Saturday, February 07, 2009

Survey: An active Parliament

Is it good for Singapore to have an active Parliament where policies are actively debated? Give your views in this Survey

Here are the survey results.

Challenges faced by alternative parties

Here is my speech given at the Forum organised by the Singapore Democratic Party.

Here is a video recording of my speech. Source:  The Online Citizen.

Class action on credit linked notes

It is important for the investors to contact their group leaders and get ready for the class action. You should register with the group leaders now on a "in-principle" basis. This allows the group leaders to know your contact details. As this is "in-principle", it does not commit you to make any payment now. You can also withdraw later.

After registering for the "in-printiple" basis, you can still wait for the offer from the financial institution or lodge the complaint with FIDREC. In case, FIDREC rejects your complaint or offer an inadequate sum, you can proceed with the class action.

You must register now. If you wait until a later date, you may miss the boat. I will not be able to help you at the last minute.  The contact persons are found here.

Compensation for the Credit Linked Notes

The general public in Singapore had the impression that most of the investors in the credit-linked notes (i.e. minibonds, high notes, pinnacle notes, jubilee notes) had been compensated. The newspapers reported that 25% had full compensation and 32% had partial compensation.

Several people talked to me about this matter. I gave them the following facts and observations:

1. Most investors who received full compensation invested small sums, i.e. $20,000 or less.
2.  Most investors who invested large sums, i.e. $50000 or more, received rejection letters
3.  Most offered partial compensation rejected the offer, as the amount was too small
4.  I estimate that the actual compensation is probably 10% to 15% of the invested sums

Most people that I talked to were shocked! They had been given the wrong impression through reading the newspapers. They now realise that the perception and reality are quite different. Many investors are still very disappointed and angry.

Friday, February 06, 2009

SFC may use stick to force banks into minibond setttlements

The Securities and Futures Commission may disqualify banks from selling securities products if they are not willing to follow the example set by Sun Hung Kai Investment Services over the minibonds saga, sources said.

The company agreed late last month to refund up to HK$85 million to investors who bought structured notes linked to collapsed US investment bank Lehman Brothers.

The regulator will first deal with big banks, the sources said.

The SFC is now liaising with banks to try to get them to settle with minibond investors by using the Sun Hung Kai Investment deal as a reference and may resort to disciplinary action, the sources said.


Minibond probe into several lenders expected to end soon

Dennis Eng
Feb 06, 2009

The Securities and Futures Commission is expected to wrap up some of its investigations into the Lehman Brothers minibonds saga soon, sources say. It is understood its investigations involve several big banks.The sources said it was hoped the banks would follow the example set by Sun Hung Kai Investment Services, which last month agreed to refund fully the ...
Home/News/Hong Kong -


Opinion of Queen's Counsel

For strategic and confidentiality reasons, I will not be reporting on the opinion of the Queens Counsel through this blog. 

I will provide the information to the leaders of the various groups, ie Minibond, High Notes, Pinnacle Notes and Jubilee Notes). We have also approached several Senior Counsels in Singapore and some have agreed to advise these groups.  

If you have invested to take legal action, you have to join the respective groups. The contact persons are shown here.

Suggestion to stimulate the Singapore economy - Money multiplier

Dear Mr Tan,
I wish to submit the following suggestion to stimulate the Singapore economy

1) First, the government to issue cash voucher with mutiple nomination of $100 with expiry of 1 year. This voucher would be sent out to all Singaporean.

2) With this voucher, the catch is that it must be spend with any SG establishment with minimum purchase of $150 in a single receipt.

3) So, it would have the immediate desired money mutiplier effect for demand within the expiry.

4) SG establishment receiving these $100 voucher through customer payment can be creative by paying part of their employee pay package with these $100 voucher based on $80 employee wage (opt in basis by individual employee depending on their need for these voucher). This would be implied improvement of the firm cashflow as the more voucher which the firm collects mean his sales turnover has improved. And, by paying voucher to employee at employee option, it free up some cash particularly the profit make when the voucher has to be spend with additional $50 cash.

