The Hong Kong Monetary Authority chief has finally agreed to disclose its full report on the sale of Lehman Brothers-related products, but only to the Legislative Council subcommittee investigating the saga.
"We have been asking Joseph Yam [Chi-kwong] to give us the omitted parts of his review report, which was submitted to the financial secretary at the end of last year," Raymond Ho Chung-tai, chairman of the subcommittee set up to study the minibonds debacle, said yesterday. "He wrote back to us yesterday afternoon saying he would be willing to give us the whole report under closed-door conditions and explaining why he is seeking public interest immunity."
Both the HKMA and the Securities and Futures Commission prepared reports on the lessons learned and issues they identified during an investigation into complaints about the Lehman Brothers-related products at the request of Finance Secretary John Tsang Chun-wah. But some parts of the reports were not disclosed because the banking and securities regulators said their investigations would be affected by doing so.
The closed-door meeting on the report will be held as early as Friday, Mr Ho said. Asked if the subcommittee would make the non-disclosed part public, he said lawmakers would decide on this.
Wednesday, April 15, 2009
REUTERS:HKMA says it gave risk warnings before minibond failure
HONG KONG, April 14 (Reuters) - Hong Kong's central bank chief on Tuesday said he had warned investors about the risks of buying derivatives long before Lehman Brothers collapsed, but revealed that Lehman minibonds had been ranked "high risk" by only half of the 16 banks investigated.
More than 40,000 Hong Kongers ploughed nearly US$2.5 billion into failed structured products, known as minibonds, offered by U.S. investment bank Lehman Brothers, which collapsed last September.
Hong Kong Monetary Authority Chief Executive Joseph Yam, answering questions on the sale of Lehman minibonds in the Legislative Council, said he had issued several warnings in the media from the middle of 2006 about the risks of investing in derivatives products. By June 2008, banks in the city were no longer offering the Lehman products, he said.
"In terms of forewarning of risk, I think we have done enough," Yam said. Investors, however, claim they were misled over the sale of the products, which were called "minibonds" but were actually complex derviatives products, and have demanded full compensation.
Yam admitted that in late 2007 three banks distributing the bonds had ranked them as "low-risk" investment products and another five banks were selling them as "medium risk".
That was partly because the products were less risky before the credit crisis spread in 2008, Yam said.
"The risk for CDOs (collateralised debt obligations) suddenly shot up," Yam said. "We warned the market ... It did not mean banks were wrong, it was just that banks did not respond in a timely manner."
Only two distributors, Sun Hung Kai Financial and KGI Asia Ltd, have agreed to compensate Lehman minibond investors so far.
A spokeswoman for Bank of China (Hong Kong) declined comment on media reports that the bank, the largest distributor of the Lehman products, was in advanced talks with the Securities and Futures Commission about compensating investors.
The HKMA and the Securities and Futures Commission have separately made recommendations on how to better protect investors, including forcing banks to separate their deposit-taking and retail investment businesses from the end of September at the latest.
Investors in Singapore and Indonesia have also lost money on the products.
More than 40,000 Hong Kongers ploughed nearly US$2.5 billion into failed structured products, known as minibonds, offered by U.S. investment bank Lehman Brothers, which collapsed last September.
Hong Kong Monetary Authority Chief Executive Joseph Yam, answering questions on the sale of Lehman minibonds in the Legislative Council, said he had issued several warnings in the media from the middle of 2006 about the risks of investing in derivatives products. By June 2008, banks in the city were no longer offering the Lehman products, he said.
"In terms of forewarning of risk, I think we have done enough," Yam said. Investors, however, claim they were misled over the sale of the products, which were called "minibonds" but were actually complex derviatives products, and have demanded full compensation.
Yam admitted that in late 2007 three banks distributing the bonds had ranked them as "low-risk" investment products and another five banks were selling them as "medium risk".
That was partly because the products were less risky before the credit crisis spread in 2008, Yam said.
