness for their countrymen.
No country is without Laws and Regulations as freedom tends to be badly abused by the unscrupulous in any society. High calibres and if possible the best are elected and picked to run a nation, these calibres are to be able to pre-empt whatever foreseeable contrivement and scheme. They are tasked, by nature of their appointments(parliamentary), to look into every injustice, solve them and cover every loophole arising from any incident, it is a duty they have to fulfill to the maximun. Every society is latent with frauds and felonies, the REASON FOR GOVERNMENT IN THE FIRST PLACE.
What we Singaporeans are witnessing in our country is that our parliamentarians are involved in running PRIVATISED STATE ENTERPRISES IN INVESTMENT AND BANKING(financial), ESSENTIAL GOODS AND SERVICES, HEALTHCARES, TRANSPORTATIONS, EDUCATIONAL AND EVEN FUNERAL SERVICES. Of course conflicts of interests are everywhere, an aspect of governance where all RULERS ARE DUTY BOUND TO ERADICATE AND IF NOT, ENSURE THAT THEY BE AT THE LEAST DAMAGING.
Poster Anon(#89) has succinctly described the wish and expectation of the investing public and it simply means an effective and efficient regulator. A regulator that is impartial, neutral with wisdom in dispensing justice.
Over the years, our Government has evolved into the largest, strongest and most aggressive entrepreneur within the confine of our geographical boundary. It is a giant cartel in everything edible, useable and MOST IMPORTANTLY ESSENTIAL.
Pardon me for the digression.
Food manufacturers have to ensure the safeties of their products, failing which they are liable to answer to the Laws or a regulator as an intermediator between both. A regulator, as can be seen here, is neither the manufacturer non the Laws(Government/Judiciary) so the role of a regulator is like that of the police in modern day administrations. The Police is not only to enforce Laws and Orders and to bring law breakers to justice, on top of this specific duty, the POLICE IS DOING CRIME PREVENTION.
PREVENTION OF FLAWS, FOULS AND UNDESIRABLE DEEDS(MISDEEDS) IS CLEARLY THE LEGISLATED DUTY AND FUNCTION OF ANY REGULATOR. A regulator that fails to fulfill its’ duty is liable to negligent or failure of duty, it could also be failure of diligence and competency. Here we are talking about an agency made up of professionals and not an individual with definite power and wisdom.
patriot
Daniel
“For this investment, you need to place your money with us for 5 years.
We will give you 5% interest per year. But if there is a credit event*, you lost all your money.”
The issue is this. At the time when Lehman comes out with the structured product, is the Lehman is in the verge of bankrupty and serious financial problem that is not revealed publicly. Did the US knows about this FI but chose to remain mum and yet approve it to other countries like Singapore who gov happily digest whatever US says ?
to me, this is no different from scam and con job. If FI is on verge of collapse and still sell something too good to be true anyway as last resort, don’t that qualify as scam ? Notice that Lehman plays on the assumption that it wil be bailed out at any cost, and therefore choose to gamble with the product anyway. It fails to get bail and the scam job exposed.
minibombed
Winners and Losers of the Minibond saga
The Biggest Winner – Lehman Brothers
Astronomical monetary gain with a scam legally approved by different government & gladly supported by financial institutions.
The Medium Winner- Financial Institutions
Attractive monetary gains at expenses of loyal customers.
Aftermath- From now onward, who dare to trust them?
They are not the only FI around. We have many others to choose.
The Small Winner- Unscrupulous Relationship Managers
(There are honest ones around. Not fair to paint all RM with a single brush)
Attractive monetary gains at expenses of trusting customers.
Aftermath is people have now lost all their trust in them. Your customers trusted and supported you but you misled them. Some even cursed customers in forums calling them greedy!
The Biggest Losers – Misled Investors
Squeezed dried for being too trusting. Additional comment is not necessary.
Potential Losers– the Regulatory Bodies
People will lose their respect for them if their (RB) action continued to be tepid. If they still insist to pretend to care for the people, one day the people may also pretend to support them. Hope this day will never arrived because then whatever things they do, no matter how good, how logical or important, will be scorned.
Just look at Thailand or Taiwan politics.
To all winners and losers of this saga
Only 10,000 victims but MANY MILLIONS observers!
Anonymous
if something sounds too good to be true, something is too good to be true
in choosing to believe it’s true and not doing your own due diligence and then crying foul when the ‘truth’ is revealed……i rest my case
it’s your own money. if you’re not interested in doing your own due diligence to protect your own money, how can you fault someone else for not doing it for you?
defies logic
Anonymous
to gemami
in the world of finance, there is no such thing as ‘no’ risk
‘no risk’ does not exist in the vocabulary
period
not even fixed deposits in a bank guaranteed by the government
qimeilow
great article.
Daniel
“in choosing to believe it’s true and not doing your own due diligence and then crying foul when the ‘truth’ is revealed……i rest my case”
You should rest your case because no matter how much due diligence you do in conducting financial investigation, you can never outsmart the market. Even town council believe such scammy product , and can you tell me that these town council did not do any due diligence prior to investing in these scammy product ?
Will anyone believe Tan Kin Lian then when a local trusted bank like DBS sell such product ? Hardly as DBS is name people trust.
Let’s not blame the investors and believe it is their fault. If even the government body like Town Councils can be deceived into investing these product after conducting due diligence, what can be worse about investors who lack financial judgement and reply on RM for investment ? Even then the RM rely on the too-good-to-be-true brochure for selling…
If it is really a scam product perpetuate by reputable entity who choose to believe it is not a scam product but commerical product , no matter how much diligence and guard you have will be next to useless when it comes to such investment.
CRUXGOD
dont anyone see the unintentional sick humour from the banks reaction..
they said vulnerable investors will get help from the banks..but how do they dtermine whether its ‘vulnerable’???
vulnerable=primary school education..
so isnt it like not saying anything at all? sooner or later, the banks is going to say, people who can pick u pt he pen n sign will be deemed as not vulnerable…
Those who buy stocks and unit trusts, are they vulnerable? How come attention only given to the structured deposit holders? =)
Really heart-warming to see volunteers coming out to the aide of fellow Singaporeans. I almost cried reading this article.