5) The next catch is that this $100 voucher has a depreciating effect that by end of the expiry date, the remaining value which could be converted to cash through SG bank is $80. The reasoning for this approach is to further stimulate those SG industries particularly those with high profit margin such as retail store, high end products and capacity measured establishments such as Concert, Cinema and exhibition space which having 20% discount (based on proceed of $80) would not be an issue rather than the actual sales volume.

6)Inevitably, I believe that with these $100 voucher, demand and supply would create a secondary trading market for this voucher during the expiry date which would further spur up comsumption and believe the government through their various agencies could also snap up these vouchers to stimulate further.


Wednesday, February 04, 2009

Measures to stimulate the economy

First posted on 22 Nov 2008

Most countries adopt the following measures to stimulate a slowing economy:
> capital spending, e.g. build infrastructure, roads, bridges, etc
> reduce tax, i.e. consumption, income or profit tax
> give cash cheques to consumers to spend

Which method is better? I believe that a combination of measures are necessary. A lower rate of consumption tax (e.g. GST) will encourage people to spend and will stimulate the economy. Cash cheques for consumers may results in some of the money being saved, and not used for spending. But it can help the cash flow of the lower income people.

So far, no country has adopted the following measure (which is my preference):
> give a credit line to consumers at a low rate of interest - subject to a cap.

This credit line, which is given to someone who has lost a job, can help to pay the mortgages and meet the monthly expenses. It reduces borrowing on credit cards or other sources that can add to the interest burden. This credit line will encourage the people with jobs to continue their normal spending (as they do not need to increase their savings in case of retrenchment). More details in this article.

In many countries, there is no need for this relief loan as the retrenched workers can get unemployment benefit. This scheme is important for many Asian countries that do not have unemployment insurance.

Jobs Credit Scheme

Will the Jobs Credit Scheme save jobs and help the unemployed? Is there a better way to spend the $4.5 billion?  Read my views in this article.

Relief loans to replace loss of earnings

First posted on 18 Nov 2008

PM Lee said that our finances are sound. The Government will implement measures to stimulate the ecoomy.

The recent methods to stimulate the economy are:
a) Spend on infrastructure works (i.e. Singapore and China approach)
b) Give money to the people to spend (i.e the US stimulus package)

These methods are good. I wish to suggest a third method:
c) Allow each person to apply for a relief loan for the loss or reduction of earnings

Here is how the relief loan works:
1. The borrower can apply for a relief loan to replace the loss or reduction of earnings.
2. This loan will carry interest at 2.5% p.a.
3. The total borrowing can be subject to a cap of say $50,000
4. The loan can be repaid at any time, when the borrower has excess earnings.
5. It will be a first charge on the sale or your property or CPF savings
6. The CPF savings cannot be withdrawn for investments, while there is an outstanding relief loan

The relief loan will help the affected person to pay the mortgage and carry on the daily life with dignity. This facility will provide the assurance for the employed people to carry out their daily life without cutting back on their expenditure drastically, although they are expected to be more careful and frugal. They will follow SM Goh's advice to continue to spend and keep the economy moving.

If mortgages continue to be paid, the property values will be somewhat protected. The fall will be modest. The lower price will encourage other people to buy properties.

How does the Government manage the task of assessing and approving these relief loans? I suggest that they outsource it to the banks and the financial adviser firms, who will carry out the assessment to the expected standard in return for an agreed fee. They have many representatives who can be retrained to process these relief loans. It will create useful jobs for these representatives.

This concept is especially relevant to Singapore, as we do not have any unemployment benefit. A relief loan can be a good alternative to help the affected people.

TOC: Social Justice and Fairness

First posted on 7 Dec 2008 - rally organised by The Online Citizen

The theme for this rally is “Social Justice and Fairness”. I like to talk on two points:

1) Our society should be more egalitarian.
2) The elected leaders should represent the people.

What is being egalitarian? It is being more equal. It means that the gap between the rich and poor should be narrower. In the past 10 to 20 years, the gap has widened.

We know how much the high income earners earn each year. Salaries of $1 million, $2 million, $5 million or $10 million are quite common in Singapore, in the business sector. Even our government leaders earn more than $1 million in salaries, as they are benchmark against the top earners.