"The risk for CDOs (collateralised debt obligations) suddenly shot up," Yam said. "We warned the market ... It did not mean banks were wrong, it was just that banks did not respond in a timely manner."
Only two distributors, Sun Hung Kai Financial and KGI Asia Ltd, have agreed to compensate Lehman minibond investors so far.
A spokeswoman for Bank of China (Hong Kong) declined comment on media reports that the bank, the largest distributor of the Lehman products, was in advanced talks with the Securities and Futures Commission about compensating investors.
The HKMA and the Securities and Futures Commission have separately made recommendations on how to better protect investors, including forcing banks to separate their deposit-taking and retail investment businesses from the end of September at the latest.
Investors in Singapore and Indonesia have also lost money on the products.
SCMP:Monetary chief defends actions in minibond saga I'm not shirking role: Joseph Yam
Monetary Authority chief Joseph Yam Chi-kwong stressed yesterday that the Securities and Futures Commission should be responsible for monitoring the disclosure of information on financial products.
"I'm not shirking responsibility," Mr Yam said. "The division of labour is very clear the HKMA does not have the power" to review the commission's work, he told a Legislative Council public hearing on the minibond saga.
While he conceded that the authority was responsible for regulating banks on the sale of structured products, he said: "My colleagues and I have done what we can do and we have fulfilled our responsibilities to get the job done to the best especially the job of regulating banks on the selling of structural products."
He was the second official to testify before the Legco subcommittee on Lehman Brothers-related financial products, after Chan Ka-keung, secretary for financial services and the treasury.
More then 48,000 investors in Hong Kong bought HK$20 billion worth of Lehman minibonds and structured products. Minibonds are not corporate bonds but consist of high-risk credit-linked derivatives that are marketed as a proxy investment in well-known companies.
Mr Yam was asked if the regulator had failed to protect investors by allowing high-risk financial products such as minibonds to be sold to ordinary investors.
He said the disclosure of information about financial products was beyond the responsibilities of the authority; the SFC, however, should be accountable. He also said that banks and brokers, rather than the regulators, should be responsible for assessing the risk of financial products.
Still, Mr Yam said the authority requested that banks raise the risk level of derivatives such as minibonds after it found in 2007 that only half of the 16 banks it investigated ranked those products as high-risk.
Mr Yam said he had repeatedly warned the public about the risk of buying derivatives products from the middle of 2006. Local banks were no longer offering Lehman minibonds by June last year.
He revealed that from April 2003 - when the Securities Ordinance came into effect - until Lehman Brothers' collapse in September last year, the authority had found 178 suspected cases of the mis-selling of financial products by banks. Of the 33 cases that have been closed, in nine cases banks were found guilty and were penalised.
Democratic Party lawmaker Emily Lau Wai-hing said the process was too slow and the authority had only finished investigating about 6,000 of more than 20,000 complaints related to Lehman products.
Mr Yam said the watchdog would recruit more staff, but some people found investigative work "disgusting". He expected to have dealt with 70 per cent of complaints by next March. About 300 investors who bought Lehman-related products protested outside Legco before the meeting yesterday. They said the regulators should be blamed for letting banks sell high-risk products.
"I'm not shirking responsibility," Mr Yam said. "The division of labour is very clear the HKMA does not have the power" to review the commission's work, he told a Legislative Council public hearing on the minibond saga.
While he conceded that the authority was responsible for regulating banks on the sale of structured products, he said: "My colleagues and I have done what we can do and we have fulfilled our responsibilities to get the job done to the best especially the job of regulating banks on the selling of structural products."
He was the second official to testify before the Legco subcommittee on Lehman Brothers-related financial products, after Chan Ka-keung, secretary for financial services and the treasury.
More then 48,000 investors in Hong Kong bought HK$20 billion worth of Lehman minibonds and structured products. Minibonds are not corporate bonds but consist of high-risk credit-linked derivatives that are marketed as a proxy investment in well-known companies.
Mr Yam was asked if the regulator had failed to protect investors by allowing high-risk financial products such as minibonds to be sold to ordinary investors.
