Under the consultation paper, the issuers are required to provide more clearer information about complex financial products. But, the question is, will this approach prevent the sale of toxic products?
The credit linked notes, which were allowed to be sold, were toxic because they carry 5 to 8 times the risk of ordinary bonds. The issuer was able to package these toxic products and offer a low rate of return to the unsuspecting investors.
It will be difficult for the ordinary people to understand the risk of these products. They have to rely on the adviser. If the adviser is not aware of the risk, then the chance of mis-selling is high.
There is already an existing requirement for the issuer to provide relevant information about the product that is registered for sale to the public. If the authority is not willing to enforce this requirement under the existing regulation, will the "better disclosure standard" prevent a similar problem from recurring several years into the future?
A better solution is to have independent experts to certify the risk of the product. This independent experts must be appointed by the approving body and not by the product issuer.
If the independent experts cannot certify the products to be fairly designed and described, the authority should not allowed the product to be sold.
This is similar to the certification of drugs. If the drugs is not tested to be safe and effective, it is not allowed to be sold to the public.
I hope that MAS will consider this point. I shall be submitting this suggestion in reply to the consultation paper.
- ► 2013 (301)
- ► 2012 (1270)
- ► 2011 (1873)
- ► 2010 (2369)
03/22 - 03/29
- Survey: Ministers in the Prime Minister's Office
- Thought for the week - Anger
- Cheating and the rule of law
- MAS consultation paper: Unlisted investment produc...
- Survey: motor insurance claims
- Survey: News and information
- Bank adamant despite advice
- Sale of toxic products
- Language, literature and culture
- Proposal - Financial services safety board
- A sense of fairness
- ST Online: Don't break CPF piggy bank, but...
- MAS consultation paper - sale of unlisted investme...
- Buying bonds
- CASE forum on MAS consultation paper
- A better way to regulate housing agent
- Einstein Intelligence Quiz
- TKL Intelligence Quiz
- Earth Hour on Sat 28 March 8.30 pm
- Big increase for motor insurance claims - the reas...
- Urban Public Transport
- NTUC is less pro-society now
- Survey: How will you vote in the General Election ...
- How Can I Find Affordable Life Insurance For High ...
- Tutoring, temp work can pay off
- MAS Consultatation paper - simple insurance produc...
- MAS Consultation Paper - Toxic Investment Products...
- Survey: Politician Ratings
- AUD, NZD on way of recovery
- Proposal to solve the global crisis
- Buying a new HDB Flat
- Save money with a basic Medishield plan
- Fraud alert - insurance claim
- Financial planning for newborn
- Worse than being retrenched
- Goldman made billions shorting AIG
- SCMP:New bank rules should better protect customer...
- Singapore Equity Investments
- US Treasuries - the next bubble?
- Creating jobs in a global crisis
- ▼ 03/22 - 03/29 (40)
- ► 2008 (2105)
- ► 2007 (1803)
- ► 2006 (696)
- ► 2005 (159)