Several letters were printed in the Straits Times during the past two days. The writers indicated that the punishment meted out to the financial institutions for mis-selling the credit linked notes was inadequate. There is no point in banning them from the sale of structured notes, when no customer will be buying them anyway over the next two years.
It is quite unjust that the retail customers, who have lost large sums of money due to the wrongdoings of the financial institutions, were left to seek compensation on their own. Most of them do not have the financial means or the knowhow to take legal action. Their chance of winning is at best uncertain, considering the ability of the financial institutions to engage the best lawyers in town, and the perception that the authority is siding these institutions.
In most countries, it is the duty of the authority to implement the law and ensure that the ordinary people are treated fairly. If there are wrongdoings, especially by the stronger people, the authority should step in to put matters right and look after the interest of the weak.
I hope that the Monetary Authority of Singapore will use its influence to get the financial institutions to offer to share the loss equally with the retail investors. A possible apporach is for the institution to take over the credit notes and pay the retail investors 50% of the invested sum now (less any payment that they have received earlier) and 50% of the proceeds of the notes at the time of maturity or earlier redemption or sale of these notes.
This step will be seen by many people to be fair to all parties. I believe that it will be accepted by the invstors in Singapore, although it may appear to be less generous that the compensation of 60% or 70% that is being considered in Hong Kong.
Tan Kin Lian.
Here are the URL to the ST letters:
http://www.straitstimes.com/ST%2BForum/Story/STIStory_400745.html
http://www.straitstimes.com/ST%2BForum/Story/STIStory_401138.html
http://www.straitstimes.com/ST%2BForum/Story/STIStory_401136.html
Tan Kin Lian
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Credit Linked Notes
20 comments:
Even 5%, 10% people also accept.
It shows how desperate they are.
In HK, the STC chief feels that 60%is still too low.
If u are weak / desperate, people would bully u.
But this is not right.
Here are the url to the ST letters which Mr Tan refers to:
http://www.straitstimes.com/ST%2BForum/Story/STIStory_400745.html
http://www.straitstimes.com/ST%2BForum/Story/STIStory_401138.html
http://www.straitstimes.com/ST%2BForum/Story/STIStory_401136.html
I agree, why did MAS allow FI to bully the investors into accepting 10%, and in many cases even worse outcome of nothing. I really hope MAS will do its job.
Perhaps we should all go to the streets like HK to make things ulgy before any real action will be taken
Hi,
I don't know the job scope of the MAS but I do know that this time round, too many investors have lost too much money whom will affect our confidence towards the financial institutions. Our image of international financial hub is damaged as a result.
The returns is commensurate with the effort to get back your returns. Everything is fair and just. More effort, more returns. Hongkongers were willing to sacrifice their time and energy as well as take the risk to take to the streets and give the banks a hard time. We do not see the same happening in Singapore, so the conclusion the authorities have is that it has not reached that pain threshold yet to justify greater returns. Anyway, any greater pain to the financial institutions would mean that they are less likely to remain in Singapore so to attract more financial institutions to Singapore so that we can remain the financial hub of Asia would mean some sacrifices for the populace. Haven't we been sacrificing all these years in the name of greater political stability so that we can attract foreign investments and more recently, foreign talent?
After the FI rejection, I am lost about what I can do to claim my money. MAS report say FI failed and they mis-sold, but FI refused to compensate. What can I do next without money to seek legal? This is really frustrating. Why can't MAS help us like HKMA is doing?
"The returns is commensurate with the effort to get back your returns"
- I have spent much effort and all I get are rejection letters and frustration.
I agree this is a fairer solution, for MAS to help investors seek compensation, same as HK is doing
The MAS report sends strong signals
to retail investors:
1)The FIs are not the culprits of
mis-selling of the toxic products,
hence they are not liable for any
compensation.
2)Unless retail investors have
concrete evidence,otherwise it
will be at the mercy of FIs to
compensate as low as they like.
3)The white wash of the FIs'
responsibility in the selling of
the toxic products dashes all
the hope of retail investors in
claiming their losses.
4)The toxic products were banned
in the US and yet were allowed
to be sold to the public in
S'pore, MAS holds no
responsibility at all.
5)Some may look for help from
FIDREC which are financially
supported by FIs.The outcome
of FIDREC can be guessed
easily.
6)Conclusion: stupid retail
investors, you have to face
your own music. Who asks you not
to open your eyes when you put
your savings into these
products?
The latest news regarding Hong Kong SFC's counter-proposal to 16 banks regarding compensation to Hong Kong investors are: the banks to buy back the minibonds at 60% of the original value plus returning to investors 40% of residual value when the minibonds mature in future.
