There is a big battle between SingTel and Starhub over PayTV. SingTel has won the rights to boradcast the English Premier League (EPL) matches in 2010. Consumers have to switch set top boxes to SingTel to watch these matches. If they wish to watch programmes from both operators, they need two set top boxes and two sets of wiring in their home.
This is time for the regulator (i.e Media Development Authority) to come in and require the PayTV operators to separate the two operations, namely to operate a platform and to provide the contents. There will be a separate charge for using the platform and subscribing to the content. Each platform operator is required to carry the content of any approved provider.
This will give the best choice to consumers. There is competition between the platform operators in pricing and service. There is also a free choice of contents.
The content should not be bundled up with the platform.
There is also a need for the Competition Commission to come in and give a ruling. The Commission is required to ensure that there is free competition in Singapore to give choice to consumers. The bundling of platform and content is monopolistic and bad for consumers. I hope that the Commission will also have a say on this matter.
Tan Kin Lian
Saturday, November 14, 2009
Specific unfair practices - financial products
Here are some practices adopted in the financial services industry that could be found in breach of the second schedule in the Fair Trading Act:
11. Taking advantage of a consumer by including in an agreement terms or conditions that are harsh, oppressive or excessively one-sided so as to be unconscionable.
12. Taking advantage of a consumer by exerting undue pressure or undue influence on the consumer to enter into a transaction involving goods or services.
14. Making a representation that appears in an objective form such as an editorial, documentary or scientific report when the representation is primarily made to sell goods or services, unless the representation states that it is an advertisement or a promotion.
18. Representing that goods or services are available at a discounted price for a stated period of time if the supplier knows or ought to know that the goods or services will continue to be so available for a substantially longer period.
20. Using small print to conceal a material fact from the consumer or to mislead a consumer as to a material fact, in connection with the supply of goods or services.
11. Taking advantage of a consumer by including in an agreement terms or conditions that are harsh, oppressive or excessively one-sided so as to be unconscionable.
12. Taking advantage of a consumer by exerting undue pressure or undue influence on the consumer to enter into a transaction involving goods or services.
14. Making a representation that appears in an objective form such as an editorial, documentary or scientific report when the representation is primarily made to sell goods or services, unless the representation states that it is an advertisement or a promotion.
18. Representing that goods or services are available at a discounted price for a stated period of time if the supplier knows or ought to know that the goods or services will continue to be so available for a substantially longer period.
20. Using small print to conceal a material fact from the consumer or to mislead a consumer as to a material fact, in connection with the supply of goods or services.
Friday, November 13, 2009
Delivery of torchlight with locator
A customer placed on order for 2 torchlights and asked for them to be delivered urgently to his office. He pays a delivery charge of $7. This is the first order with delivery.
It is better for a customer to order more pieces and enjoy a discount of $1 (for order above 5 pieces). The delivery cost will also be spread among a larger number of orders.
It is better for a customer to order more pieces and enjoy a discount of $1 (for order above 5 pieces). The delivery cost will also be spread among a larger number of orders.
Most customers prefer to collect from my office and save on the delivery charges.
Combating escalating motor claims
Someone asked for my views on why the "motor claim framework", which was introduced two years ago to combat the escalating claims, did not work. This question should more properly be addressed to the parties that introduced this framework, rather than to me.
This framework was introduced by the General Insurance Association with the support of the Monetary Authority of Singapore. They should explain what has happened, what had failed and what they are doing about this matter.
Why did I say that the framework did not work? I recall that the framework was intended to bring down the claims and keep motor premiums from escalating. From anecdotal evidence, it seems that the motor premiums continued to escalate sharply during the past two years. Clearly the framework had failed to achieve its primary purpose.
When the framework was first launched, there were media reports that motorists can wait at the roadside and ask for a surveyor to arrive on the spot to settle the claim or arrange the repair. At that time, it was quite clear to me that this proposal was impractical, but the people who promoted this framework was confident that it would be the silver bullet to solve the underlying problem. It did not work.
It seems that nobody really wants to put to find a solution. They are only interested to make a show of dealing with the problem. Most of the parties involved actually benefited from the escalating claims - the repair shops, the lawyers, and the insurance companies. The only parties that suffer are the consumers, who has to pay higher premiums.
The consumers do not have the power to hold anybody accountable for the escalating premiums. Their complaints will be ignored and will be brushed off as the price for living in an advanced country. If consumers have to pay higher petrol prices and ERP, what is a few dollars more in insurance premiums?
The trouble is that this attitude will lead to wastefulness, which is now acceptable as being part of life in Singapore. It is now a Singapore culture to pay a lot of money on infrastructure and systems (instead of going for cheaper solutions) and passes the higher cost to consumers.
What is the underlying cause of the escalating motor claims, which was not solved during the past three decades? It is caused by fraudulent claims, not only for repair claims but for injury claims as well.
These fraudulent claims cannot be handled by the insurance executives, who do not have the power to deal with crime. They have to be handled by the people with the power, namely the Government. If the Government does not wish to deal with fraudulent claims, then the problem can never be solved.
Tan Kin Lian
This framework was introduced by the General Insurance Association with the support of the Monetary Authority of Singapore. They should explain what has happened, what had failed and what they are doing about this matter.
Why did I say that the framework did not work? I recall that the framework was intended to bring down the claims and keep motor premiums from escalating. From anecdotal evidence, it seems that the motor premiums continued to escalate sharply during the past two years. Clearly the framework had failed to achieve its primary purpose.
When the framework was first launched, there were media reports that motorists can wait at the roadside and ask for a surveyor to arrive on the spot to settle the claim or arrange the repair. At that time, it was quite clear to me that this proposal was impractical, but the people who promoted this framework was confident that it would be the silver bullet to solve the underlying problem. It did not work.
