Tan Kin Lian's Blog: People to be blamed

Friday, October 03, 2008

People to be blamed

Comment posted in my blog

Blame MAS for not enforcing the rules it set stringently like section 27 of the FAA governing the behaviour and the way advisers should approach the needs of their clients.

Blame MAS for not vetting stringently the products before allowing for release into the market.

Blame the company for being greedy and overly profit oriented and overlooked the need of the consumers.

Blame the company for being lax in the compliance by their salespeople, the RMs and agents.

Blame the salespeople or RMs or agents for being greedy and NEGLECTING and ignoring WILLFULLY the needs of the consumers.

Blame the RMs and the agents for being unqualified and incompetent to dispense this advice.

The banks must bear the full responsibility for their errors and their salespeople's incompetence and mis-selling. The aggrieved investors must be compensated minimally the return of their capital.

27 comments:

Anonymous said...: Blame the Federal Reserve and other central banks for keeping the interest rate too low for too long.

This causes insufficient return to the savers (capital providers) and resulted in upward shifting of the risk seeking behaviour of investors from all level of risk profile. If the bank interest is high, most people would not be interested in these products.

Blame the investment theories for its focus on mean-variance analysis and normal distribution of return, ignoring the higher moments. Distribution of return is never normal.

This causes the misconception in risk assessment among the general practitioners in Financial Sector as well as investors. The result is alot of faulty products with insufficient risk premium floating in the market place.

As Keynes said, when his theory fails, his generation are all dead.; October 03, 2008 3:55 AM
Anonymous said...: I noticed this list, "blames"everybody else except the investors themselves.

As much as i sympathize with their predicaments, Investors of these notes, must shoulder a big part of the blame !!!; October 03, 2008 6:21 AM
Anonymous said...: how come we didn't blame our own greed!!!! i am a loser in this saga but i blame myself for my greed partially.; October 03, 2008 7:36 AM
nhyone said...: Yes, that's right. Blaming everyone but oneself.

Good attitude.; October 03, 2008 8:27 AM
Anonymous said...: What a sad state this place has become??!!; October 03, 2008 8:27 AM
Tan Kin Lian said...: The investors are the people who are shouldering the full impact of the loss. There is no need to blame them.

Most of the investors are not greedy. They were misled into investing in these structured products based on inaccurate statements and assurances. If there were properly advised, as they should be under section 27 of the Financial Advisers Act, they would not have taken the risk.; October 03, 2008 8:45 AM
Anonymous said...: I do not blame the investors because they were not given the basic and correct information for a start. What is criminal is that the banks sell a products with hidden toxic securities which to this day is still kept secret.

Ask the banks what the 100 plus underlying securities the structured products are linked to? Sorry, they say, we cannot show you. Why? Investors bought the products because it is clearly stated that it is linked to 6 great banks which have not defaulted todate. Isn't this deception?

If you buy a sports car and after purchasing it, the manufacturer secretly swap the engine out, can you blame the buyer? NO!!!!!!; October 03, 2008 8:55 AM
Everlearning said...: Blame the education system that does not make us wiser in seeing through all these financial investments that wipe out total or partial of our principals.; October 03, 2008 8:55 AM
Anonymous said...: Well said, Mr Tan. Many bystanders do not /chose not to appreciate the fact that there are innocent uncles/aunties who have been misled by the FI. These folks are not greedy. May these 'self-righteous' bystanders spare a thoughts for those who are suffering.

Arthur; October 03, 2008 9:00 AM
Anonymous said...: Mr Tan,
I disagree.

IF we don't make ourselves share a part of the blame, then we are not taking responsibilities for our own actions.

Nobody has greater responsibilities for our own finance than ourselves.

If its always others who are to be blame, today A can con you, tomorrow B can con you.

Its is only by making oneself responsible for himself (sharing part of the blame) , that he will learn to protect himself.; October 03, 2008 9:00 AM
Anonymous said...: It is very unkind to call these people "greedy". They are victims.
Do u have any conscience at all??
GST 7%, Inflation 6%. To tie up capital for 5 years for a meager return of 5% is "greedy"? The Stat. board bond or even sgs used to pay closed to 5% not many years ago.; October 03, 2008 9:02 AM
Anonymous said...: No matter how much the investors think they know they still don't know enough to make an informed decision. The RMs or the consultants, or the insurance agents are responsible to help you and the outcome of the transaction.
The investors are not greedy. They are responding to commonsense.If there is high return for no risk especailly considering the high inflation their money is exposed to, is it not an opportunity to hedge?
Yes some may truly be greedy like the 2 people who confessed their greed.They realised and it is good lesson. For many, like ah and ah soh aunties and uncle old folks they are very clueless and easy victims of greedy RMs and insurance agents. These people must be protected. The rules must change. The comapnies , the banks and their salespeople must be policed.; October 03, 2008 9:26 AM
Anonymous said...: i think the principle that has been forgotten in this whole issue is that of caveat emptor. the buyer should always be aware of what he/ she is buying. the investors should take some of the blame for signing on.

it is fair enough to say that some were coerced into buying these products but i doubt that the majority of them were misinformed.

nobody complains when they make money but the moment there is a loss, everyone goes up in arms. that is the whole idea of risk, taking a chance.; October 03, 2008 10:33 AM
Crazy Aries said...: i believe that some investors must shoulder the blame for their greed for higher return.

