Tan Kin Lian's Blog: Churning the CPF savings

Thursday, December 24, 2009

Churning the CPF savings

There is a report about financial advisers advising low income families to wthdraw their CPF savings for investment in unit trusts. The financial advisers earn up to 3% on the front end charges and give a rebate to the CPF member. By churning these investments many times, the CPF member is able to withdraw a fairly significant amount of savings. The problem is - for every $1 that is withdrawn, the CPF member is likely to lose $3 (my guess) of savings.

The CPF tries to bar the errant financial advisers from being involved in the future. This is similar to telling a thief that if he is caught, he will be barred from stealing in the future. I hope that our Government will make this type of activity into a crime that can send the culprits to jail.

We have a law on Financial Advice, which is administered by the Monetary Authority of Singapore. Surely, this law requires the licensed advisers to operate ethically and avoid dishonest transactions, such as illegal withdrawals of CPF savings? If this is the case, the MAS should investigate and take action under this law. We cannot have people who are licenced to abuse their privileges.

Tan Kin Lian

12 comments:

Anonymous said...: Agreed ! It should be a crime !; December 24, 2009 11:13 AM
Anonymous said...: Churning is rampant among insurance agents and the poor are the easy victims. The promise of cash back from the CPF by the agents is behind all this unethical practice.
The poor need help and yet they are the very people who get cheated by insurance agents. Not just their CPF
they are dumped with wholelife and endowment products which don't help address their needs.
The insurance agents earn their commission by robbing these people of their future. Is it wonder these people can't buy a CPFlife?
Since 2001 after the liberalisation of the CPF scheme many members' accounts are still reeling from losses.
What do the insurance agents know about investment? With tikam tikam ILPs exams you think suddenly they become investment experts?
Even with traditional insurance products they are advising the wrong products most of the times.
The poor get poorer and the rich get richer. The insurance agents make sure the poor stay poor if not poorer.; December 24, 2009 11:29 AM
Concerned said...: Given the calibre and integrity of some of these FAs, if they don't do these sorts of things, they have to eat grasses everyday.
So consumers think twice before action.; December 24, 2009 5:19 PM
Anonymous said...: Is buying one policy and get one free churning?
I remember a ntuc agent showing me how buying a revosave can help me to get a vivolife policy free.
My friend was shocked when I told him this.; December 25, 2009 12:42 AM
My foot said...: Banks & Insurance companies need to grow their business.
They have found that getting sales from innovative products is profitable.
People now days are also informed about returns on their money.

However they do not know enough.

Their greed to expand their wealth drives them to be attracted to higher returns without understanding what are the risks.
Agents, banks etc use this perspective to their advantage.

The search for higher returns is ongoing.. and it will never cease.
The only hope is for interest rates to go up and all will dump their cash into fixes deposits.. just like in the 70s.

What can you do?.. put the money under your mattress for the next 10 years? buy gold?
No. go spend it on yourself. go for a holiday to Peru and Chile.
see how the other half of the world lives. Do they use tissue pack to chope seats?
Do they have NS? how is rubbish removed from their homes? What is vehicle tax applied? How much does a teacher earn in Santiago?

Learn and grow.; December 25, 2009 11:34 AM
Anonymous said...: December 25, 2009 12:42 AM,

report to MAS...blow the whistle; December 25, 2009 12:34 PM
Anonymous said...: Tell the insurance companies to operate a casino instead of a casino disguised as insurance company and the agents as runners.
Now you know who are insurance agents. They are thieves in disguise and they do anything to get to your money even the CPF.; December 25, 2009 10:57 PM
Anonymous said...: MAS knew about it long time ago but if they have acted that would hurt the insurance companies' and the banks' business.
Can't depend on MAS to regulate.; December 26, 2009 2:51 PM
roddy said...: Totally agree.

What's the use of sending these unscrupulous financial advisers warning letters? They are not kids who didn't know better. They are criminals who went in with the intent to cheat.

At the very least:
1. Publish their names &
2. Publish the names of companies they work(ed) for
In the long term:
3. Charge such financial advisers in court

Warning letters are laughable as a form of deterrence; December 28, 2009 10:52 AM
Anonymous said...: MAS is beholden to the FIs and insurance companies.; December 28, 2009 1:01 PM
Anonymous said...: Recently I was approached to do this job, he said I don't have to do anything, he will pass me clients and all I have to do is to submit them, give him the commission for every case, I get to keep the monthly target commission $3000, but I rejected this job offer because I suspected that those clients are linked to loansharks.; February 09, 2010 2:26 PM
piggywiggie said...: recently my boss fired me because i know that he has syndicated about $5 million of transactions which involved churning of CPF monies... but he was so confident that he says that no one will believe me cos they will think I am a disgruntled employee and that the syndicate handles the transactions very well to cover their tracks by churning the transactions again after the 90 day watch period... so how can we whistle blow and be protected when unscrupulous bosses like these harm employees like us who are just trying to make a living?; February 18, 2013 11:21 PM