It seems that nobody really wants to put to find a solution. They are only interested to make a show of dealing with the problem. Most of the parties involved actually benefited from the escalating claims - the repair shops, the lawyers, and the insurance companies. The only parties that suffer are the consumers, who has to pay higher premiums.
The consumers do not have the power to hold anybody accountable for the escalating premiums. Their complaints will be ignored and will be brushed off as the price for living in an advanced country. If consumers have to pay higher petrol prices and ERP, what is a few dollars more in insurance premiums?
The trouble is that this attitude will lead to wastefulness, which is now acceptable as being part of life in Singapore. It is now a Singapore culture to pay a lot of money on infrastructure and systems (instead of going for cheaper solutions) and passes the higher cost to consumers.
What is the underlying cause of the escalating motor claims, which was not solved during the past three decades? It is caused by fraudulent claims, not only for repair claims but for injury claims as well.
These fraudulent claims cannot be handled by the insurance executives, who do not have the power to deal with crime. They have to be handled by the people with the power, namely the Government. If the Government does not wish to deal with fraudulent claims, then the problem can never be solved.
Tan Kin Lian
Unfair contract terms
There is a law against unfair contract terms in Singapore. Some of the standard terms used in contracts for financial products are likely to be considered as unfair, if they are challenged in court.
If you are caught in an unfair contract, you can engage a lawyer to take a look at the contract to see if it falls foul of this law. If I am not mistaken, the requirement for fair contract goes beyond the concept of "caveat emptor". The other party is required to give fair terms for the contract.
Here are some legal points about contract law in Singapore.
I like to ask volunteers (especially those with legal training) to do some research and send your views to kinlian@gmail.com.
Power of demonstration
I gave the rechargeable torchlight to a friend and showed him the use of the locator lamp. He showed it to many of his friends, who expressed interest in the torchlight. He came back to me with an order for a dozen pieces.
Specific unfair practices
ECOND SCHEDULE
Section 4(d)
SPECIFIC UNFAIR PRACTICES
1. Representing that goods or services have sponsorship, approval, performance characteristics, accessories, ingredients, components, qualities, uses or benefits that they do not have.
2. Representing that goods or services are of a particular standard, quality, grade, style, model, origin or method of manufacture if they are not.
3. Representing that goods are new or unused if they are not or if they have deteriorated or been altered, reconditioned or reclaimed.
4. Representing that goods have been used to an extent different from the fact or that they have a particular history or use if the supplier knows it is not so.
5. Representing that goods or services are available or are available for a particular reason, for a particular price, in particular quantities or at a particular time if the supplier knows or can reasonably be expected to know it is not so, unless the representation clearly states any limitation.
6. Representing that a service, part, repair or replacement is needed or desirable if that is not so, or that a service has been provided, a part has been installed, a repair has been made or a replacement has been provided, if that is not so.
7. Representing that a price benefit or advantage exists respecting goods or services where the price benefit or advantage does not exist.
8. Charging a price for goods or services that is substantially higher than an estimate provided to the consumer, except where the consumer has expressly agreed to the higher price in advance.
9. Representing that a transaction involving goods or services involves or does not involve rights, remedies or obligations where that representation is deceptive or misleading.
10. Representing that a person has or does not have the authority to negotiate the final terms of an agreement involving goods or services if the representation is different from the fact.
11. Taking advantage of a consumer by including in an agreement terms or conditions that are harsh, oppressive or excessively one-sided so as to be unconscionable.
12. Taking advantage of a consumer by exerting undue pressure or undue influence on the consumer to enter into a transaction involving goods or services.
13. Representing in relation to a voucher that another supplier will provide goods or services at a discounted or reduced price if the supplier making the representation knows or ought to know that the other supplier will not do so.
14. Making a representation that appears in an objective form such as an editorial, documentary or scientific report when the representation is primarily made to sell goods or services, unless the representation states that it is an advertisement or a promotion.
15. Representing that a particular person has offered or agreed to acquire goods or services whether or not at a stated price if he has not.
16. Representing the availability of facilities for repair of goods or of spare parts for goods if that is not the case.
17. Offering gifts, prizes or other free items in connection with the supply of goods or services if the supplier knows or ought to know that the items will not be provided or provided as offered.
18. Representing that goods or services are available at a discounted price for a stated period of time if the supplier knows or ought to know that the goods or services will continue to be so available for a substantially longer period.
19. Representing that goods or services are available at a discounted price for a particular reason that is different from the fact.
20. Using small print to conceal a material fact from the consumer or to mislead a consumer as to a material fact, in connection with the supply of goods or services.
Section 4(d)
SPECIFIC UNFAIR PRACTICES
1. Representing that goods or services have sponsorship, approval, performance characteristics, accessories, ingredients, components, qualities, uses or benefits that they do not have.
2. Representing that goods or services are of a particular standard, quality, grade, style, model, origin or method of manufacture if they are not.
3. Representing that goods are new or unused if they are not or if they have deteriorated or been altered, reconditioned or reclaimed.
4. Representing that goods have been used to an extent different from the fact or that they have a particular history or use if the supplier knows it is not so.
5. Representing that goods or services are available or are available for a particular reason, for a particular price, in particular quantities or at a particular time if the supplier knows or can reasonably be expected to know it is not so, unless the representation clearly states any limitation.
6. Representing that a service, part, repair or replacement is needed or desirable if that is not so, or that a service has been provided, a part has been installed, a repair has been made or a replacement has been provided, if that is not so.
7. Representing that a price benefit or advantage exists respecting goods or services where the price benefit or advantage does not exist.