I do not mind people earning higher salaries, if they are able to build the economic pie. But, the economic pie must be fairly shared with the other members of society.

I am worried that the low income earners are not earning enough to make a decent living. Many people have to work hard on two jobs, and they hardly earn enough to survive, to meet their monthly expenses. It is important that the salaries of the low income earners should be raised.

In many countries, there is a minimum wage that is tied to the cost of living. Everybody working a decent day’s work should receive a wage that is sufficient to pay for their living expenses, at a frugal level. They are not well off, but they should not starve.

Apart from an adequate wage, we must also give people some security against unemployment, especially if they fall victim without any fault of their own.

In some countries, there is unemployment insurance to give them some benefit for 12 to 24 months. It allows them to adjust a period to adjust. This type of payment ensures that they can continue to pay their mortgage and meet their living expenses for a period of time. They do not have to borrow on credit cards or from loan sharks and pay a high rate of interest, which adds to their burden.

Even America, which is the champion of the free market system, has a minimum wage for their workers. It also has an unemployment insurance scheme that makes payment for 12 months or slightly longer.

Singapore has schemes such as the workfare and assistance given by the community development council. We need to review the effectiveness of these schemes to make sure that they are able to address the real problems. I suspect that these schemes take a lot of work to administer and do not provide adequate assistance to the people in need.

Represent the people
Our elected leaders can represent the people and be the voice of the people. This requires the leaders to be freely elected at the general and by-elections. We should move back to the old days when most elections are contested and the candidates have to go out to win over the votes of the people.

The trend in recent years, where many elections at the group representation constituencies (or GRCs) are won through walkovers is not satisfactory. Some members of parliament have never been directly elected for several rounds, as they continue to win through walkovers.

We should move towards smaller GRCs and eventually to move back to the single member constituencies, which was the case in the 1970s and early 1980s. A free election will bond the leaders to the people. It will lead to a more united country. It will go back to the old days when the people are proud to be Singaporeans.

In recent months, more than 10,000 people have lost their hard earned savings by being misled into investing in the mini-bonds and other credit linked notes. They have signed a petition for the authority to carry out an independent investigation into the possible wrong doings by the financial institutions that created and/or marketed the products.

I hope that the authority will act on this petition, which has been signed by nearly 1,000 people. The signatories need to know if their appeals have been heard and have been fairly considered. They also like to know the progress and outcome of the investigation. As the goes, “justice has to be done, and seen to be done”.

Let me wish the very best for the future of our people and nation, and for Singapore.

Tan Kin Lian

Tuesday, February 03, 2009

Bonus restructure badly affected by the global crisis

Dear Mr, Tan Kin Lian,

I have two concerns about NTUC Income's bonus restructure enforced on policy holders effective last year, 2008.

First Concern
I have been paying about 11 years for an Income endowment policy. If I am not mistaken, my payout from NTUC Income at maturity date, 2011, will probably be badly affected by the recession. Had the bonus not been restructured in 2008, I would have a larger amount locked-in last year because the economy was bouyant in 2007 and the bonus for 2007 is distributed in 2008.

Second Concern
I think policyholders like me should have been allowed an opt out option last year when Income decided to restructure the bonus. This is because when I signed for my policy it was based on a different understanding of the bonus distribution. I have only two years more to pay my premiums so if I understood how my policy is affected by the bonus restructure, I should be allowed to opt out with no penalty. I find I cannot opt out now because of the financial penalty incurred, I have to continue my premium payments for this year and the next.

In conclusion, I expect my worst fears will be realised when I receive notification of downward revision on Income endowment policy after the end of Income's financial year.

I would like to hear from you. Thank you very much, your insights into these concerns I'm sure will be absolutely helpful.

I agree with your views. I believe that NTUC Income should have allowed policyholders to make a choice to stay with the old bonus structure.

But the management and board was adament about their right to change the bonus structure and not to give this option. The chairman made a promise at last year's Annual General Meeting about the future bonuses. At that time, the promise was quite reasonable.

Subsequently, the global financial crisis came, and made the situation worse for policyholders - especially with the restructured bonus.

