There is a foreign bank who has been very active in creating structured products over the past years.
Some of these products are quite bizzare. They are almost like gambling products. They require the investor to bet on how many investment counters or indices will reach certain levels over a number of years. Even an actuary (like me) cannot calculate the probabilities.
These bizarre products are then marketed by respectable banks to ordinary people, including the financially naive and old folks. These are people who normally keep their money in fixed deposits in the banks.
The banks earn a margin of 5% on the sale of these products. The remaining funds are then passed to the issuing bank. I do not know if the issuing bank managed the funds according to the contract, and if their actions are audited by any independent party.
Nobody is responsible to ensure that terms of these structured products are fair to the consumers. Are they being taken for a ride?
The belief is "let the buyer beware". But the ordinary people did not choose to buy these products. They are being cajoled to invest in these products, often on misleading verbal statements.
Many people have collectively invested billions of dollars into these products, only to get a miserable return or even suffer a loss. During this time, other types of investments earned 50% or more.
This is called "market liberalisation". It is a very sad episode.
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