8. Charging a price for goods or services that is substantially higher than an estimate provided to the consumer, except where the consumer has expressly agreed to the higher price in advance.
9. Representing that a transaction involving goods or services involves or does not involve rights, remedies or obligations where that representation is deceptive or misleading.
10. Representing that a person has or does not have the authority to negotiate the final terms of an agreement involving goods or services if the representation is different from the fact.
11. Taking advantage of a consumer by including in an agreement terms or conditions that are harsh, oppressive or excessively one-sided so as to be unconscionable.
12. Taking advantage of a consumer by exerting undue pressure or undue influence on the consumer to enter into a transaction involving goods or services.
13. Representing in relation to a voucher that another supplier will provide goods or services at a discounted or reduced price if the supplier making the representation knows or ought to know that the other supplier will not do so.
14. Making a representation that appears in an objective form such as an editorial, documentary or scientific report when the representation is primarily made to sell goods or services, unless the representation states that it is an advertisement or a promotion.
15. Representing that a particular person has offered or agreed to acquire goods or services whether or not at a stated price if he has not.
16. Representing the availability of facilities for repair of goods or of spare parts for goods if that is not the case.
17. Offering gifts, prizes or other free items in connection with the supply of goods or services if the supplier knows or ought to know that the items will not be provided or provided as offered.
18. Representing that goods or services are available at a discounted price for a stated period of time if the supplier knows or ought to know that the goods or services will continue to be so available for a substantially longer period.
19. Representing that goods or services are available at a discounted price for a particular reason that is different from the fact.
20. Using small print to conceal a material fact from the consumer or to mislead a consumer as to a material fact, in connection with the supply of goods or services.
Thursday, November 12, 2009
Unfair practices as defined in Singapore
Here are some extracts from the Unfair Practices Act:
Meaning of unfair practice
4. It is an unfair practice for a supplier, in relation to a consumer transaction —
(a) to do or say anything, or omit to do or say anything, if as a result a consumer might reasonably be deceived or misled;
(b) to make a false claim;
(c) to take advantage of a consumer if the supplier knows or ought reasonably to know that the consumer —
(i) is not in a position to protect his own interests; or
(ii) is not reasonably able to understand the character, nature, language or effect of the transaction or any matter related to the transaction; or
(d) without limiting the generality of paragraphs (a) to (c), to do anything specified in the Second Schedule.
Circumstances surrounding unfair practice
5. —(1) An unfair practice may occur before, during or after a consumer transaction.
(2) An unfair practice may consist of a single act or omission.
(3) In determining whether or not a person has engaged in an unfair practice —
(a) the reasonableness of the actions of that person in those circumstances is to be considered; and
(b) an act or omission by an employee or agent of a person is deemed also to be an act or omission of the person if the act or omission occurred in the course of —
(i) the employee’s employment with the person; or
(ii) the agent exercising the powers or performing the duties on behalf of the person within the scope of the agent’s actual or apparent authority.
Consumer’s right to sue for unfair practice
If a consumer has been the subject of an unfair practice, the consumer can sue the supplier under this Act, but the amount of claim is subject to a limit of $20,000.
Meaning of unfair practice
4. It is an unfair practice for a supplier, in relation to a consumer transaction —
(a) to do or say anything, or omit to do or say anything, if as a result a consumer might reasonably be deceived or misled;
(b) to make a false claim;
(c) to take advantage of a consumer if the supplier knows or ought reasonably to know that the consumer —
(i) is not in a position to protect his own interests; or
(ii) is not reasonably able to understand the character, nature, language or effect of the transaction or any matter related to the transaction; or
(d) without limiting the generality of paragraphs (a) to (c), to do anything specified in the Second Schedule.
Circumstances surrounding unfair practice
5. —(1) An unfair practice may occur before, during or after a consumer transaction.
(2) An unfair practice may consist of a single act or omission.
(3) In determining whether or not a person has engaged in an unfair practice —
(a) the reasonableness of the actions of that person in those circumstances is to be considered; and
(b) an act or omission by an employee or agent of a person is deemed also to be an act or omission of the person if the act or omission occurred in the course of —
(i) the employee’s employment with the person; or
(ii) the agent exercising the powers or performing the duties on behalf of the person within the scope of the agent’s actual or apparent authority.
Consumer’s right to sue for unfair practice
If a consumer has been the subject of an unfair practice, the consumer can sue the supplier under this Act, but the amount of claim is subject to a limit of $20,000.
Gerrymandering and election
Gerrymandering is the redrawing of electoral districts to benefit the incumbent in an election. It is practiced in New York and is considered to be corrupt.
Consumer Protection and Fair Trading Act
There is a law in Singapore called the Consumer Protection and Fair Trading Act (CPFTA). This law, which was passed in 2003 did not apply to financial products initially. It was extended to include financial products in 2007.
Many consumers have lost a lot of money due to unfair trading imposed by financial institutions and intermediaries. They should get a lawyer to see if these parties have infringed the CPFTA. If you are not able to engage a lawyer, you can do some research on your own or get assistance from FISCA.
Many consumers have lost a lot of money due to unfair trading imposed by financial institutions and intermediaries. They should get a lawyer to see if these parties have infringed the CPFTA. If you are not able to engage a lawyer, you can do some research on your own or get assistance from FISCA.
If you have done some research and wish to share your views with other consumers, please send them to kinlian@gmail.com.
Motor insurance is compulsory
It is compulsory by law for the owner of a vehicle to have a motor insurance cover. The mandatory cover is for third party injury. In theory, you do not need to buy insurance to cover property damage, if you do not wish to.
It is difficult to find an insurance company that will offer only compulsory Act cover. A more frequent coverage is third party cover (which covers liability to third parties for injury and property damage). The premium is about 50% to 65% of the comprehensive cover. Comprehensive cover, which is more common, will also cover damage to your own vehicle.