I suggest that you write to the chairman of the board of NTUC Income to express your views. You can also write to MAS.

Advice on lodging complaint on FIDREC

Mr Wang Says So writing a series of articles on possible lines of arguments that investors could use when they use the FIDREC adjudication process. I urge you to read the articles.
The first two articles.
He may be writing other articles.

SCMP:Minibond settlement may start new troubles


3 Feb 2009
Enoch Yiu

The city’s corporate police seem to be getting smarter and faster – at least when it comes to such high-profile cases as the minibond issue.

While in the past insider dealing cases needed seven or eight years to reach a final verdict, the Securities and Futures Commission has made history by taking only four months to reach settlement with Sun Hung Kai Investment Services on the minibond refund.

The brokerage has agreed to voluntarily pay back all HK$85 million to 310 investors in minibonds issued or guaranteed by collapsed Lehman Brothers Holdings. The landmark settlement shows the commission can move mountains when it wants to.

It also appears to be a smart choice. While the broker insisted it had done nothing wrong, it agreed to give a full refund to investors. Had the SFC opted to take the case to the Market Misconduct Tribunal, it might have waited many years for a ruling and investors might not have got their money back in the end.

Our regulatory friends have assured White Collar that Sun Hung Kai is not the only one in the SFC’s sights. It is checking other minibond distributors – understood to include two brokers and 21banks – and will demand a full refund to clients if it is confirmed they had misled investors into buying the products without explaining the risks.

Once the SFC reached an agreement with an institution, all of the firm’s clients would receive the compensation.

White Collar is concerned investors may now ignore the moral hazard of investing in such dubious products. The 310 Sun Hung Kai investors who bought the Lehman minibonds did not need to bear any investment losses at all.

The SFC considered they should be fully repaid as they would never have been lured into buying the products if brokers and banks had clearly explained the risks involved.

But Sun Hung Kai has been a broker in Hong Kong for 40 years and has many sophisticated clients. Were all these clients so naive as to be misled by the brokerage staff? If some investors bought the products with their eyes open, they should bear at least some responsibility.

Has a precedent been set where investors use high-profile complaints and street protests to pressure the SFC to force intermediaries to accept liability for the investors’ own wrong investment decisions?

The other problem created by the Sun Hung Kai settlement is the expectation gap. Other minibond investors may not accept lower compensation levels from their banks or brokerages. It will certainly add pressure to other banks and brokers to follow suit, but neither the SFC nor the Hong Kong Monetary Authority can force them to offer the same settlement.

It is easy to understand why Sun Hung Kai was willing to pay up – the money involved was not large, at less than 1per cent of all minibonds sold. Also, if it said no to the SFC, it would have risked losing its licence.

For the banks, some of which have sold several billion dollars worth of minibonds, a full settlement may be less attractive. Although the SFC can mete out disciplinary action, it is the HKMA that supervises their daily operations and issues their licences.

As this column has mentioned before, the government should seriously consider a single financial regulator for banks and brokers.

SCMP:Lawmakers want brokerage's role in Lehman products saga revealed


3 Feb 2009
Paggie Leung

Legislators have urged the Securities and Futures Commission to publish in full the details of its investigation into Sun Hung Kai Investment Services’ sales of Lehman Brothers investment products.

“Why don’t you release the investigation report to let us decide whether your penalty is a fair one?” financial affairs panel legislator Albert Ho Chun-yan asked SFC chief executive Martin Wheatley yesterday at a meeting to discuss reports on the minibond saga prepared by the commission and the Hong Kong Monetary Authority.

The question came 11 days after the SFC reprimanded the company over its sales of minibonds.

The firm immediately announced it would repay about 300 investors HK$85 million and review its internal systems. It did not acknowledge any liability or wrongdoing.

“No one knows what Sun Hung Kai did … we are all in the dark,” Mr Ho said. He said he would have preferred it if the SFC had just fined the firm and used that to repay the investors. “The message would be clearer and fairer,” he said.

Civic Party legislator Ronny Tong Ka-wah said disclosure would let firms know the “things [the SFC] is going to do to the institutions to make them realise that in future, they have to adhere to regulations faithfully”.

