Hi Mr. Tan
I have placed some fixed deposits in Hong Leong Finance and UOB bank. If MAS were to sue these advisers for neglience, will my FDs go bust like what my Minibonds did?
Do you think I should withdraw the amounts before maturity as I understand that FDs are not capital guaranteed if the bank or finance company goes bust?
REPLY
The fixed deposits should be safe. Read para 2 of this webpage
http://www.mas.gov.sg/news_room/letters_to_editors/2008/Response_to_do_more_to_protect_policy_holders.html
I think FDs with banks or finance companies in Singapore are basically very safe at the moment, especially if your fd is not more than S$20k you are fully covered by insurance.
ReplyDeleteMy fear is the deteriorating global financial market conditions that may also cause problems here. Take for example, the collapse of Lehman Bros has already become a great issue here in Singapore and Hong Kong, and this is just the beginning as more defaults look imminent. Under such uncertainties, Unfounded rumours may be rampant causing a run on some banks or finance companies, such as what has happened to BEA recently. So it is of paramount importance that the relevant authorities and banks take swift and decisive actions to contain rumourse and also to ensure that complaints of the public about rotten deals will be fairly and satifactorily dealt with.
One of the current challenges is how the authorities and banks going to react and resolve satifactorily the complaints of many smaller investors who claim that they have been missold high risk structured products as low risk investments.
If these issues are not settled swiftly and satisfactorily, I am afraid huge demage may be inflicted, not only to the small investors, but also to the financial institutions involved as well as our financial system as a whole.
People will lost their trust to financial institutions and this will cause a decline in the banks' business and those who sell banks products will become redundant, jobs will be lost and so on... Can your imagine the impact?
Dear Mr Tan
ReplyDeleteI am one of the unfortunate victims of the Minibond Series 3 which I bought from Hong Leong Finance. My sister and I have placed a FD with the bank about 3 weeks ago (before the collapse of the Lehman Brothers). In view of the current situation, since I am one of the victims, I will not want any money invested with the bank, so my sister and I have withdrawn our FD from the bank.
A copy of the 'Deposit Insurance: A Cconsumer Guide' can be obtained from any of the banks.
ReplyDeleteQuote:-
WHAT IS DEPOSIT INSURANCE?
Deposit insurance protects depositors in the event a bank or finance company fails.
WHO ADMINISTERS THE DEPOSIT INSURANCE SCHEME IN SINGAORE? WHAT IS THE COVERAGE UNDER THE DEPOSIT INSURANCE SCHEME?
The Singapore Deposit Insurance Corporation ("SDIC") administers the Deposit Insurance Scheme in Signapore.
In the event a bank or finance company that is a Scheme member fails, all of your eligible accounts with that member are aggregated and insured up to
S$20,000, net of your liabilities to the bank or finance company.
Moneys held in bank deposits under the CPF Investment Scheme ("CPFIS")are separately insured up to S$20,000.
unquote
There is also mention about Joint account etc. The details can be found in the Guide itself.