During the past two years, the premium for motor insurance has increased by about 30% due to more accidents and fraudulent claims. Some customers have to pay more. The insurance companies introduced the "Motor Claim Framework" to combat the escalation in claims. So far, it has failed to achieve the desired outcome.
It is difficult to find an insurance company that will offer only compulsory Act cover. A more frequent coverage is third party cover (which covers liability to third parties for injury and property damage). The premium is about 50% to 65% of the comprehensive cover. Comprehensive cover, which is more common, will also cover damage to your own vehicle.
During the past two years, the premium for motor insurance has increased by about 30% due to more accidents and fraudulent claims. Some customers have to pay more. The insurance companies introduced the "Motor Claim Framework" to combat the escalation in claims. So far, it has failed to achieve the desired outcome.
Shape Quiz for birthday party
A customer came to my office to buy 60 sets of shape quiz to be given to children at a birthday party. Cost per package is $2 (comprise of shape quiz sheet with 100 shapes and pieces made in plastic).
Delivery of rechargeable torchlight
I can arrange delivery of the rechargeable torchlight to buyers for $7. You pay the normal price of $6.50 and enjoy a discount of $1 for purchase of 5 or more. More details of the torchlight here.
You can pay by internet banking or send a cheque to my office at Blk 5, Ang Mo Kio Industrial Park 2A #06-12, Singapore 567760. Enquiry at 6555 5762.
Wednesday, November 11, 2009
China Daily:More deals reached in Lehman debacle
11 Nov 2009
HONG KONG: Some 16 banks have agreed to settle all complaints arising from the sale of Lehman Brothers non-minibond products by March next year, a Legislative Council's subcommittee heard yesterday.
Choi Yiu-kwan, the Monetary Authority's deputy chief executive, unveiled the latest agreement with the banks at a hearing of the subcommittee on the debacle arising from the sale of Lehman Brothers financial products.
In a payout plan proposed in July by the Securities and Futures Commission, the authority and the 16 banks, minibond holders can redeem at least 60 percent of the value of their initial investments.
The deal also required the banks to immediately put improved complaint-handling procedures in place to resolve complaints on the sale of structured financial products other than minibonds.
Choi said before the proposal of the payout deal on July 22, the authority completed an average of 130 complaints about the sale of non-minibond products a month.
Since the introduction of the deal, it has finished some 550 investigations into complaints about the sale of non-minbond products every month on average, he said.
But he added that some 4,450 complaints about the sale of non-minbond products and about 1,000 about the sale of minibonds are still under the authority's investigation.
He expected the regulator can complete a monthly average of at least 1,000 investigations into the sale of non-minibond products in the near future.
Choi said it is now difficult to tell whether a payment deal can be bargained for Lehman Brothers non-minibond holders, but he has the idea in mind.
Lawmaker Starry Lee Wai-king urged the financial regulator to hold regular talks with complainants to update them concerning progress on the investigation.
But Choi said holding regular meetings with individual investors will place a huge demand on manpower. He said such a commitment may slow down the progress of investigations.
To help monitor the business of local banks, Choi said the authority holds meetings with each local bank's board of directors once a year to analyze how well the firms perform compared with other institutions of similar levels and advise them on their management, especially in the area of risk management.
HONG KONG: Some 16 banks have agreed to settle all complaints arising from the sale of Lehman Brothers non-minibond products by March next year, a Legislative Council's subcommittee heard yesterday.
Choi Yiu-kwan, the Monetary Authority's deputy chief executive, unveiled the latest agreement with the banks at a hearing of the subcommittee on the debacle arising from the sale of Lehman Brothers financial products.
In a payout plan proposed in July by the Securities and Futures Commission, the authority and the 16 banks, minibond holders can redeem at least 60 percent of the value of their initial investments.
The deal also required the banks to immediately put improved complaint-handling procedures in place to resolve complaints on the sale of structured financial products other than minibonds.
Choi said before the proposal of the payout deal on July 22, the authority completed an average of 130 complaints about the sale of non-minibond products a month.
Since the introduction of the deal, it has finished some 550 investigations into complaints about the sale of non-minbond products every month on average, he said.
But he added that some 4,450 complaints about the sale of non-minbond products and about 1,000 about the sale of minibonds are still under the authority's investigation.
He expected the regulator can complete a monthly average of at least 1,000 investigations into the sale of non-minibond products in the near future.
Choi said it is now difficult to tell whether a payment deal can be bargained for Lehman Brothers non-minibond holders, but he has the idea in mind.
Lawmaker Starry Lee Wai-king urged the financial regulator to hold regular talks with complainants to update them concerning progress on the investigation.
But Choi said holding regular meetings with individual investors will place a huge demand on manpower. He said such a commitment may slow down the progress of investigations.
To help monitor the business of local banks, Choi said the authority holds meetings with each local bank's board of directors once a year to analyze how well the firms perform compared with other institutions of similar levels and advise them on their management, especially in the area of risk management.
Be aware of your rights
Many Singaporeans are ignorant of their rights as individuals or as a human being. This is due to many decades of trust in a government that will take care of the people, i.e. the "nanny state".
In recent years, the people are expected to take care of themselves, in line with the trend towards a "free market" environment. Unfortunately, they are ill-prepared for this responsibility. Many people are not aware about their individual or contractual rights.
It is easy for certain unscrupulous parties to take advantage of the ignorant people using unfair contract terms, unfair trading, investment scams or outright cheating, and get away under the guise of "caveat emptor".
The people who are cheated do not even know how to seek redress. They can engage a lawyer, but they find the fees to be too high, and they are wary about trusting the lawyer.