He said the disclosure of information about financial products was beyond the responsibilities of the authority; the SFC, however, should be accountable. He also said that banks and brokers, rather than the regulators, should be responsible for assessing the risk of financial products.
Still, Mr Yam said the authority requested that banks raise the risk level of derivatives such as minibonds after it found in 2007 that only half of the 16 banks it investigated ranked those products as high-risk.
Mr Yam said he had repeatedly warned the public about the risk of buying derivatives products from the middle of 2006. Local banks were no longer offering Lehman minibonds by June last year.
He revealed that from April 2003 - when the Securities Ordinance came into effect - until Lehman Brothers' collapse in September last year, the authority had found 178 suspected cases of the mis-selling of financial products by banks. Of the 33 cases that have been closed, in nine cases banks were found guilty and were penalised.
Democratic Party lawmaker Emily Lau Wai-hing said the process was too slow and the authority had only finished investigating about 6,000 of more than 20,000 complaints related to Lehman products.
Mr Yam said the watchdog would recruit more staff, but some people found investigative work "disgusting". He expected to have dealt with 70 per cent of complaints by next March. About 300 investors who bought Lehman-related products protested outside Legco before the meeting yesterday. They said the regulators should be blamed for letting banks sell high-risk products.
China Daily:HKMA in defense over minibonds
HONG KONG: Chief Executive of the Hong Kong Monetary Authority (HKMA) Joseph Yam Chi-kwong admitted the government body is duty-bound in the Lehman Brothers' minibond saga, but it did enough in warning the market and monitoring banking businesses.
Yam was the second official, after Secretary for Financial Services and the Treasury Chan Ka-keung, testifying in the Legislative Council (LegCo) subcommittee's hearing which probed issues related to the investment products sold by the global financial services firm.
Lawmakers criticized the HKMA for its incapacity in monitoring the sales of structural products.
"I started to warn the market about the high risk brought by derivative instruments since mid-2006. Banks were given guidance on selling derivatives...I think the risk warning was quite enough," Yam said in his first testimony.
Lehman Brothers collapsed on September 14, 2008. Its minibonds cost nearly 50,000 Hong Kong investors billions of dollars.
He agreed that minibonds were complicated and the name misled people into thinking that the products were bond.
Yam said it was the responsibility of banks but not monitoring bodies to explain the nature and risk of products to investors, though he did frequently communicate with the financial secretary and financial services chief on market fluctuation.
The authority to examine and approve investment products lies in the Securities and Futures Commission (SFC), and the HKMA has no power to re-check its work, he added. The SFC is also responsible for determining if the disclosure of a product's information is enough.
Facing criticism from lawmakers, Yam emphasized he was not shirking the responsibility of the minibond incident.
"In monitoring banks' activities, including the sale of mortgage-linked products, I and my colleagues have done what we can within our authority," he responded.
Responding to charges that HKMA's benchmark was too lenient when eight-mortgage linked products could be rated low-risk and medium-risk, Yam shrugged off the allegation, noting that investment risks rose sharply with the onset of the global economic crisis.
Yam noted that the SFC (Securities and Futures Commission) failed to require lenders to re-evaluate risks entailed in their products once the market changed.
He added that in response to HKMA intervention some lenders did raise risk evaluations to high. Some lenders also stopped recommending high-risk products to investors. Yam told lawmakers HKMA referred 178 alleged illegal sales to the investigating committee between April 2003 and September 2008. Yam admitted the HKMA has limited power in investigation and punishment, otherwise the probe into the minibond debacle could be speeded up.
However, he rejected allegations that the investigation was too slow.
Around 6,000 of the 20,000 complaints have been handled since last year, while 6000 cases have reached settlement with banks. Yam expected to complete investigation of 70 percent of complaints by next March.
Over 200 people are deployed to deal with the complaints. Yam said it is not easy to hire new staff and training takes time.