However, the commission said it had achieved the best outcome in the case, given that it did not have the power to order the company to pay compensation.

“Getting compensation back to its investors is the most important part of this investigation process and imposing a fine would not achieve that,” Mr Wheatley told lawmakers.

“I think you have to realise that it would make any negotiation we have with any of the banks concerned more difficult if we couldn’t achieve any agreement [with Sun Hung Kai].”

Hong Kong investors lost billions of dollars on minibonds guaranteed by Lehman Brothers when the US investment bank went bankrupt in September 2008. Minibonds are not corporate bonds, but consist of highrisk credit-linked derivatives. They are marketed as a proxy investment in well-known companies.

Ten of the worst ... scams to avoid

Dear Mr Tan
Please find an updated list of top ten scams from the UK Guardian Feb 2 2009 . Land Banking is listed at number 4 and continues to be a problem. Is there any chance some action will be taken on this in Singapore

Ten of the worst ... scams to avoid
More than 3 million consumers fall victim to scams each year, but you don't have to be one of them. Tony Levene picks the main ones to avoid
Tony Levene
Monday February 2 2009

Scams cost UK consumers at least GBP3.5bn last year, according to the Office of Fair Trading (OFT). And the older you are, the more likely you are to lose money: older folk tend to have cash as well as being more trusting.

The OFT estimates 3 million UK consumers a year fall victim to scams sent by post, email, text or over the phone. But the real figure could be much higher. Many victims fail to report losses, often due to embarrassment.

Today is the first day of the OFT's scams awareness month designed to raise awareness of mass marketed scams. The consumer watchdog is setting up a nationwide "Scamnesty" scheme, which calls on consumers to drop scam mailings into scamnesty bins or boxes at local libraries and public areas across the country. The OFT says the information collected will help identify and develop strategies to combat the worst criminals.

So what are the scams most likely to catch people out? Here is our top 10.

1. Homeworking scams
Credit-crunched people turning to part-time work to help balance budgets need to watch out. Homeworking scamsters advertise "easy earnings" in return for cash. But all they send out is a leaflet telling people to advertise "easy earnings" schemes. Others promise big rewards for packing goods ? they take the money upfront and victims never see any earnings, even if they are conned into packing goods.

2. Racing tipsters
Many tipsters try to find winners, but some offer "guaranteed" tips which turn into a regular income in return for a fee. Except they don't. Others ask you to put money on horses for them in return for a 50% share of winnings, while promising to recompense losing bets. The only safe bet is that you won't see your money again.

3. Bogus foreign lotteries
You receive a letter from Spain saying you have won a million euros in a lottery you have never heard of, let alone entered. The fraudsters demand you send some money to "unlock the cash". And then some more. There is no prize ? victims can lose tens of thousands of pounds.

4. Landbanking
Fraudsters buy a field, divide it into tiny slices and sell each one for big money ? usually ?10,000 ? by convincing victims the land will soon get planning permission. The land never gets planning consent and the landbankers disappear with your money, leaving you with valueless land.

5. Pyramid schemes
A classic pyramid scheme involves getting lots of people to invest small amounts of money and offering them a reward for every new recruit they sign up. For example, you might be invited to invest ?3,000 of your own money and asked to recruit seven other investors who will pay you ?3,000 each. You now have ?21,000. The incentive for your friends is that they are "allowed" to go out and each recruit seven other investors so they get ?21,000 as well. It is illegal and people soon run out of friends to con.

6. Business opportunity scams
Here you are offered a "franchise" or other business idea in return for thousands of pounds in fees. The attraction is along the lines of "thousands of pounds a month without leaving the comfort of your armchair." The idea is usually rubbish and the originator runs off with your money.

7. Phoney jobs
Another credit crunch special. Websites promise jobs with high pay for an hour's work a day for those with no experience or skills. The first snag is you have to send substantial cash sums for the application form upfront. The second snag is that the job does not exist.

8. Bouncing cheques
Advertise your car or motorbike in a legitimate website or publication and you could get someone offering you more than you ask for. They will back this up by sending you a "certified cheque" or "banker's draft" for the cash. By the time you discover the cheque is a forgery your vehicle is halfway across Europe. Many insurers will not pay out for "theft by deception".

