June 27, 2009
One in four who had mis-selling complaints fully compensated
By Francis Chan
MORE than two-thirds of the investors in Singapore who complained of mis-selling after losing money from the collapse of US investment bank Lehman Brothers, have been offered compensation.
Out of 5,350 cases dealt with by financial institutions that sold the Lehman-linked structured products, a quarter saw investors receiving full compensation, said Senior Minister Goh Chok Tong yesterday.
The latest updates came from the Monetary Authority of Singapore (MAS).
Mr Goh, who is also MAS chairman, was speaking at The Association of Banks of Singapore's (ABS) annual dinner.
He said the financial institutions that distributed the failed structured products have generally reviewed investor complaints in accordance with MAS recommendations that they should not take an overly legalistic approach.
Three banks and one finance company told MAS that as at last month, settlements worth $105 million - on a no-admission-of-liability basis - had been offered to more than 3,600 investors of Lehman-linked notes.
Of the 5,350 cases dealt with and decided on by the financial institutions, 67 per cent had seen settlements offered, while investors in 25 per cent of the cases decided were fully compensated.
Ten financial institutions sold over $660 million worth of Lehman-linked investments to more than 10,000 investors, who bought Lehman Minibonds, DBS High Notes 5 and Merrill Lynch Jubilee Series 3 LinkEarner Notes.
Mr Goh said MAS had recently consulted the public on proposed regulatory enhancements to cover the sale and marketing of structured products to retail investors.
'Broadly, the findings from MAS' policy review and investigations show that financial institutions will need fundamental changes in both business models and mindsets to win back the trust and confidence of consumers. This is true not only in Singapore, but across the globe.'
Mr Goh said that MAS had completed its probe into the sale of the structured notes and would release its findings soon.
Investors caught up in the fiasco have been looking forward to the the findings for months, most with mixed feelings.
'If the investigation process is conducted properly and without prejudice, I am hopeful that the findings will be in our favour,' said one investor who did not want to be named.
'My case is still in adjucation, so I do hope to hear favourable findings,' said another Minibonds investor whose complaint is being dealt with by the Financial Industry Disputes Resolution Centre.
'But all they need to do is tell us the truth, and I am sure most, if not all, cases should receive full compensation.'
MAS recently set out in its Fair Dealing Guidelines the roles and responsibilities of boards and senior management in driving some fundamental changes needed for good customer outcomes.
Mr Goh said MAS will fine-tune its approach to supervision of the market conduct of financial institutions, including greater probing of boards and senior management on the steps they are taking to embed fair dealing outcomes in all their processes, from product approval to staff incentive structures.
franchan@sph.com.sg
Dear Francis
ReplyDeleteI refer to the following points in your report:
a) Two-thirds got payment offer
b) One in four who had mis-selling complaints fully compensate
c) 5,350 cases dealt with by financial institutions
In the interest of giving a more complete picture to your readers, can I ask you to get the following information from MAS
a) Total amount compensated in respect of the 1 in 4 cases that received full compensation?
b) Of the cases that received offers for partial compensation (i.e. two thirds less one quarter of cases), what is the number that accepted the offer and the amount that has been paid for these cases?
Your report gives the impression to the general public that most investors have been fairly compensated. However, from my sources, many of the investors are unhappy and have rejected the offers, and many were not even compensated.
I hope that you can get the additional information.
MR TAN
ReplyDeleteMay I add a few more questions to MAS.
[1] What MM GCT really mean by saying "... investigations show that financial institutions will need fundamental changes in both business models and mindsets to win back the trust and confidence of consumers. ..'?
[2] Was there mis-selling or no mis-selling?
[3] For those who are 100% compensated, does it mean there is a breach of S27 of Financial Advisor Act?
[4] If there was a breach, what was the punishment the FI received from MAS?
[5] If there was no punishment, it this in accordance to the law enacted?
FROM CASHEW NUT
Feel even more sour reading such reports.
ReplyDeleteThe report doesn't give the true picture of the situation. There are many who are still in limbo because the offers are unsatisfactory and insult. The FIs can qualify their offers of no admission of liability but it is well known fact that the RMs were as guilty of mis-selling because of the commission to be earned and pressure from above(the FI) to meet the target.MAS can advise non legalistic approach it is because the FIs fear the uncovering of skeletons in the cupboard caused by management and FIs and the RMs. The public will lose confidence in the FIs as well as in the regulator
ReplyDeletewho anyone can see is in favour of the FIs and has not done much for the industry. The debacle is a systemic failure.
MAS MUST get rid of commission as a means of reward for work done or not done.
