Tan Kin Lian's Blog: Fall outside "vulnerable investors"

Saturday, October 18, 2008

Fall outside "vulnerable investors"

MAS has asked the financial institutions to give priority to the vulnerable investors. These are the elderly, low educated and the first time investors. The financial institutions have agreed to take full responsibility for these vulnerable investors who have been mis-sold. The full responsibility includes compensation for part or the full amount that they have lost. This is a an encouraging first step.

I wish to ask the other investors, who do not fall into the “vulnerable group” to be patient and to strong. If you have been equally misled into investing in these structured products, and it seems to be clearly the case, you have a strong case to ask for compensation. But, you have to be reasonable in your expectation and may have to accept partial compensation that is lower than the “vulnerable investors”.

Let us take this at the next step. In the meantime, you should lodge your complaint.

12 comments:

Anonymous said...: MAS is trying to divide. Now it is using the educated and not educated.
It is subtle.Don't fall into the trap. MAS knows the odds stacked high against them.; October 18, 2008 3:10 PM
Anonymous said...: Dear Mr. Tan,

I have taken your recommendation to lodge a complaint 3 weeks ago with the FI that sold me the minibond/pinnacle product. Till now, I have not received any response from them. With the latest communication by MAS, I am pretty sure that the FIs have stepped up their resources attending to the complaints, so my question is, does it makes sense that we continue to wait till we get a concrete response first before we make the next move - of doing the statutory declaration in preparation for a class suit against the FI? Obviously if the FIs response is a favourable one, then this move can be omitted. Thank you for your advice.; October 18, 2008 3:14 PM
Anonymous said...: Why should other investors who are really misled into buying these toxic producsts get back less than the vunerable group ? Same "misled and mispresetation", same crime, so same compensation, only fair right ?

If the crime is committed against people in the vunerable group, the authority should imposed more and heavier punishment to the wrong doer (100% principal plus compensation $$, and heavy fine), not the other way round ie. less punishment/compensation if the crime is against a less vunerable group.

The people in the less vunerable group do not suffer less than those in the vunerable group, it is also their hard earned money and many of them have parents and families to support.; October 18, 2008 3:17 PM
Anonymous said...: good job, your contribution to many singaporean who suffer from recent loss in those so called structure product.
all this caused by the banking system, a banking advisor or Rms shall not get commission directly from the product they sold, this is conflict of interest against their job; October 18, 2008 3:41 PM
Anonymous said...: There are just so many combination to group the investors. For example, I am educated, speak and write English well but I am a retiree and I bought the structured product for the first time. So do I belong to the catogory that the government would help?

Then I am actively diversifying my retirement fund into investment into various categories like shares, bonds, currencies and property. I classify the structured products as bond because I thought I was buying the diversified bond porfolio. So am I classify as an agressive or conservative investor?

It actaully does not matter in this mess if MAS just accept that there is mis selling and there is no point to group people and label them artificially. A mis selling is a mis selling irrespective of the background of the investors. Just look at the misleading advertisement, brochures and the unclear prospectus!; October 18, 2008 3:44 PM
Anonymous said...: One of the previous comments in Mr Tan's blog had mentioned that it is the RMs in the banks that are mis-selling to these "Vulnerable investors". I would like to point out something differently.

Its a norm that banks always put their best candidate in corporate banking and employ people that of lower quality to be in retail banking. These "corporate bankers" climb up the ladder fast and earns a huge salary for their talent. However, these are also the people that are promoted to "lead" the retail banking. In order to maintain huge profit, they approve plans that market structure deposit in a way that it is a low risk product. These management also drive initialive that penalise the RMs if they do not sell these products. Even when bad things happens, they may just resign and still get a big cheque for doing a bad job.

MAS should step in to investigate the wrong doings of these high executive that made these morally wrong decisions. Black sheet do happen in RMs, however most of the RM does proper advise according to the FAA act. There is no point keep investigating how these sales person had mis sold when the fact is that they are being force to follow orders.