9. Boiler room investment frauds
Very persuasive salespeople call you up ? usually from abroad ? to offer you sure-fire share investments. The shares, if they exist at all, are overpriced by up to 100 times. And it is impossible to sell them. It is easy to lose ?20,000 or more.

10. Phishing
This is nothing to do with angling! Fraudsters send emails purporting to come from your bank's security department, asking you for your log-in, password and other personal details. Once they have these they loot your account. No legitimate bank ever asks for these details. And banks are getting tougher with victims, telling some they will not be recompensed for their losses because, by now, everyone should know about this racket.

Tony Levene is the author of How to avoid scams (Age Concern ?9.99)
Copyright Guardian Newspapers Limited 2009

Monday, February 02, 2009

Attend the interview with the bank now

Dear Mr. Tan,
I bought minibonds series. When I heard about the lehman brothers bankruptcy in last September, I went to the bank and asked them what would be the next step. They told me to wait.

I didn't hear anything specific for a couple of months so I went back to see the rep who sold me the product. He told me that I should meet his colleague for an interview. I was skeptical given what I read in newspaper about categorizing graduates and non graduates. But he managed to persuade me that it doesn't hurt and someone would call me the next working day.

Someone just called me to have an appointment. Can you advise whether going to meet this manager would help or hurt my chances of getting my money back?

It is all right to attend the meeting. You should tell the truth, and focus on the questions listed here.

If you have been truly misled, you should expect a fair offer of compensation.  If you do not get a fair offer, you can escalate the complaint to FIDREC.

Please read my blog in detail for the other information that you need. I am not able to advice you individually on this matter. I hope you understand my limitation.

Insurance company reject claim due to non-cooperation

Dear Mr Tan,
I had an accident on 2005 and had pleaded guilty at the court's hearing. My mother was the one who informed the insurance agent of this accident as the insurance was under her name.

Last year, I received first law letter from the insurance company that they will severe ties with me as I have bleached their contract of not cooperating with them on this case. I had once received a called from them but have told them that i was busy and would return call back which I had told my mother to. Since then, I had not received any further contact from them until this first lawyer letter.

Now I received a second letter to attend to court hearing between the plaintiff (the one whose car I knocked onto), the insurance company as co-applicant, and I as the defendant. Could you advice me?

You should reply to the lawyer's letter to explain that you have been willing to cooperate, and you are waiting for their communication.

As to the letter to attend the court hearing, you should bring it to your insurance company's attention. They have to deal with this matter. As they are more experienced, they will know what they have to do.

Sunday, February 01, 2009

Forum, Sat 7 Feb 2009

I have agreed to speak at the following forum on the topic "Challenges that alternative/opposition parties have to face".

Date: 7 Feb 2009, Saturday
Time: 2-5 pm
Place: Copthorne Orchid Hotel, Dunearn Road, Radius Room

I hope that the regular visitors of my blog will attend this forum.

More details here:

Distribution cost of life insurance policy

Dear Mr. Tan,
I read your survey about "life insurance policy". I bought a policy a few months ago, and the agent did not tell me about the distribution cost. I am now aware about it, after reading the survey results. I feel cheated that such a high cost (representing nearly two years of my savings) was not brough to my attention, although it is printed in the many pages of the benefit illustration. Can I seek a recourse now?

It is the duty of the insurance agent to disclose to you about the distribution cost of the life insurance policy that you have bought. 

If it is not brought to your attention, I suggest that you should make a complaint to the insurance company and request that the policy be cancelled for a full refund. If the company does not agree, you can lodge a complaint with FIDReC (

You should look at the amount of the distribution cost. If it is a few hundred dollars, it is a fair remuneration to the insurance agents, in which case, you should not make the complaint. However, if it is $1,000 or more, you can make the complaint.

Survey - Life Insurance policy

If you have bought a life insurance policy (i.e. whole, life, endowment, investment linked, or variation) during the past two years, you can participate in this survey

Read the survey results.

Results - Where to live

Blog Archive