Here is my advice to Singaporeans:
a) Spend time to learn about your rights as human beings
b) Learn about the law of contracts and agency
c) Learn about the law on consumer protection, fair trading, fair contractual terms
d) Talk to lawyers who are your friends.
Tan Kin Lian
In recent years, the people are expected to take care of themselves, in line with the trend towards a "free market" environment. Unfortunately, they are ill-prepared for this responsibility. Many people are not aware about their individual or contractual rights.
It is easy for certain unscrupulous parties to take advantage of the ignorant people using unfair contract terms, unfair trading, investment scams or outright cheating, and get away under the guise of "caveat emptor".
The people who are cheated do not even know how to seek redress. They can engage a lawyer, but they find the fees to be too high, and they are wary about trusting the lawyer.
Here is my advice to Singaporeans:
a) Spend time to learn about your rights as human beings
b) Learn about the law of contracts and agency
c) Learn about the law on consumer protection, fair trading, fair contractual terms
d) Talk to lawyers who are your friends.
Tan Kin Lian
Bus arriving soon
I have been looking for a solution to show the arriving buses at an electronic display at bus stops. This is to help the older people with weak eyesight. A polytechnic lecturer told me that some countries have adopted a low cost system using wire mesh technology. How does it work?
Increase in motor insurance premiums
Many motorists have seen a large increase in motor insurance premiums in recent years. Some have their renewals rejected, due to bad luck or bad driving that have resulted in two or more claims. In some cases, the large claims were due to fraudulent claims lodged by third parties.
I have received e-mails of this nature from motorists over the past years, "Mr. Tan, I have been driving without any claims for more than 15 years. Last year, I had an accident. The other party lodged a large claim. The insurance company paid the claim, but did not check with me. This year, they want to increase my premium by 30%. What should I do?"
I usually advised them to find another insurance company and provided them this list of hotline numbers. However, they were unsuccessful in most cases, and most insurance companies would not want to take a motorist with a claim.
Some motorists have their renewals rejected due to two or more claims. They were not able to get another company to take over the insurance.
This may happen to a small percentage of motorists each year. For these people, getting renewals is a stressful exercise. Accidents can happen to anyone, even if you are careful most of the time. You may be careless just once, to get into trouble.
Some people who are caught in this difficult situation come to me for help. Other people who are not involved tend to say, "These drivers are reckless. They should not expect to get their insurance renewed. It is better that they keep off the roads".
This tends to be the attitude of Singaporeans, until they become the party that is personally involved. I hope that Singaporeans can be more empathic to people who are caught in a bad situation due to bad luck or circumstances beyond their control.
Tan Kin Lian
I have received e-mails of this nature from motorists over the past years, "Mr. Tan, I have been driving without any claims for more than 15 years. Last year, I had an accident. The other party lodged a large claim. The insurance company paid the claim, but did not check with me. This year, they want to increase my premium by 30%. What should I do?"
I usually advised them to find another insurance company and provided them this list of hotline numbers. However, they were unsuccessful in most cases, and most insurance companies would not want to take a motorist with a claim.
Some motorists have their renewals rejected due to two or more claims. They were not able to get another company to take over the insurance.
This may happen to a small percentage of motorists each year. For these people, getting renewals is a stressful exercise. Accidents can happen to anyone, even if you are careful most of the time. You may be careless just once, to get into trouble.
Some people who are caught in this difficult situation come to me for help. Other people who are not involved tend to say, "These drivers are reckless. They should not expect to get their insurance renewed. It is better that they keep off the roads".
This tends to be the attitude of Singaporeans, until they become the party that is personally involved. I hope that Singaporeans can be more empathic to people who are caught in a bad situation due to bad luck or circumstances beyond their control.
Tan Kin Lian
Express your views
I write this blog to express my views. Visitors to my blog can also express their views and give their reasons. I do not intend to engage in a debate with people having different views from me. This is not a platform for debating. I do not have the time to engage in one to one debates.
If you wish your views to be posted, you should show respect. Do not attack my views or any other views or make personal comments. If you are abusive, your views will not be posted. I do not block different views, but only those that are abusive or disrespectful.
Some visitors use this blog as a platform to promote their own views. Please create your own blog for your purpose.
Some visitors do not like my views, or see their views blocked. They are not required to visit this blog. There are 1 million other blogs that they can visit.
If you wish your views to be posted, you should show respect. Do not attack my views or any other views or make personal comments. If you are abusive, your views will not be posted. I do not block different views, but only those that are abusive or disrespectful.
Some visitors use this blog as a platform to promote their own views. Please create your own blog for your purpose.
Some visitors do not like my views, or see their views blocked. They are not required to visit this blog. There are 1 million other blogs that they can visit.
Tuesday, November 10, 2009
Invest your savings
Here is a chapter on "Invest Your Savings" from my book - TKL Financial Planning.
Providing health insurance for the population
There is some debate in this blog about how to insure the unhealthy people. Those who are healthy felt that they should not be subsiding the unhealthy people and they like the current system of insurance purchased from insurance companies operating on commercial grounds.
This self-centered approach is not helpful to people who are not in good health, especially those who were born with congenital conditions and did not take care of their health in the past (and now wish to make a change).
Some countries realize that they cannot just let these people be uninsured. America is now addressing this problem and is taking bold steps to make a reform.
I like the approach adopted in Australia. Every family can join a health insurance plan without the need for underwriting and to pay the community rate. The Government provides attractive tax incentives and make it attractive for people to join a plan, rather than be uninsured. The healthy people are willing to join, due to the tax subsidy.
I believe that a similar approach is being adopted in Japan, Germany, Switzerland and other European countries. The systems are not identical, but the general approach is probably as I have described (but I may be wrong).