I do hope that MAS can see the true picture. Only pulling out the roots will prevent these from happening again.; October 18, 2008 3:58 PM
Anonymous said...: Hope we can return to the old good banking days, when you walk into a bank to do some banking, without the counter staff looking into your bank account and with relationship manager asking you to buy some products on display or relationship manager looking into your bank and calling you to buy some products their banks are promoting.; October 18, 2008 11:20 PM
Anonymous said...: I try not to visit the bank but there is no choice if you are there to place a FD, they will direct you to see a RM. Also if they allow you to do a FD at the counter, you get the board rate and if you want a better FD rate, you have to see the RM and that is the FI arrangement to get you!

I actually find it streeful to visit bank now.; October 19, 2008 10:34 AM
June said...: I bought a capital protected notes from Standard Chartered in late Jan this year. I did not receive any prospectus nor a call from my RM to update me on the status of the notes. I was told that the product was safe and I will get back my principal upon maturity. How I was approach? The RM keep calling me and encouraged me to transfer my FD to purchase the product before the deadline.

After the Lehman saga, I called the bank countless time to ask for my RM and was told he had left in early Feb. Just imagine this RM trying to sell as many products to the retail investors to collect his big fat commission before moving to greener pasture! A new RM was only assigned to me after my compliant to the bank and I was told to hold on to the notes. It's stressful to hold and wait not knowing what the future lies...; October 19, 2008 11:50 AM
Anonymous said...: Education does not play a part in this. I am reasonably well educated (MBA) but there is no way I can understand the whole financial and legal jargons in the entire prospectus (my RM did not give me) even if I attempted to read it. We are dependant on the FIs and their RMs to provide us with the relevant and correct information.

I am a retiree and had told the RM that I am risk-adverse. I was told that if I have confidence in that FI, I should have confidence in the basket of 6 banks comprising of DBS, StandChar, UOB, HSBC, Korean Development Bank and Malayan Bank. Even if one bank collapsed totally, my investment will only be slightly affected. I will get back my principal if I held it to maturity or when the investment is terminated before maturity. It is very safe.

The difference in interest is around 3%. (FD about 2% and this product 5.3%). I am not crazy enough to risk it all just for an additional 3%.

This product is not linked to Lehman Bros. I had spoken to the FI and was told that they had not received any news from Morgan Staney and that I will only get about 40% if I sell it now (Oct 13). This is sheer robbery!!! Now I am in a dilemma on what to do next.

Frankly I believe no one is told about the EXTREMELY HIGH risk involved. If we were told, I believe none of us will invest our hard earned money in them. The additional 3 to 4% interest does not justify the high risk taken.

This is obviously serious misrepresentation or is it deliberate misleading? For that matter, is the RMs totally aware of the risks involved before they sell them to the retail investors? Or ... is it a case of trying to achieve sales target by deliberately omitting damaging facts? Well....

We trusted the FIs and that is why we buy from them. Now ...

As such, everyone should be entitled to the total compensation and not just the vulnerable investors. We are also victims!!

The FIs should be held accountable for their actions.; October 19, 2008 3:43 PM
Anonymous said...: Thank goodness more than a month ago I have taken Mr. Tan's advice about the moral ethics of financial institutions now and close my bank account to spare myself the stress and constant alert needed to safeguard myself. In the next few months I will also be liquidating my life policies. Enough is enough. I want to lead a peaceful and stressfree life. Not interested to tango with the sharks anymore. Maybe can live longer this way.; October 19, 2008 10:13 PM
Betsybug said...: Sanity

Well said! I will also put it this way - if each of us were to "rewind" our lives back to the moment we were being sold these products, but this time the RMs present a full, and straightforward picture of the risks and benefits, I don't think many, if any of us will invest our money.

This will answer the people who says we are complaining only when the products have turned toxic (and not when the investment was paying our dividends). I will say this - it is only now that the full picture has been made clear.

I have no problems giving priority to the vulnerable investors, if only to lessen their anxiety earlier. But at the end of it all, every investor need to compensated to the same degree because of the SYSTEMIC misrepresentation. The burden of proof is on the FIs and not the investors.

DBS, the ball is in YOUR court!; October 19, 2008 11:24 PM