Tan Kin Lian's Blog: Distributors were negligent

Sunday, September 06, 2009

Distributors were negligent

The distributors who sold the credit linked notes were negligent, but were not cheating.

Most of them were probably ignorant about the true nature of these structured products. They mis-represented the products, but not intentionally. In the greed to earn the attractive commission on the sale of the products, the sales representatives failed in their duty to give proper advice and information to the customers. The financial institutions also failed in their duty to supervise the sales representatives.

The negligence has caused loss to the investors. The investors deserve to be fairly compensated for the loss. The financial institution cannot hide under the disclaimers signed by the customers, as there was negligence and misrepresentation.

The compensation does not need to be full. It would be fair for the loss to be shared equally between the investor and the negligent distributor.

An honorable financial institution would recognise that it had neglected its duty and come forward to offer a fair settlement to all affected customers, and not only to certain customers based on educational level or age. Great Eastern Life has acted honorably and deserve to be commended.

But many financial institutions chose to look at its bottom line profit, and decided to use its financial power to fight these cases in court. And, sadly, they were backed by the Government.

When will Singapore return to its old values of honesty, fairness and justice?

Tan Kin Lian

13 comments:

Anonymous said...: If you think you cannot win, why fight?
"以卵击石"?
That is why people go to FIs to seek redress & beg for mercy. But after begging for one year, most are not successful.; September 06, 2009 9:33 AM
Anonymous said...: Great Eastern may not be totally that nice. Remember it ask all the agents to pay back the commission. All consumers ask to be protected, then who is going to protect the financial advisor guy?

If the creator of the product makes the product wrong, they should take full responsbility. Next time, nobody want to sell financial products, cos if something goes wrong with the product, the company will ask all the sales people to compensate. What if the sales people are trained based by the financial institution to believe the product to be guaranteed? It is also unfair to them.; September 06, 2009 9:54 AM
Anonymous said...: To anonymous 9:54 AM,
Now that you know GE has done an honorable thing, if you don't feel likewise, you can quit, join another insurance company or whatever.
During the training, did you study the prospectus or just remember the selling points of the product. (Clients don't insist, so giving proper coverage of the negative points wouldn't help sales right?)
Sure, other trainees also didn't ask. But the difference is they accept the company's decision.; September 06, 2009 10:38 AM
Anonymous said...: It is right to say that both MAS and FIs are ignorant about the nature of the toxic products and yet the former approaves it sale and the later mis-sell and mis-represent the products.Should they both be liable for the loss of our investment? Both should be dealt with the law like selling drug to the open market and claim not liable.Who can prove that they are innocent?
Because they are interlinked with each other in interest,that is why they cannot pin point the fault of each other. They have to find a scape goat-- investors should understand the risks themselves. Who ask them to sign on the various type of forms? This is a kind of acknowledgement of understanding of the products.
This kind of argument cannot stand as investors' signature just to agree on purchase of the products. It does not give any signal of acknowledgement of understanding, especially when RM emphasize the products were safe and they had been approved by MAS.
There are two Chinese proverbs beautifully describe the relationship of MAS and FIs:
1.官商勾结
2.狼狈为奸
Now you can immagine what is the end result of this fiasco.; September 06, 2009 12:36 PM
Anonymous said...: To anonymous 9:54 AM,
You are to be blamed too for not vetting the products before peddling them to their clients.
You people are supposed to be life planners and financial experts.If you think you are not then this is not the right profession for you. You have failed the fit and proper requirement too.
As responsible planner you are to put your clients' interest first and to see that the products are suitable and to disclose everything and not to hide facts to make a sale.
I beleive you are a salesman like any insurance agents who will peddle any products the company has.This is not good. You should check first and make sure it will not harm your customers and not only that you must make sure it is the best of the products your company has to meet your clients' needs and not becuase of high commission or promotion or they are new products.
If you think you can't keep up to this requirement i suggest that you leave and join ntuc where all the product pushers are.People will understand if you are from ntuc.; September 06, 2009 1:12 PM
Anonymous said...: To Annoynomous 10.38am, Great Eastern ask the sales people to compensate for the failing product.

But if the sales people also bought the plans themselves (because they believe in the nature and benefits), aren't they now suffering double loss?; September 06, 2009 4:04 PM
Anonymous said...: This is too bad. Buying it and pay back the commission doesn't make you competent. It is because you were incompetent yourself that is why it happened.As suggested above the agent should leave becuase he or she is not suitable as a life planner. It is dangerous to consumers.; September 06, 2009 7:00 PM
Anonymous said...: To: Anonymous 4:04 PM
Fr: Anonymous 10:38 AM

"But if the sales people also bought the plans themselves, aren't they now suffering double loss?"

All the policy holders of the affected plans would be compensated by GE, regardless whether they bought it from themselves or some other agent, right?
Or are you saying that you won't be compensated (in the same way as other policy holders) just because you as an agent, bought the plan for yourself?

As for the commission, GE has done the honorable thing for you in compensating the affected policy holders. :); September 07, 2009 9:29 AM
Anonymous said...: The FAs of Phillip Securities should stand up and voice out the unfairness of this MB saga. They are victims as much as the retail investors. They were trained and convinced that the MB is a bond, safe and low risk. The training was conducted by Lehman Brothers.

Now when things fall apart, Phillip Securities are blaming them and taking back their commission. I know of a few honest and hardworking FAs in Phillip Securities but is this fair for Phillip Securities to first blame the retail investors and then their Own FAs?

This is not a way to look after your staff. Better leave then stick to this one.....; September 07, 2009 9:35 AM
Anonymous said...: Sorry,the guidelines for every FA or agent is, "if you are not confident about a product don't sell.If you do not know don't sell."
If you are not competent go find another job.; September 07, 2009 11:21 AM
Anonymous said...: "Ill-gotten" money should be refund to the "investors".
Many are still getting nothing you know!!; September 07, 2009 11:54 AM
Anonymous said...: There is no excuse for GE agents to claim they didn't know about the products. Does this mean they sold blindly. I think they were incompetent and greedy and also unethical otherwise their customers would not have been conned.
If GE agents didn't know they have no business as an agent. Just get out. Ill-gotten gain is sinful.; September 08, 2009 12:25 AM
Anonymous said...: "An honorable financial institution would recognise that it had neglected its duty and come forward to offer a fair settlement to all affected customer"

After a year of MB, which FIs are honorable? MAS buried the past and starting to setup new rules. Does this means we, the MB investors, just has to bite the bullet. What kind of regulator is this? Nothing compare to that of Hong Kong and Taiwan.

Remember, if a woman lost her parliment seat because of washing hand after shaking with a fish-monger, more will follow her because of the MB saga.; September 09, 2009 11:54 AM