I have submitted my views to MAS on their consultation paper on "fair dealing outcome" to consumers.
MAS wants to make the management and board of financial institution responsible to achieve this outcome. The key points of my paper are:
1. The management and board of financial institutions have the goal of making the most profit for shareholders. It is difficult for them to be responsible for "fair dealing outcome" for consumers. There is a conflict of interest.
2. "Fair dealing outcome" has to be defined more clearly. It should be defined as a product that have fair (not excessive) charges and give good value to consumers.
3. For complicated financial products, the regulator must ask two independent financial experts to study and give their views. The vews of the experts should be posted in a website to guide consumers.
I quote the example of new drugs. The regulator tests and approves the new drugs before they are sold to the public. They do not expect the consumers to do their own testing. Financial products should go through the same test.
The consultation will have to address some of the issues of unethical and malpractices by insurance agents other than the products.
ReplyDeleteThe standard of practice must be raised and product pushing will have to be stopped to prevent conflict of interest. Commissions as reward or for service done will have to be changed too to reflect fairer cost and value for the customers and not for filling up forms and explaining product features.. All existing insurance agents need to upgrade to new
acceptable qualifications otherwise they have to leave the industry. This is to weed out the incompetent salesmen and women.Lastly, MAS must regulate directly and cannot leave this to the insurers to self regulate. They never do and very often they condone to the malpractices of their agents and it is getting rampant .To increase sale and market share, they allow expensive products to be sold at the expense of the consumers and they will compromise ethics and even break their own mission and vision statements. The senior management must be accountable for the misconduct of their insurance salesmen.