"But I guarantee that our heart lies with the investors. We want to help them," he added the authority would not tolerate any illegal behaviors but will handle it in an impartial manner.
Yam will be summoned again to the fifth hearing next Tuesday. Yet subcommittee chairman Raymond Ho Chung-tai did not predict how many times Yam will testify.
Around 200 minibond investors protested outside the LegCo during Yam's stay yesterday morning. They accused the HKMA of not being able to keep an eye on the investment products.
Peter Chan, chairman of the Alliance of Lehman Brothers Victims, requested Yam to resign as he never apologized for the incident.
Yam was the second official, after Secretary for Financial Services and the Treasury Chan Ka-keung, testifying in the Legislative Council (LegCo) subcommittee's hearing which probed issues related to the investment products sold by the global financial services firm.
Lawmakers criticized the HKMA for its incapacity in monitoring the sales of structural products.
"I started to warn the market about the high risk brought by derivative instruments since mid-2006. Banks were given guidance on selling derivatives...I think the risk warning was quite enough," Yam said in his first testimony.
Lehman Brothers collapsed on September 14, 2008. Its minibonds cost nearly 50,000 Hong Kong investors billions of dollars.
He agreed that minibonds were complicated and the name misled people into thinking that the products were bond.
Yam said it was the responsibility of banks but not monitoring bodies to explain the nature and risk of products to investors, though he did frequently communicate with the financial secretary and financial services chief on market fluctuation.
The authority to examine and approve investment products lies in the Securities and Futures Commission (SFC), and the HKMA has no power to re-check its work, he added. The SFC is also responsible for determining if the disclosure of a product's information is enough.
Facing criticism from lawmakers, Yam emphasized he was not shirking the responsibility of the minibond incident.
"In monitoring banks' activities, including the sale of mortgage-linked products, I and my colleagues have done what we can within our authority," he responded.
Responding to charges that HKMA's benchmark was too lenient when eight-mortgage linked products could be rated low-risk and medium-risk, Yam shrugged off the allegation, noting that investment risks rose sharply with the onset of the global economic crisis.
Yam noted that the SFC (Securities and Futures Commission) failed to require lenders to re-evaluate risks entailed in their products once the market changed.
He added that in response to HKMA intervention some lenders did raise risk evaluations to high. Some lenders also stopped recommending high-risk products to investors. Yam told lawmakers HKMA referred 178 alleged illegal sales to the investigating committee between April 2003 and September 2008. Yam admitted the HKMA has limited power in investigation and punishment, otherwise the probe into the minibond debacle could be speeded up.
However, he rejected allegations that the investigation was too slow.
Around 6,000 of the 20,000 complaints have been handled since last year, while 6000 cases have reached settlement with banks. Yam expected to complete investigation of 70 percent of complaints by next March.
Over 200 people are deployed to deal with the complaints. Yam said it is not easy to hire new staff and training takes time.
"But I guarantee that our heart lies with the investors. We want to help them," he added the authority would not tolerate any illegal behaviors but will handle it in an impartial manner.
Yam will be summoned again to the fifth hearing next Tuesday. Yet subcommittee chairman Raymond Ho Chung-tai did not predict how many times Yam will testify.
Around 200 minibond investors protested outside the LegCo during Yam's stay yesterday morning. They accused the HKMA of not being able to keep an eye on the investment products.
Peter Chan, chairman of the Alliance of Lehman Brothers Victims, requested Yam to resign as he never apologized for the incident.
Rule of law - lesson from Thailand
The popularly elected government of Thailand, led by supporters of Thatsin Sinawatra. was deposed by street rallies, culminating in the disruption and closure of Bangkok Airport, conducted by the yellow shirted followers of the Democratic Party.
The new government was formed by the Democratic Party with some defections from the previous ruling party.
The red-shirt followers of Thatsin now follow the example of using street rallies and public disorder to cause chaos in Thailand during the recent Asean Summit.
Chaos will come to a society where the rule of law is not respected. I hope that democratic institutions, and the will of the people, are respected.
