Tan Kin Lian's Blog: Sales representatives did not know

Tuesday, October 14, 2008

Sales representatives did not know - misrepresentation

Hi Mr Tan

I appeal you to highlight this. I feel that most wales representatives thought the credit securities products were "not High Risk" products. If they had known that it is a high risk product, they would not have recommended people to invest.

Therefore, it is definitely a misrepresentation by sales representatives - the way the credit linked products were marketed as relatively "Safe/Low Risk" products by Lehman, Merrill, Morgan to the banks & financial institutions which was in turn presentated to the investors.

It is common sense that if it was marketed as high risk - few people would have invested.

15 comments:

Anonymous said...: This is very true. Most, if not all the sales representatives truly believe that these stuctured notes are very safe, so much so that they feel it is not necesaary to even mention it to investors. After all, most such products usually earn about 5% p.a. vs. about bank interest 2% last year - only slightly higher yield. So how could it be high or even moderate risk? Who on earth then (especially all the sales rep.) would ever dream that Lehman Brothers, Merrill, AIG, Morgan Stanely would collapse or near collapse? You would be sent immediately to Woodbridge hospital if you dare to even utter it, then.

Indeed, most such products were mis-represented/mis-sold!!! Thus, justice must prevail.; October 14, 2008 2:08 AM
Anonymous said...: Should MAS play a part? Since they approved these products and prospectus. Should they advice the FIs that they should inform customers that this are high risk products? Or maybe those who approve these products don't even know the risk or the products are about.; October 14, 2008 2:21 AM
Anonymous said...: While it is true that the investors may not been well explained by the RMs about the risks involved,it is also true that RMs themselves may not have even understand the extent of the risks level. DO NOT FORGET that at the signing of the documents with investors, the RMs are representatives of the banks. So the banks have to be responsible on this aspect whether the RMs are knowledgeable or not.; October 14, 2008 2:36 AM
Anonymous said...: Dear Mr Tan
The source of the problem is the FI and our regulatory authority. I hope you can start a 'blog' to call all RMs who sold these products to come forward and share how they were taught to sell these products by their FIs. These RMs are make a living and at the rate the FI is doing to make them responsible is not right. The FI are no different from our regulatory authority. Currently the RMs does not have anyone to protect them. I hope you could explore something for these RMs.; October 14, 2008 6:22 AM
Anonymous said...: 2.36 AM

Fully agreed with you. RM failed in their duty to highlight and re-emphasize to investor during their signing on the hard copy. A responsible RMs or agent will go thro line by line statement as stated on hardcopy & make sure their client understand and agreed before sign on the paper. But in the process of this type of investment, they did not do such and the whole thing only take 30min -45mins to close the deal. Isn't this a classic case of Mis-represented?.

Jason#58; October 14, 2008 9:32 AM
Anonymous said...: Reading the prosectus will take days and weeks and not 20 minutes and still many cannot understand. The Ak peks are expected and blamed for not reading the poprosepctus.; October 14, 2008 10:49 AM
Anonymous said...: In recent years, we have all read in the news that there was huge shortage of front line personnel from the banking sectors etc. I believe the shortage was the main cause of the problem / low standard - RMs were not sufficiently trained but hastily pushed out in the market to sell, which easily lead to mis-selling.; October 14, 2008 11:38 AM
Anonymous said...: haha sales person must be ruthless to get good sales..
"good sales person": highlight good points of product, but not bad points. Say its capital protected when it is not. say no/low risk when risks are very high.
"low sales person":highlight pros and cons,advise consumer to reconsider without pushing