MAS MUST also make the need based advisory approach as compulsory.
MAS MUST make all intermediaries, salesmen or insurance agents, RMs or whatever title they use to be responsible and accountable for the advice and recommendation given
to consumers.
Honest and competent advisers should have nothing to fear of these rulings. In fact they are a boon to their profession.The public will have more confidence in these advisers.
The Terminator III
Figures could be mis-leading unless we have the full picture of the statistics. As far as I know, none of the investors in our brokering house group has been compensated at all. More importantly, MAS should publish the wrongdoing by the FI's ASAP. Look at what Hong Kong is doing and what MAS is doing here.
ReplyDeleteWhat steps are the FIs taking?
ReplyDeleteThe agents are still peddling products. They are not using the need analysis approach as recommended by the consultation paper.So what steps the FIs and the senior management are doing?
You say, self regulation, mah. So we are doing exactly what you MAS told us to do. Free play, leh. So long no complaint. Whistle blowing, we too have except we don't give out the address.You see, everything in place according to new guidelines.Fair dealing means also fair dealing to insurance agents, lah. Don't sell whole life how to make more money.Customers want it ,mah.Don't blame us, hor.We sell what customers want, hor.If we don't sell what customers want, how to make money.
I wonder what kind of investigation MAS is conducting if they have not talk to investors directly. All of the interviews were conducted by FIs or FIs' representatives.
ReplyDeleteThose who received some form of compensation seem to be from the banks and a finance company.
ReplyDeleteCan MAS provide data for those who bought from stockbroking firms?
I invested $150K in minibond and was offered $10K compensation. Am I happy? NO! NO! NO!
ReplyDeleteFed up with the bank, MAS and government. I'm just being used by bank and government in their number game to become a statistic in "offered compensation" group
"Mr Goh said MAS will fine-tune its approach to supervision of the market conduct of financial institutions, including greater probing of boards and senior management on the steps they are taking to embed fair dealing outcomes in all their processes, from product approval to staff incentive structures."
ReplyDeleteThe CEOs must be held accountable for whatever happened at lower level especailly the salespeople. The CEOs cannot deny no knowledge of misconduct.
Products must be plain vanilla and not those rubbish complicated twisted cashback anticipated endowment. Tell them to call a spade a spade.
Commission must be removed as it has been the cause of all the evils from mis-selling, unethical and misrepresentation and conflict of interest.
Commission doesn't reflect the professionalism , competence and the advisory work dispensed by the insurance agents and RMs.It must be replaced by a more equitable remuneration system , otherwise salesmen, conmen and insurance agents are paid like the professional qualified advisers.
Not only that the losers are the consumers who don't get appropriate advise by insurance agents and being dumped with useless products like wholelife and anticipated endowment.The product peddlers who provide product advice must not be paid with high commission. it is unfair to the buyers who receive nothing but help to fill up the forms only.
MAS must stop this.
NEW YORK (AFP) - - US authorities have asked for 150 years in jail for disgraced Wall Street mogul Bernard Madoff, who is accused of mounting one of the largest fraudulent operations of modern times, according to documents made public
ReplyDeletehere./////
How many years do you think the RMs and the senior managers and the CEOs of the banks should be jailed?
My spouse and I were not given any compensation from Maybank at all.
ReplyDeleteWe definitely feel very sour and angry. But is there anything we can do? Fight till the end? Go to court etc?
We want to move on and forget about it. We prefer to work harder to earn back the loss.
However, this report (of 2/3 received compensation... ) made us miserable again.
Jasmin
S$150K and offered only S$10K???
ReplyDeleteThat is only one years's interest.
Who would accept such offer?
Sad.
Yet again, garmen distorting the statistics to report nice numbers.......just like when they report jobless rates etc; it depends on what "base" one use
ReplyDeleteWhy don't we use the number and ask back the question: "if 67% gets payment offer", isn't it very clear that the products are flawed and should not be sold in the very first place?"
Jasmin,
ReplyDeleteWhy not
Talk to Lockton companies (singapore) for the After The Event insurance. If you strongly believe that you have been mis-sold Lockton will insure you. No upfront fees or payment. Talk to them directly or ask your lawyer to talk to them. Details below
Address:
36 Robinson Road #16-01 City House
Singapore 068877
Telephone:
(65) 6221 1288
Fax:
(65) 6225 0682
Email:
Website:
http://www.alexanderforbes.com
Each time GCT and MAS make an announcement to paint a rosy picture, I get really upset!
ReplyDeleteST and Francis Chan should note that I remain one big unhappy mis-sold investor.
The more unfair reptg, the more people get sour
ReplyDelete