The new government was formed by the Democratic Party with some defections from the previous ruling party.
The red-shirt followers of Thatsin now follow the example of using street rallies and public disorder to cause chaos in Thailand during the recent Asean Summit.
Chaos will come to a society where the rule of law is not respected. I hope that democratic institutions, and the will of the people, are respected.
Tuesday, April 14, 2009
The Standard:BOC set to seal minibond dea
Bank of China (Hong Kong) (2388), the city's largest distributor of minibonds linked to failed US investment bank Lehman Brothers, is in advanced negotiations with the Securities and Futures Commission to settle the issue, market sources told The Standard.
A settlement may involve payment of about HK$600 million to the bank's disgruntled minibond buyers.
It would also serve as a benchmark for talks between the SFC and other banks to wipe off their respective minibond exposures, the sources said.
The reports come as thousands of minibond buyers prepare to rally on July 1.
BOC (Hong Kong) is estimated to have sold HK$5.6 billion out of HK$14 billion worth of Lehman minibonds bought by 48,000 local investors.
So far, only two institutions - SHKI, a unit of Sun Hung Kai & Co (0086) and KGI Asia Ltd - have settled their minibonds claims.
SHKI distributed payments of HK$85 million among 310 clients while KGI Asia paid five customers about HK$1.6 million.
The talks with SHKI are being used as a model by the SFC for current negotiation with BOC (Hong Kong), sources said.
They said the authorities are keen to settle with BOC (Hong Kong) ahead of July 1 so as not to have angry minibond investors join traditional rallies.
The organizer, Alliance of Lehman Brothers' Victims, yesterday estimated that up to 100,000 of its supporters will march on July 1.
About 400 to 500 investors will protest today against the Hong Kong Monetary Authority and the SFC outside the Legislative Council as HKMA chief executive Joseph Yam Chi-kwong attends a subcommittee hearing on the issue, the group said. Another 2,000 investors plan to march on Sunday from Causeway Bay to the SAR government headquarters.
Earlier this month, the HKMA said it had found sufficient grounds for disciplinary action against some bank staff accused of mis-selling minibonds.
Even though some investors have settled with banks, they only recovered 30 to 50 percent of their investment, the group's chairman, Peter Chan Kwong-yue, said.
Democratic Party member Andrew Fung Wai-kwong said he will file a judicial review for 11 cases before the end of the month against a Small Claims Tribunal decision on March 23 that resulted in all 135 cases being transferred to the District Court.
As of April 8, the HKMA had received 20,724 complaints, and 20,509 had cleared initial assessment.
Only 418 complaints relating to 16 banks were referred to the SFC.
As of last Wednesday, a total of 427 cases had been transferred to the SFC by the monetary authority.
Meanwhile, Liu Sui-fong, 84, is among 77 minibond investors seeking help from the Federation of Trade Unions. Liu said she had been ``misled'' by BOC (Hong Kong) staff to invest all her HK$520,000 savings in minibonds, which claimed to yield 4 percent interest a year.
A settlement may involve payment of about HK$600 million to the bank's disgruntled minibond buyers.
It would also serve as a benchmark for talks between the SFC and other banks to wipe off their respective minibond exposures, the sources said.
The reports come as thousands of minibond buyers prepare to rally on July 1.
BOC (Hong Kong) is estimated to have sold HK$5.6 billion out of HK$14 billion worth of Lehman minibonds bought by 48,000 local investors.
So far, only two institutions - SHKI, a unit of Sun Hung Kai & Co (0086) and KGI Asia Ltd - have settled their minibonds claims.
SHKI distributed payments of HK$85 million among 310 clients while KGI Asia paid five customers about HK$1.6 million.
The talks with SHKI are being used as a model by the SFC for current negotiation with BOC (Hong Kong), sources said.
They said the authorities are keen to settle with BOC (Hong Kong) ahead of July 1 so as not to have angry minibond investors join traditional rallies.
The organizer, Alliance of Lehman Brothers' Victims, yesterday estimated that up to 100,000 of its supporters will march on July 1.
