An independent financial adviser recommend to her to invest in an investment plan from company Z. She did not realize that company Z was an insurance company and the investment was actually a investment linked life insurance policy and not a mutual fund.
The financial adviser had explained to her the detail of the investment. She was attracted by the bonus units that were offered under a promotion.
As she held a doctorate in economics, she knew what to look for. She was also very careful in scrutinizing the investment. The fund charges looked quite reasonable.
She received a monthly statement from Z that showed the progress of her investment. It all looked quite all right.
She got a shocked when the investment passed 18 months. She found that the investment started to deduct 4% of her monthly savings. The deduction during the first 18 months was a modest sum, which was acceptable.
When she checked with Z, she got a bigger shock. The 4% deduction would continue for 25 years, making a total of 100% of her annual savings. As she had invested about $50,000 a year, the amount that she would have lost when she terminated her investment was $50,000. This represented more than half of her hard earned savings for three years. This was the savings that she wanted to give to her husband to start a business in their home country.
How did she missed the high surrender charges, when she was very careful in scrutinizing the investment?
She found out that she had signed many pages of the benefit illustration to acknowledge that she was aware about the investment - but the page containing the fund charges was not given to her. The financial adviser had deliberately removed this page and asked her to signed all the other pages. She was not able to prove that she did not get the page containing the surrender charges.
She filed her complaint with the MAS, with company Z and with the financial adviser firm. She pursued her complaint through various sources, including FIDREC.
Recently, I checked with her about the outcome of her case. She replied "I did not win". She have lost $50,000 and could not get her money back. She was cheated by the financial adviser and by company Z. MAS did not lend a hand to address this issue.