Factors affecting the quantum of compensation:
1. Vulnerable
It seems like the definition of vulnerable is a combinition of following:
- age > 62 yrs old
- uneducated
- non-english speaking
2. Tranche of your minibond.
Different minibond series are invested in different combination of assets. Some tranches invest more in corporate bonds such as those issed by GE Capital, hence their underlying value are worth more and likely to worth more if held longer, when conditions of the captial market improves. In return for compensation, you need to transfer your rights of the minibond to the FIs, hence FIs are more willing to compensate more for those series with higher underlying value, especially the ealier tranches of minibond, as they will be able to benefit in future, if any.
3. Written Evidence.
As minibond is considered to have high risk profile, if you have written evidence that your risk profile is on the contrary (most if not all FIs need to do some form of needs analysis for you and there is a section on risk profile), then the chances of mis-selling is very high. On this basis alone, you have a high chance of winning under Common Law (i.e. sue the FI in court).
4. Customer-centric
Some FIs with progressive leadership team are more customer-centric and more willing to compensate on the basis of good will.
IN SUMMARY
Whether you get compensation and how much depends mainly on the interplay of the above four factors (although some other factors may also be relevant).
1 & 3 prove there was mis-selling and the other two are show of good will.I believe that 1&3 weigh so strongly against the FIs that they could not in any way wriggled themselves out of it but to pay. The FIs rather pay then getting themselves into a legal suit which may damage their reputation.
ReplyDeleteMis-selling is so clear. The FIs are not idiots. They are not generous. They are engaging in damage control now.
If age and educational level are important factors for the FIs to decide compensation, then the younger and better educated you are the more vulnerable you are in a legal dispute between you and a financial institution. Is this the logic behind the compensation? If it is, then the FIs can go all out to mis-sell all kinds of toxic products to the younger and better educated people in future without worrying any punishment.
ReplyDeleteI am a retiree and suffered a loss of $100K because of the ZERO refund of the ML Linkearner S3 Notes that was mis-represented and mis-sold to me by a brokerage company. I am now working P/T and earn less than $2,000/- monthly to support 2 adults and one school-going child.
ReplyDeleteMAS, please hear me - I have been a good citizen, pay my taxes dutifully and never been gambling in casino or speculating in shares. So much for Singapore's aspiration to be a financial hub and professionalism in the industry! A fair compensation will restore my faith in managing the last leg of my life.
Good summary.Thanks
ReplyDeleteDBS high notes is a " trojan Horse " to trap and cheat decent people of their life saving..DBS is one of the dispute party and yet strangely they are able to pass on a judgement on Who get what and who gets nothing?...I think there a law in this country but not in a kangaro Court..so when there a class action taken..hope the CJ 's asurance that the law do not favour BIG or small or rich or Powerful...and demand respect from the citizen to the Court..will be more exciting to watch " the Little Nonya " when she start singing the high notes in Court.
ReplyDeleteMr Tan
ReplyDeleteWe seek your advice as to what can we do now for those whose claims were rejected.
On the basis of the 4 factors:
1. My parents were not deemed vulnerable because my mother was 60 when she invested (my dad was 67) and they had O lvl education and spoke english. Had the products been sold in Chinese, they would not have understood a word.
2. Of all the CLN products, DBS High Notes 5 is the most worthless, so is it natural that DBS refuses to compensate because there is no 'future' benefit for them to buy back.
3. Written Evidence - the FNA was done but no copy is ever given to the investor. In any case, even if you indicated low risk, they would claim that the product was indeed assessed to be 'low risk' since it constituted the basket of '8 reputable firms'.
4. Customer-centric? No, they don't even seem staff-centric. Of all the FIs, this famous one did not even let their retrenched staff fulfill their one month notice. What's the use of sending us their corporate calendars and angbaos when they have already stripped away a very significant portion of old folks' savings.
It is easy for ppl who did not buy to mock and say "buyers beware" or for those who could readily lose the money because they are still in their economic prime. The situation is simply not the same for the old folks > 60 yrs old. If we can say that our CPF savings are alone not enough for our retirements, how can you blame the old folks for wanting a slightly (not that great anyway!) % rate of return for their savings?
Remember the old folks' generation started off with low wages for many many years before slowly having it increased. Some of your parents may have reached their peak salaries in their 40s which the amount alone is not even the basic salary of a graduate today. They also paid for HDB flats, taxes and cost of living expenses.
Further, with the longer lifespan, everyone is simply trying to stretch their dollars. Can you imagine the fear and worry they live in not knowing how long they will live/die and whether they will have enough to last til the very last day?
The lesson learnt here is: Investment is for retirees. The young and/or educated ones, be realistic, work hard and save your hard-earned money through the decent method.
ReplyDeleteRejected HN5
To prudie,
ReplyDelete1. Risk profile of a product is not defined by the FI, or their marketing collaterals. It is a matter of fact in the eyes of law. And it is commonly know that credit-linked investments or derivatives are high-risk products
2. You can actually request for a copy of the FNA from the FI. If they can't produce, it could be due to their poor record-keeping or it was not conducted in the first place, any way it will be interpreted to the investors favour in the court.
If the FNA obtained really shows your parents are low risk investors, you stand are a very high chance of favourable compensation.
I agree with point 3, a risk profile analysis is usually done for each investor. Although it is usually done in a "any how" manner, it's now an important piece of information. You should try to find this document and enclosed it when you file your complaint. Look for the section that states the Investment Profile.
ReplyDeleteDear Mr Tan
ReplyDeleteI wish to thank you, as well as the investor who had shared the above information, i.e. "Factors affecting the quantum of compensation"
Alas, after waiting for six months,I was offered an acceptable amount of compensation from the institution that sold me the toxic structured product.
Apparently,I was compensated (though not 100%)due to Factor 3, i.e. "written evidence that my risk profile is low" and also being a retiree.