About 400 to 500 investors will protest today against the Hong Kong Monetary Authority and the SFC outside the Legislative Council as HKMA chief executive Joseph Yam Chi-kwong attends a subcommittee hearing on the issue, the group said. Another 2,000 investors plan to march on Sunday from Causeway Bay to the SAR government headquarters.
Earlier this month, the HKMA said it had found sufficient grounds for disciplinary action against some bank staff accused of mis-selling minibonds.
Even though some investors have settled with banks, they only recovered 30 to 50 percent of their investment, the group's chairman, Peter Chan Kwong-yue, said.
Democratic Party member Andrew Fung Wai-kwong said he will file a judicial review for 11 cases before the end of the month against a Small Claims Tribunal decision on March 23 that resulted in all 135 cases being transferred to the District Court.
As of April 8, the HKMA had received 20,724 complaints, and 20,509 had cleared initial assessment.
Only 418 complaints relating to 16 banks were referred to the SFC.
As of last Wednesday, a total of 427 cases had been transferred to the SFC by the monetary authority.
Meanwhile, Liu Sui-fong, 84, is among 77 minibond investors seeking help from the Federation of Trade Unions. Liu said she had been ``misled'' by BOC (Hong Kong) staff to invest all her HK$520,000 savings in minibonds, which claimed to yield 4 percent interest a year.
Review of the public sector
Some people think that the recent cases of food poisoning in the markets reflect slackness in enforcement of cleanliness and health by the National Environment Agency.
But, the underlying problem is a deeper one. In recent years, many government agencies have reduced their manpower in the bid to cut cost. We now have insufficient number of people to enforce the law. This applies not only to this Agency but to many other government bodies as well.
It is one thing to cut down cost and manpower on unnecessary activities and red tape. It is a separate matter when the cost cutting lead to cutback in essential services and enforcement of regulations.
Are the reduced manpower put to better use in society? This is hardly the case. Many of the excess manpower find work in the financial and property markets. These financial experts, advisers and agents help to build up a big bubble that has now burst. Many of them have now lost their jobs or face the prospect of being retrenched.
We need to rethink our approach towards the use of manpower in our society. Public service is an essential source of employment. They can do useful work and can be for the good of society.
Does the reduction of manpower in the public sector lead to lower cost for the public? This may not be the case. Too often, the reduction of manpower is followed by huge expenditure on computer systems, management consultants and high salaries for the top people that run the agencies.
We need to reflect on this matter as well. Are we using the public funds properly? Is there a correct balance between employing people to do useful work or replacing them by expensive systems and so-called talents?
Tan Kin Lian
But, the underlying problem is a deeper one. In recent years, many government agencies have reduced their manpower in the bid to cut cost. We now have insufficient number of people to enforce the law. This applies not only to this Agency but to many other government bodies as well.
It is one thing to cut down cost and manpower on unnecessary activities and red tape. It is a separate matter when the cost cutting lead to cutback in essential services and enforcement of regulations.
Are the reduced manpower put to better use in society? This is hardly the case. Many of the excess manpower find work in the financial and property markets. These financial experts, advisers and agents help to build up a big bubble that has now burst. Many of them have now lost their jobs or face the prospect of being retrenched.
We need to rethink our approach towards the use of manpower in our society. Public service is an essential source of employment. They can do useful work and can be for the good of society.
Does the reduction of manpower in the public sector lead to lower cost for the public? This may not be the case. Too often, the reduction of manpower is followed by huge expenditure on computer systems, management consultants and high salaries for the top people that run the agencies.
We need to reflect on this matter as well. Are we using the public funds properly? Is there a correct balance between employing people to do useful work or replacing them by expensive systems and so-called talents?
Tan Kin Lian
Protecting a democratic institution
The recent change in leadership in AWARE (Association of Women for Research and Education) has raised issues of concern. The old leadership, comprising of volunteers who has worked for many years to build up the values and stature of the organisation was unexpected toppled by a group of new members who voted in a new committee at the annual general meeting.
