I encountered the following two cases recently.
Case One. A consumer was advised by the adviser to invest a single premium of $50,000 as an investment in a life insurance policy, on the promise that it could give a better return than interest rate on CPF. She was not well educated or savvy. She was sold a annual premium policy with an annual premium of $50,000. When the second premium became due, she asked the adviser to explain why she had to pay another $50,000. He told her to ignore the request for the payment. The consumer learned later that there was a large deduction from the accumulated savings, which became clear only after one year. She complained to the insurance company. She had to go for interviews and encountered a lot of delays. I understand that the case has still not been solved.
Case Two. A foreigner, working in Singapore, was sold a life insurance policy on the misrepresentation that it was an investment product. The monthly premium was $3,500. She discovered to her horror, that 5% of the premium was deducted every month from the savings after 18 months. The financial adviser deliberately lied to her that the deduction was only 0.7% (which must be the fund management fee). The other deduction, to pay the distribution cost, was hidden from the consumer, who had asked about it. The consumer asked for my advice on what she can do now to recover her loss. I asked her to write to the newspapers.
In both cases, I have used "she" to refer to the consumer and "he" to refer to the adviser. This may not be the real genders in the actual cases.
The culpability does not lie with the financial advisers alone. They also extend to the insurance companies that designed the products to levy a high upfront charge and hide the charge from the consumers. This allowed the dishonest agents to mislead the unwary consumers.
Tan Kin Lian
The insurance company and their agents always work hand in glove to rob the customers. They both have their own goals. The company knows the agents are very greedy and they know the agents only care about the commission. This makes it easier for the company because the product quality is non issue with the agents only commission is. Give the agents good and high commission and they become most willing to do the bidding of the company; the agents will do, say anything and will think of the most creative way and bolder to con the customers if the commission gets bigger. The company also knows that it is easier con the existing trusting clients of the agents. The clients trust the agents and therefore any new products will be a lot easier to dump on their clients. All the company needs is to give high commission and the job is done.. The sale and high APIs will roll in.
ReplyDeleteMeantime the customers don't even know what hits them, until 20 years later when it is too late.
Sometimes the comatose customers deserve what they get.
Hope SM Goh will come out again to remind the agents and the company of their roles to consumers..Their role is help the consumers and not ganged up rob them.
3 years after Minibombs. Such things still happen. After 3 years of lambasting insurance agents, such things still happen.
ReplyDeleteWhy? Cos we have not held the insurance company responsible. Cos we did not have sufficient insurance regulations.
So what if you guilt the existing insurance agent into proper behaviour. Then maybe he cannot hit target and have to quit insurance industry. The insurance company simply employs a newer, more malleable, more ignorant guy as insurance agent.
You need to have "give" and "take". Make it VERY VERY HARD for insurance company to recruit new agents. Then existing agents can make money doing honest day work and the agent status becomes valuable. Then the agent will behave well, follow regulations, in order to keep his agent status, just like how doctors try to hold onto their doctor status.
The college of insurance is an exam mill to provide the insurance companies with salesmen.Imagine these salesmen become financial experts after 3 months of study and they are licensed to 'kill'. The companies give them titles to hoodwink the consumers.
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