usually bank insurance products are much more expensive than external insurance companies. You go investigate yourself=) Reason: Money goes to sales person,management,CEO + their fat bonuses.. And worse still,once you buy,try calling them after the deal is closed(after freelook period),see if they want 'entertain' you...just try..=)
(perhaps they are very free now); October 14, 2008 1:36 PM
Anonymous said...: Is RMs at fault? If the Product owner who structured the product did not fully disclose to the sale team, who is at fault? I believe the blame should goes to the product owner, that is the BANK. All RMs went thru products training (an hour or so). Is the training materials sufficient to cover all the information, esp the risks and returns portion? I suggest the Authority to review the training material and see if there are sufficient information given to the sale team prior launching the product to the market. This is not a case for investor vs RMs. More likely a case bewteen investors and the bank. So how, there are weaknesses starting from the design of the product to the training phrase. Maybe, the independent reviewer appointed by the banks should review on that.; October 14, 2008 1:41 PM
Zhou Weiqian said...: Did everyone notice the high 5 notes brochure mislead us too, it marked Lehman Brothers, Merrill, AIG, Morgan Stanely very high ranking which gave us safe impression of this product.; October 14, 2008 2:53 PM
Anonymous said...: Structured Notes that are credit-linked to Bank entities are actually SAFE products---- until the collapse of the banking system in USA in the last few weeks.
This is a 1-in-100 yrs event. How could sore investors like you blame MAS, banks, and RMs????
Do you cow-peh, cow-bu when you recevied your quaterly interest payouts from your banks??; October 15, 2008 1:20 PM
Anonymous said...: Its not just abt the collapse of Lehman. These structured fund also routinely failed to deliver the projected 5% returns the promised.; October 16, 2008 12:07 AM
Anonymous said...: It is not a question of whether a BIG bank will collapse or not. The issue here is : sales represntatives did not bother to explain at POS that there is indeed a very small risk you will lose all your money if an credit event occurs. Now you see, this is precisely the problem, 1-in-100 years! So the sales people believe that they is NO need to mention at all!!!

They will just HIGHLIGHT - 100% Protected, 100% Guaranteed or whatever! I guess, most RMs if not all, sold their structured products with this BASIC STANDARD method.; October 16, 2008 12:37 AM
Anonymous said...: My experience with the bank RMs is much better than what some of you claimed. When I made enquiries on the Hi Notes with DBS early last year, the RM did mention about the default risk which is actually very unlikely (at that time before the finanacial storm hit us ). However, I didn't take up the offer because of the long lock-in period of 5 yrs and above.
Seriously, I wasn't pressured to buy any financial products whenever I visited DBS, UOB,or OCBC branches in my area.
I'm amazed that you guys can be so easily pressured to part with your so-called coffin money so willingly whenever you visit a bank branch? So what if you FD had just mautred and the bank RM wants to make a recommendation to invest in structured deposits? You can always say NO first and later discuss with your friends/relatives to find out more about the products being recommended.

IT'S GREED TYHAT DID YOU IN. SIMPLE AS THAT.; October 16, 2008 12:32 PM
Anonymous said...: For those Minibonds Series 1 holders out there, plse have a look at the docs given by the bank or broker house who sold the porduct to u.

Maybank's brochures didnt highlight that there is risk exposure to the swap party at all.

I was given the Maybank RM 's profile upon application for the investment.

She was described as qualify to sell bonds, notes and debentures.

No where was it mentioned that she is qualified to sell Structured products. Misled already by the name of the product that carry the word " bond" and the way the RM says that so long the 7 reference bonds dont go under, it works like a bond. I was given the understanding that our investment money would be used to buy the reference bonds and therefore holds a mini part of it. How can an investor ever imagined that its a stuctured product which carry risk exposure to so many other elements .

Moreover, we were given the prospectus on the spot and application is irrevocable.

We could only trust the banker's intergrity and believed wholehearty that the brochure and the RM had told us all the right and essential info.
Even if they made us sign that we read and understand the prospectus, it is absolutely rubbish.How can one really understand a 80 page doc within the 20 min or so at the bank.
There was no princing supplement given out nor the bank send me any statement of what they eventually use the money to buy. Thus I continued to believe what I understood from day 1 till now when it was a rude shock that it was all misrepresentation and misleading info provided then.; October 16, 2008 5:47 PM