I do not like the American or Singapore system, as there is a high layer of administrative cost and uncertainty about the coverage, due to the proliferation of different plans and exclusions of pre-existing and other conditions. The confusion is not helpful to consumers and the actual benefit to consumers is lower than the premiums that they have paid. I believe that a better and more streamlined system can be found.
Tan Kin Lian
This self-centered approach is not helpful to people who are not in good health, especially those who were born with congenital conditions and did not take care of their health in the past (and now wish to make a change).
Some countries realize that they cannot just let these people be uninsured. America is now addressing this problem and is taking bold steps to make a reform.
I like the approach adopted in Australia. Every family can join a health insurance plan without the need for underwriting and to pay the community rate. The Government provides attractive tax incentives and make it attractive for people to join a plan, rather than be uninsured. The healthy people are willing to join, due to the tax subsidy.
I believe that a similar approach is being adopted in Japan, Germany, Switzerland and other European countries. The systems are not identical, but the general approach is probably as I have described (but I may be wrong).
I do not like the American or Singapore system, as there is a high layer of administrative cost and uncertainty about the coverage, due to the proliferation of different plans and exclusions of pre-existing and other conditions. The confusion is not helpful to consumers and the actual benefit to consumers is lower than the premiums that they have paid. I believe that a better and more streamlined system can be found.
Tan Kin Lian
A free market has to be regulated
The headline of a Straits Times report said "MAS flags two risks for property buyers". MAS is warning about the risks of a weak economy (which may cause property prices to drop) and a strong economy (which leads to higher interest rates). Property buyers should not be paying high prices which they may not be able to service.
This move is timely to prevent an asset bubble in property - the same type of bubble that caused the collapse of the US and global financial system last year.
Some people think that a free market should be unregulated. This is not correct for many markets where one party, usually the seller, has more information that the other party, usually the buyer, and can take unfair advantage of the buyer. This situation applies to the property market, financial market, insurance market and for many professional services.
For the free market to work well, it has to be regulated to ensure that information is made easily available to all parties and that a code of fair practice and professional ethics is observed. A free market is not one which allows some people can take advantage of other people to make an excessive profit.
There is now a trend towards stronger regulation in America. I hope that this trend is followed in other countries.
Tan Kin Lian
This move is timely to prevent an asset bubble in property - the same type of bubble that caused the collapse of the US and global financial system last year.
Some people think that a free market should be unregulated. This is not correct for many markets where one party, usually the seller, has more information that the other party, usually the buyer, and can take unfair advantage of the buyer. This situation applies to the property market, financial market, insurance market and for many professional services.
For the free market to work well, it has to be regulated to ensure that information is made easily available to all parties and that a code of fair practice and professional ethics is observed. A free market is not one which allows some people can take advantage of other people to make an excessive profit.
There is now a trend towards stronger regulation in America. I hope that this trend is followed in other countries.
Tan Kin Lian
Monday, November 09, 2009
Albert Einstein
Someone asked if I knew Einsten. I knew of him (but he did not know of me). Besides being the genius that discovered the theory of relativity, Einstein was a peace activist and a strong socialist.
He was purported to have created a logic quiz, called the Einstein Intelligence Quiz. I saw this quiz 30 years ago, but could not solve it at that time. I learned how to solve this quiz recently and to create similar quizzes at various levels, including a more difficult level than Einstein's Quiz.
You can buy the TKL Intelligence Quiz books here. Enthusiast can buy volumes 3 and 4 in soft copy (PDF).
He was purported to have created a logic quiz, called the Einstein Intelligence Quiz. I saw this quiz 30 years ago, but could not solve it at that time. I learned how to solve this quiz recently and to create similar quizzes at various levels, including a more difficult level than Einstein's Quiz.
You can buy the TKL Intelligence Quiz books here. Enthusiast can buy volumes 3 and 4 in soft copy (PDF).
Economist and forecast
MM Lee had forecasted the economic growth to be 3% in 2010. A blogger commented that MM is not an economist and questioned how MM got his figures.
I am not an economist myself, but I will also make my own guess. Those who don't like my guess are free to ignore it. They are not required to challenge me.
I never knew that economic forecasting is the purview of economists and that other lesser mortals are not allowed to venture their guess. I am told that if you meet 20 economists, you are likely to get 40 forecasts and most of them are likely to be wrong. So why should this privilege of guessing wrongly belong only to certain people?
Albert Einstein once met a person with an IQ of 160. They discussed quantum physics. He later met someone with an IQ of 110. They discussed engineering. Then, he met someone with an IQ of 70. Einstein asked him, "what is the economic growth likely to be for next year?"
So, here is my guess. Economic growth for 2010 will be 0% to 2%. My guess is lower than MM. Why? I think that the stimulus would have run out and that people will realize that the underlying problems of the global economic system is quite serious. If I am wrong - attribute it to my IQ of 70.
Tan Kin Lian
I am not an economist myself, but I will also make my own guess. Those who don't like my guess are free to ignore it. They are not required to challenge me.
I never knew that economic forecasting is the purview of economists and that other lesser mortals are not allowed to venture their guess. I am told that if you meet 20 economists, you are likely to get 40 forecasts and most of them are likely to be wrong. So why should this privilege of guessing wrongly belong only to certain people?
Albert Einstein once met a person with an IQ of 160. They discussed quantum physics. He later met someone with an IQ of 110. They discussed engineering. Then, he met someone with an IQ of 70. Einstein asked him, "what is the economic growth likely to be for next year?"
So, here is my guess. Economic growth for 2010 will be 0% to 2%. My guess is lower than MM. Why? I think that the stimulus would have run out and that people will realize that the underlying problems of the global economic system is quite serious. If I am wrong - attribute it to my IQ of 70.
