Tan Kin Lian's Blog: Toxic products and traffic control

Wednesday, February 17, 2010

Toxic products and traffic control

Someone told me an interesting analogy.

The Authority allowed the toxic products to be sold but require the issuer to put into a statement into the prospectus, "This product carries risk. You may lose some or all of your money".

It is similar to making a statement, "If you are on the road, you may be knocked down by a vehicle". After making this statement, the Authority does not need to control the behavior of the drivers and the vehicles on the road, i.e no need for traffic controls, rules or their enforcement. After all, the Authority has discharged its responsibility by giving the warning.

Tan Kin Lian

9 comments:

Anonymous said...: Cigarettes are known to be toxic. Despite carying warning messages on the packaging, people still smoke.
Gambling is addictive and NCPG has been set up, yet throngs of people flock to 4D or toto outlets and the newly open RWS.

This is the beauty of this world.; February 17, 2010 10:59 AM
Anonymous said...: Another analogy by using the "rides at the integrated resort". Do you think the operator will not need to take any responsibility as long as it puts up "disclaimer and warning of danger"? No safety check is needed, but put in the "warning sign" will be enough? Can you accept this arrangement?; February 17, 2010 11:40 AM
John Tham said...: Losing some or all of your money is a reality in any investments. Even in some life insurance policies, the policyholder may not receive any compensation unless he died. He may be forced to redeem his policy as a result of not being able to continue working. Many insurance policies have terms in small print. The irony of life may be such that, those insurance agents who do not explain the small print get the business and those who do don't.
Everybody has to earn a living. The industry must go on. The use of a disclaimer clause has been the way to keep many industries from legal actions.
My opinion about the risks in these investments instruments is to classified them into a few categories, such as Cat. A for very high risk, Cat. B for next high risk, etc. The classification can be done by MAS since it has so many top talents. Investors could be divided into several categories as well. For example, very high net worth and investment veterans belong to Cat. A, lesser net worth investors go to Cat. B, etc. Cat. A investors could invest in any category of investments. Cat. B investors could only invest in Cat. B investments and below. Our government or government appointed organisation could be the one to classify which category an investor belongs. This could be a win-win situation as the industry could continue to prosper and investors can afford their risks.; February 17, 2010 1:19 PM
Anonymous said...: Same old debate all over again.

"Buyer beware" operating model versus a "Seller be fair" operating model.

I don't believe there is any scientifically correct answer.

This is a decision that is a reflection of the values upheld by a society and its leaders.

One model puts money ahead of everything else.

The other model values the human being and tries to protect the less capable from the follies of their own ignorance.

Like the recent recall of faulty Toyota cars. Is a "buyer beware" stance appropriate? Do we now have to also become automotive engineers in order to become an 'informed" buyer?

These issues are not new. American society has a long history with these issues.
Source:
http://en.wikipedia.org/wiki/Ralph_Nader

These issues are only new in Singapore because civil servants here prefer to attend MBA courses instead of courses in public administration.

Personally, I believe hard nosed, profit driven civil servants have no place in the civil service. Ideally, the civil service should be populated by people with a passion for public service.; February 17, 2010 3:08 PM
The Goat said...: Fully agree with Anonymous 3.08pm.
ESPECIALLY the last para. Unfortunately we don't find many in those positions.; February 17, 2010 4:55 PM
Anonymous said...: Governments and businesses were intended to improve society.
Unfortunately, this axiom is being lost over time.; February 17, 2010 5:46 PM
Anonymous said...: "Everybody has to earn a living. The industry must go on. The use of a disclaimer clause has been the way to keep many industries from legal actions. "
I agree with the statement that 'every has to earn a living' but without cheating. How about if you are the cheated ? Has he or she got the right not be cheated?
if the statement is absolute with out qualification then the thieves can claim the right to earn a living by stealing.
That is what is happening in the insurance industry. Insurance agents cheat consumers by short changing them, misrepresenting and mis-selling.They even masquerade themselves as financial consultants when they are not . Isn't this cheating. Have they the right to earn a living by misrepresenting to victims that they are an expert in finance when they are not?
The industry should not be allowed to go on if it is manned by thieves in sheep's clothing. The fight must go on until the industry is ridden of these charlatans just as Wall Streets is going through cleansing.; February 17, 2010 6:36 PM
Anonymous said...: The return is higher than the bank.. that is how capital plus was pitched and the social enterprise won first place by $5million weighted premium or $50millions.

What a shame!!!!!; February 17, 2010 7:34 PM
Anonymous said...: It is deception and by deception insurance companies sell their products using decieving insurance agents to decieve the unwary and gullible customers.
'It is better than the bank' is ntuc's favourite strategy to divert the reality of investment.No one tells the truth and they are greed motivated.; February 17, 2010 9:23 PM