But i firmly believe most were misled by the RM, selling whatever product the bank launch to consumer.; October 03, 2008 10:35 AM
Anonymous said...: Ignorance is not an excuse. Investors are also at fault beause they were very trusting.; October 03, 2008 12:57 PM
Anonymous said...: If someone goes to a govt-linked Pharmacy store and tell them that he is an illiterate and intend to buy a tin of milk powder which is safe for consumption. That person places his trust on the pharmacist and the govt-linked Pharmacy store because he has already qualified that he doesn’t understand what is stated on the tin or pamphlets. However, the pharmacist on-duty sold him a brand of milkpowder containing melamine because she has to meet the quota required otherwise she may lose her job and $3k bond. Are you implying that the poor victim has to blame himself for being illiterate and placing too much trust on the pharmacist and govt-linked pharmacy store????; October 03, 2008 8:26 PM
symmetrix said...: I am prepared to accept that the investor should accept part (but not all or most) of the blame. In a dispute situation between a bigger party (ie the FI) and a smaller party (ie the investor), and both are at fault, then the bigger party should shoulder the greater responsibility.

The same concept applies to road accidents. A bigger entity should not take advantage of a smaller entity. Doing otherwise is morally and ethically wrong.; October 03, 2008 8:42 PM
Weng Mao Fa said...: DR DAVID HILL Bern, Switzerland, wrote in BankokPost.com:

In 2003, the former US Federal Reserve chairman Alan Greenspan warned of the forthcoming financial collapse of the US if Fannie Mae's activities were not reined in. The government did nothing and Fannie Mae was allowed to continue operating until only last month, some five years after the warning from the US' top banker.

In 2006, the Bank for International Settlements, the world's most prestigious financial body and the central bankers' ultimate bank, stated that the financial world was in a diabolical state and that it had to change its current ways and activities. No government throughout the world intervened until it is was too late.

http://www.bangkokpost.com/031008_News/03Oct2008_news24.php; October 03, 2008 10:09 PM
Anonymous said...: I blame myself for being caught in this minibond saga. I should be contented with FDs.

Jasmin; October 04, 2008 7:28 AM
Anonymous said...: the investors can entrust so much money with the RMs, after meeting them for the first time and probably less than 30min.

Some lost 6-figure some.

Don't you think it is 'absurd'? I mean the level of ignorance

and let's continue to point fingers, until the next crisis occur and get yourself burnt again; October 04, 2008 12:23 PM
zhummmeng said...: Adego, you seem to think you are very financially savvy and the rest are also like you. You also seem to miss the point here too.. the victims are gullible, ignorant,clueless, uneducated old folks and it was a decision of the moment that RMs required them to exercise. The fingers are pointing at the regulators, the vendors , the banks and RMs and all these people colluded to fleece this poor folks called the investors who happened to be the aggrieved party in the deal.You mean the fingers should be on the poor victims without whose role in the equation the crisis would not have happened, right? Even the investors were at fault their fault is miniscule.Their loss is disproportionate.
To stop the 'burn', stop all the other parties from burning the investors up.
The RMs MUST be qualified and HONEST and comply with section 27 of the FAA.The banks MUST stop producing or distributing bad and complicated products. The regulators, MAS must START regulating and enforce them strictly.Over regulating is better than under regulating.
Jasmine, don't chide yourself because of moment's folly.Folly does not mean salespeople got the right to cheat you.; October 04, 2008 6:21 PM
Anonymous said...: Jasmine, like you, I really feel regret buying product from banks which I beleived to take customers' interest into account, at least for the sake of their own reputation.

I swear I will not buy anything else rather than FDs from banks anymore.; October 04, 2008 9:29 PM
Anonymous said...: zm, it's another case of, 'banks are trust-worthy, agents are liars'.

I am not sure how many % of the investors are those that u mentioned, old and uneducated. But I know many of them are highly educated people, and many professionals.

banks have their problems, the receiving end has a choice as well. if u prefer to blame all others, except yourself, then u will never grow up.; October 04, 2008 10:09 PM
zhummmeng said...: You have heard about Professors, doctor, lawyers got conned by 'magic stone" conmen, right? Are these people not highly educated ?
It is not easy to con a doctor on something like a medical product because he is trained in medicine. But if it is an investment product he might not know and he can get conned.You cannot know everything. You sure kenna conned one time or another. How to manage or insure against this risk? Avoid any thing you don't know.
But in life insurance the risk of meeting a dishonest or a incompetent agent is very high.
To manage this risk
Get the regulator to lay down certain perimeters or guidelines for the agents to operate failing which they risk losing their license or suspension.The regulator also must be serious to enforce doggedly otherwise the guidelines become dead letters gathering dust in the store room of MAS or decorating the insurance company's pantry.; October 04, 2008 11:49 PM
Anonymous said...: Zhummmeng, you are one of those few who has the wisdom and compassion to see the reality of the matter with a clear perspective. Your comments are constructive and skillful. Keep up the good work!; October 05, 2008 10:38 AM
Anonymous said...: I blame Lehman Brothers for its greed to create such products!; October 05, 2008 10:44 PM
Anonymous said...: Lucky for me I did not buy any minbonds after the bank sale manager told me of the risk. Instead I continue to place my 200k in saving and fixed deposit account earning less than 1% imterest. Don't be greedy that my mother alway told me!
The bank did told us of the risk.; October 12, 2008 2:20 PM