Tan Kin Lian
Have a positive approach
Singaporeans have a critical, negative mindset. This is part of our culture and is brought about by our education system. If we see an idea, we tend to look for what is wrong with it.
I wish to encourage a positive mindset. If we see an idea, we can look for what is the benefit of implementing it, compared with the cost. If the benefit outweigh the cost, we can go ahead. If we are not sure, we can give it a try. We try and see if it works, rather than worry about what could go wrong.
We do not need a perfect solution, before embarking on a change. We only need incremental benefits. So long, as the benefit outweigh the cost of implementing the change, we can go ahead. This is how progress can be achieved.
Many people observed that Singaporeans are not entrepreneurial. They cannot think out of the box. They are afraid of trying. This is part of the mindset and culture that we were brought up with. We know how to criticise, how to find out what is wrong, but we are not bold in making a change and to make things different, to make things better.
But, culture and mindset can be changed. We can be positive. We can be bold. We can be daring to change.
Tan Kin Lian
I wish to encourage a positive mindset. If we see an idea, we can look for what is the benefit of implementing it, compared with the cost. If the benefit outweigh the cost, we can go ahead. If we are not sure, we can give it a try. We try and see if it works, rather than worry about what could go wrong.
We do not need a perfect solution, before embarking on a change. We only need incremental benefits. So long, as the benefit outweigh the cost of implementing the change, we can go ahead. This is how progress can be achieved.
Many people observed that Singaporeans are not entrepreneurial. They cannot think out of the box. They are afraid of trying. This is part of the mindset and culture that we were brought up with. We know how to criticise, how to find out what is wrong, but we are not bold in making a change and to make things different, to make things better.
But, culture and mindset can be changed. We can be positive. We can be bold. We can be daring to change.
Tan Kin Lian
Capitalism flawed
Read this report about a survey of public opinion on capitalism and the free market. I share the same views. I find globalisation and the free market to be bad for ordinary people. It depressed wages and led to wide disparity of income. People have to work harder just to get by.
Sunday, November 08, 2009
Land sales are not protected by Financial Services Authority of UK
http://www.guardian.co.uk/money/2009/nov/07/landbanking-investment-scheme
Over the past five years, Guardian Money has warned that, despite taking in tens of millions of pounds from investors, no landbanker has ever delivered the expected profit bonanza that comes with planning permission.
Instead, we have reported how several landbankers have gone bust, including Land Heritage (UK)* and United Land Holdings, leaving buyers with virtually unsellable plots. These investors had no chance of getting their cash back from a compensation scheme, as land sales are not protected by the Financial Services Authority. In 2007 the FSA declared that although it does not regulate land as an investment, "there is a risk that many of these schemes are in breach of the financial regulation regime if they are structured as a 'collective investment scheme'. To operate and promote such a scheme legally, the operators would need to request and obtain authorisation from the FSA, which would then regulate these firms."
Over the past five years, Guardian Money has warned that, despite taking in tens of millions of pounds from investors, no landbanker has ever delivered the expected profit bonanza that comes with planning permission.
Instead, we have reported how several landbankers have gone bust, including Land Heritage (UK)* and United Land Holdings, leaving buyers with virtually unsellable plots. These investors had no chance of getting their cash back from a compensation scheme, as land sales are not protected by the Financial Services Authority. In 2007 the FSA declared that although it does not regulate land as an investment, "there is a risk that many of these schemes are in breach of the financial regulation regime if they are structured as a 'collective investment scheme'. To operate and promote such a scheme legally, the operators would need to request and obtain authorisation from the FSA, which would then regulate these firms."
Make insurance available on fair terms
In some countries, e.g. Australia, it is mandatory for health insurance companies to provide insurance to all eligible persons, regardless of their health condition. This also applies to a few European countries. In some of these countries, the insurance premium has to be community rated, and is the same regardless of age - quite likely within a large age band. The purpose of insurance is to make it available and to cover everyone through the principles of pooling.
In the USA and many other countries, it is possible for a motorist, who is unable to get motor insurance from the market, to get insurance from the "residual market". They have to pay a higher premium, but insurance is at least available. The residual market is a pool for those who cannot buy insurance from the normal market. In this pool, the risks are shared by the insurance companies equally or in proportion to their market share.
Singaporeans are used to the "free market" and lack of consumer protection that they are not aware that there are other arrangement that makes insurance available to all at fair rates. They can only think about underwriting for profits. They do not care about the people who cannot buy insurance,unless they are the people who are personally penalised by the system.
A journalist wrote that people who cannot get insurance due to bad claims record should not be driving on the roads. This is easy to say, but does not help the person who is penalised unfairly due to same bad luck. Reckless drivers are banned from driving, but this is decided by the court, and not by "commercial reasons" adopted by insurance companies.
America is addressing the issue of "difficulty to get insurance" by making reforms to their system. The Obama Administration wants to make insurance available through an insurance exchange, and also for a government owned enterprise to offer insurance to compete with the private sector, i.e. the "public option". This recognises the failure of the "free market" in making insurance available to people at fair rates.
Some people misinterpreted my views (stating that I am against the principles of underwriting). They are ignorant of the wider issues. Some are deliberately mischievous in misrepresenting my views.
My view is this - insurance should be underwritten, but cannot be carried too far as to deny consumers the right to get insurance at fair rates. Most commercial companies, working on commercial terms, will not be socially responsible. This is why insurance, along with other important matters in the economic life, should be properly regulated and cannot be left to the profit-driven "free market".