To my collection, this type of unplanned leadership change has occurred in some other organisations in the past. The new leadership represent the views of a small group of people who attended the annual general meeting, and does not reflect the membership at large.
What can be done to preserve the democratic nature of an organisation and ensure that the elected leaders reflect the values of the membership?
Here are a few possible approaches:
1. Nominations for elected office should be submitted at least 14 days in advance of the general meeting. The nominees should be required to submit a statement to show their background and their plans for the organisation.
2. Voting should be allowed for all members, rather than those who attend the general meeting. With today's technology, it should be quite easy to vote through the internet. Those who attend the meeting can vote on the spot.
Many organisations in Singapore are weak. People are not prepared to serve in the committee. Each general meeting see the return of a few of the well known figures. Occasionally, an upset election results create big news.
We have to address these long standing problems. It is time for us to build stronger democratic institutions in Singapore.
Tan Kin Lian
To my collection, this type of unplanned leadership change has occurred in some other organisations in the past. The new leadership represent the views of a small group of people who attended the annual general meeting, and does not reflect the membership at large.
What can be done to preserve the democratic nature of an organisation and ensure that the elected leaders reflect the values of the membership?
Here are a few possible approaches:
1. Nominations for elected office should be submitted at least 14 days in advance of the general meeting. The nominees should be required to submit a statement to show their background and their plans for the organisation.
2. Voting should be allowed for all members, rather than those who attend the general meeting. With today's technology, it should be quite easy to vote through the internet. Those who attend the meeting can vote on the spot.
Many organisations in Singapore are weak. People are not prepared to serve in the committee. Each general meeting see the return of a few of the well known figures. Occasionally, an upset election results create big news.
We have to address these long standing problems. It is time for us to build stronger democratic institutions in Singapore.
Tan Kin Lian
Monday, April 13, 2009
Annual General Meeting of NTUC Income
The Annual General Meeting is scheduled to be held at 6 pm on Friday, 29 May 2009 at the Auditorium, 7th level, NTUC Income Centre, 75 Bras Basah Road, Singapore 189557.
China bosses told to cut salaries
Pay of bosses in banks and insurance companies pay is too high. Article.
Sunday, April 12, 2009
A sense of loss as a Singapore (2)
Hi Mr Tan,
I have visited your blog again and have read the comments to my email. I'm not upset, don't worry.
I respect what you are doing. But I do not know whether it will succeed. Singapore has changed. The younger Singaporeans are pleasure-loving and hedonistic, the older ones are too busy struggling. And all of us are struggling in this over-populated country and intimidated by a government that can do whatever they like and manipulate whatever law they want. The worst is seeing younger Singaporeans sell out their countrymen for the love of money.
I empathesize with those who are poor and suffering. I would not mind contributing if you have any schemes to help them. under the present government, they are reduced to getting scraps " qiu sheng bu si, qiu si bu neng" (seeking life is difficult, seeking death is not possible). Perhaps it is possible to set up some sort of recruitment co that matches these people to employers who are willing to pay them fair wages and not exploit them.
As for me, I am thinking of leaving the country next time. I am tired Mr Tan. I am quite well educated, but I still have some integrity. I don't want to sell my soul for money like what some people are doing.
I have visited your blog again and have read the comments to my email. I'm not upset, don't worry.
I respect what you are doing. But I do not know whether it will succeed. Singapore has changed. The younger Singaporeans are pleasure-loving and hedonistic, the older ones are too busy struggling. And all of us are struggling in this over-populated country and intimidated by a government that can do whatever they like and manipulate whatever law they want. The worst is seeing younger Singaporeans sell out their countrymen for the love of money.
I empathesize with those who are poor and suffering. I would not mind contributing if you have any schemes to help them. under the present government, they are reduced to getting scraps " qiu sheng bu si, qiu si bu neng" (seeking life is difficult, seeking death is not possible). Perhaps it is possible to set up some sort of recruitment co that matches these people to employers who are willing to pay them fair wages and not exploit them.