Here is the url to the Chinese language MingPao story:
http://www.mpfinance.com/htm/Finance/20090710/News/ea_eaa1.htm
Don't despair!!!!
Ride on the coat tail of the class action..
The investigation into the RMs handing of the sales process will be in your favour. I guarantee you the RMs broke section 27 of the FAA and therefore is laible and so is their master the FIs.
The FIs have been found to have lapses in internal governance , poor training of the RMs and RMs were not qualified to sell these products. This breached the fit and proper criteria of the FAA.
These violations of the laws resulted in mis-selling, conflict of interest and misrepresentation.
The violations will put the last nail to the coffin of RMs.
There is hope for full compensation if this is proven.
Regards
Anon 10:04pm
Thanks for the url.
If I read the last but one paragraph of the MingPao story correctly, it says something like the SFC considers it more reasonable if the banks bear more losses than the investor. The rationale is that the banks should be held responsible for their mis-selling practices.
The SFC's reasoning is very enlightening to our MAS, if it chooses to listen and emulate.
There are 3 places sell minibond
which were banned to be sold to the
retail investors in US, namely, Taiwan,Hongkong and Singapore.
As regards mis-selling and
compensation, 3 places adopts
different attitudes and methods:
1)Taiwan authority compelled all FIs
to buy back the notes with the
original price.
2)SFC of Hongkong recommended FIs
to buy back the notes at 60%
of original value, 40% of
residual value.
3)MAS reported that FIs are not
liable even they mis-sold and
breached the FA act. So there is
case in claiming compensation
from FIs.
Now we can see how FIs are well
protected.Who cares for the interest of weak people. Who becomes lame duck in front of these
powerful FIs.
1) Taiwan : 100%
2) HK: 60% + 40% (on maturity, if still have value)
3) SG: Many of us still get 0-10%.
Is it fair? Where you want to buy financial products in future?
Singaporeans Lehman investors shouldnt despair, if HK investors get back at least 60% of their investments, then they should go to their "Meet the people" session to ask their MPs why Singaporeans are treated so shabbily? Are HK politicians paid better than their Singaporeans counterparts? Are HK investors more "vulnerable" and hence more deserving of compensation? Are Singapore Banks compensating foreign customers more than their own Singaporeans?
Is it true that Taiwan get 100%?
If not 100%, how many %?
How many get compensated?
Any one got info?
Any news report from Taiwan.
It would be interesting to know.
From the legal point of view, the MAS report on mis-selling and compensation of FIs to retail investors gives a funny but crooked
dimension of the logic.I don't think many of us can understand.For instance,
1)Crime is committed and no one
is liable. Similarly, FIs
mis-sold the toxic products,
yet they are not liable for
their crime.
2)The ban of FIs to sell structured
in the next 2 years is no more
than a farce. Only an idiot will
buy structured notes in the next
few years. The ban is shamefully
meaningless.
3)MAS dare not pin point the errors
committed by FIs, is it because
MAS afraid that FIs might accused
MAS was the main culprit in
allowing FIs to sell the notes?
Logically they have to protect
the interest of each other.
As a result, retail investors
become the sacrifice of the joint
effort of MAS and FIs. How sad!
We Singaporeans are too quiet n our GAHMEN thought we still able to take the blow ! They do not know how much pain and insomnia nights we have suffered .... LETS MARCH ON THE STREETS LIKE WHAT HK INVESTORS DID AND FIGHT FOR OUR RIGHTS !
Responding to Anon July 12, 2009 11:58AM
The Hong Kong regulator, SFC, is pursuing the banks to compensate HKers. Why the SFC is not afraid being accused by the banks of allowing the toxic products to be sold in HK?
Your above-mentioned fear of counter-accusation by the FIs is not the main reason why MAS is not punishing the FIs in a hard-hitting way.
IMHO, the main factors for the regulator to pursue punishment are:
(1) The govt has intention to pursue punishment
(2) Govt accountable to citizens
(3) Govt has no stake in FI business
(4) Consumer association/council is independent and vocal.
(5) Media and press are free and independent.
(6) People can take to the street to protest without free.
For the above six points, they are YES for HK and NO for SG.
SG investors are thus hard pressed in this sad state of affair.
Someone wrote saying that they have put in much effort and still get back nothing. Please open your eyes and subscribe to Starhub channel 48. If not can go to HK and see how they do it. They really camp on the pavement outside the banks and tell the story for all to hear, in pictures, words and actions. Yes, they were hurled away by HK police on certain occasions but they persisted, because they are motivated by a strong sense of injustice and willing to make sacrifices to get the attention they deserve. What kind of action do we see the victims take in Singapore? Milling around in HongLim Square? You have to take your battle to the frontline and not to the dumping grounds if you want any results. Otherwise just forget it and move on.
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