Tan Kin Lian
In the USA and many other countries, it is possible for a motorist, who is unable to get motor insurance from the market, to get insurance from the "residual market". They have to pay a higher premium, but insurance is at least available. The residual market is a pool for those who cannot buy insurance from the normal market. In this pool, the risks are shared by the insurance companies equally or in proportion to their market share.
Singaporeans are used to the "free market" and lack of consumer protection that they are not aware that there are other arrangement that makes insurance available to all at fair rates. They can only think about underwriting for profits. They do not care about the people who cannot buy insurance,unless they are the people who are personally penalised by the system.
A journalist wrote that people who cannot get insurance due to bad claims record should not be driving on the roads. This is easy to say, but does not help the person who is penalised unfairly due to same bad luck. Reckless drivers are banned from driving, but this is decided by the court, and not by "commercial reasons" adopted by insurance companies.
America is addressing the issue of "difficulty to get insurance" by making reforms to their system. The Obama Administration wants to make insurance available through an insurance exchange, and also for a government owned enterprise to offer insurance to compete with the private sector, i.e. the "public option". This recognises the failure of the "free market" in making insurance available to people at fair rates.
Some people misinterpreted my views (stating that I am against the principles of underwriting). They are ignorant of the wider issues. Some are deliberately mischievous in misrepresenting my views.
My view is this - insurance should be underwritten, but cannot be carried too far as to deny consumers the right to get insurance at fair rates. Most commercial companies, working on commercial terms, will not be socially responsible. This is why insurance, along with other important matters in the economic life, should be properly regulated and cannot be left to the profit-driven "free market".
Tan Kin Lian
Difficult to get insurance
One big flaw of the free market system is the difficulty of sick people to get insurance. The insurance companies do not want sick people to insure with them. They only want healthy people. Read this article.
We have a similar problem in Singapore with motor insurance. If you have two or more accidents in a year, you will find it difficult to get an insurance company to cover you. This is a complaint written in the newspapers.
These two examples shows the flaw of the free market system that only aims at making profit. Who wants to cover the people that are likely to make a claim?
Tan Kin Lian
Encourage electronic cheques
Printed in Straits Times Forum Page on 7 November
In spite of the technological advances, many people still write cheques to pay their bills, especially for the irregular payments. This manual mode of payment is inefficient, costly and time consuming.
I urge the Infocomm Development Authority and the Monetary Authority of Singapore to introduce a convenient way for the public to pay their bills electronically, and make it as simple as writing a physical cheque. This should be done through a common platform that serves all the banks, instead of asking each bank to develop its own application.
The payor should log into his bank account and write an e-cheque by indicating the party and amount to be paid, and details of the payment. If there is a mistake, the payor should be allowed to cancel the e-cheque within one day.
The payees should have the facility to log into the platform to view the details of the electronic payments that are credited to their accounts, similar to clearing their incoming physical mail. They can accept or reject the payment. For example, they may wish to reject a payment that does not have sufficient details to identify the transaction.
The use of a common platform will make the new system adopted more widely in a short time. It will also reduce the implementation cost of the participating banks.
The current form of internet banking was not designed to serve the needs of commercial organisations, which explains why so few organisations ask their customers to pay through internet banking. I believe that a new system, as described above, will overcome the current shortcomings.
Tan Kin Lian
In spite of the technological advances, many people still write cheques to pay their bills, especially for the irregular payments. This manual mode of payment is inefficient, costly and time consuming.
I urge the Infocomm Development Authority and the Monetary Authority of Singapore to introduce a convenient way for the public to pay their bills electronically, and make it as simple as writing a physical cheque. This should be done through a common platform that serves all the banks, instead of asking each bank to develop its own application.
The payor should log into his bank account and write an e-cheque by indicating the party and amount to be paid, and details of the payment. If there is a mistake, the payor should be allowed to cancel the e-cheque within one day.
The payees should have the facility to log into the platform to view the details of the electronic payments that are credited to their accounts, similar to clearing their incoming physical mail. They can accept or reject the payment. For example, they may wish to reject a payment that does not have sufficient details to identify the transaction.
The use of a common platform will make the new system adopted more widely in a short time. It will also reduce the implementation cost of the participating banks.
The current form of internet banking was not designed to serve the needs of commercial organisations, which explains why so few organisations ask their customers to pay through internet banking. I believe that a new system, as described above, will overcome the current shortcomings.
Tan Kin Lian
GST and inefficiency in our economy
Someone argued that as many countries (except Malaysia, Hong Kong and Brunei) have adopted Goods and Services tax, this must be a good tax.
I argue that GST is a bad tax for Singapore for the following reasons:
a) There is no need for GST as the government has sufficient tax revenue from other sources
b) It is more efficient to collect any needed tax revenue from income and corporate tax rather than GST
c) GST requires an additional expensive layer of administration and imposes compliance cost to business
d) Singapore does not provide the costly welfare benefits (e.g. pension, unemployment) that is provided in other high tax countries
e) It is a bad idea to lower income and corporate tax and replace by GST - just to attract some high income foreigners to move their tax base to Singapore.
We should not have followed other countries blindly in adopting GST. We could have stayed with our system of taxation and be a more efficient economy.
Tan Kin Lian
I argue that GST is a bad tax for Singapore for the following reasons:
a) There is no need for GST as the government has sufficient tax revenue from other sources
b) It is more efficient to collect any needed tax revenue from income and corporate tax rather than GST
c) GST requires an additional expensive layer of administration and imposes compliance cost to business
d) Singapore does not provide the costly welfare benefits (e.g. pension, unemployment) that is provided in other high tax countries
e) It is a bad idea to lower income and corporate tax and replace by GST - just to attract some high income foreigners to move their tax base to Singapore.
We should not have followed other countries blindly in adopting GST. We could have stayed with our system of taxation and be a more efficient economy.
Tan Kin Lian
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