As for me, I am thinking of leaving the country next time. I am tired Mr Tan. I am quite well educated, but I still have some integrity. I don't want to sell my soul for money like what some people are doing.
Saturday, April 11, 2009
Equity Linked Notes - are the terms fair?
I was given the Security Purchase Contract Note for an Equity Linked Note. The contract note is very difficult to read, even for an expert like me. The Note was issued by bank X and distributed by bank Y to a Chinese educated elderly person (who does not understand English).
After reading the contract note, I was able to analyse the terms as follows:
a) The note is linked to two shares, A and B
b) Interest is payable at an annual rate of 12% for each day that both shares stay above the trigger price (which is 85% of the reference price). If any share fall below the trigger price, interest is not payable for that day
c) At the end of each observation period (about two months), if both shares are above the trigger price, the Note is redeemed at par, plus accrued interest.
d) On the maturity date (18 months), if any share falls below 70% of the reference price, the investor is given the shares and has to bear the capital loss (of more than 30%).
e) The Notes are principal protected at maturity (provided the Knock-in event has not occurred). There is no mention of the party providing the guarantee, but a statement as follows: "the notebolder is exposed to the credit risk of the issuer or the third party guarantor".
I find this product to be unsatisfactory in the following respects:
1) The "interest payment" is not really "interest". It is actually a risk premium given for providing the insurance against a 30% drop in any of the shares in the basket.
2) It is impossible for the investor to know if the risk premium is fair, given the unknown extent of the risk?
3) The contract is designed by bank X, which stands to gain from the margin between the true cost of the risk and the so called "interest" payable to the noteholder. This can be to the disadvantage of the retail investor, and can in an extreme case, be considered as "cheating" the investor.
There are laws against creating gambling contracts, without approval of the authority. Does this type of equity linked note fall within the definition of a gambling contract? This law was written to prevent the public from being cheated.
Outcome: The issuing bank X went bankrupt. The investor lost the entire principal, amounting to several hundred thousand dollars. The distributing bank Y was negligent in exposing the investor to a large risk - without proper diversification.
If you are in a similar situation, with a similar product, you can write to me at kinlian@gmail.com.
After reading the contract note, I was able to analyse the terms as follows:
a) The note is linked to two shares, A and B
b) Interest is payable at an annual rate of 12% for each day that both shares stay above the trigger price (which is 85% of the reference price). If any share fall below the trigger price, interest is not payable for that day
c) At the end of each observation period (about two months), if both shares are above the trigger price, the Note is redeemed at par, plus accrued interest.
d) On the maturity date (18 months), if any share falls below 70% of the reference price, the investor is given the shares and has to bear the capital loss (of more than 30%).
e) The Notes are principal protected at maturity (provided the Knock-in event has not occurred). There is no mention of the party providing the guarantee, but a statement as follows: "the notebolder is exposed to the credit risk of the issuer or the third party guarantor".
I find this product to be unsatisfactory in the following respects:
1) The "interest payment" is not really "interest". It is actually a risk premium given for providing the insurance against a 30% drop in any of the shares in the basket.
2) It is impossible for the investor to know if the risk premium is fair, given the unknown extent of the risk?
3) The contract is designed by bank X, which stands to gain from the margin between the true cost of the risk and the so called "interest" payable to the noteholder. This can be to the disadvantage of the retail investor, and can in an extreme case, be considered as "cheating" the investor.
There are laws against creating gambling contracts, without approval of the authority. Does this type of equity linked note fall within the definition of a gambling contract? This law was written to prevent the public from being cheated.
Outcome: The issuing bank X went bankrupt. The investor lost the entire principal, amounting to several hundred thousand dollars. The distributing bank Y was negligent in exposing the investor to a large risk - without proper diversification.
If you are in a similar situation, with a similar product, you can write to me at kinlian@gmail.com.
Friday, April 10, 2009
Build MRT internechange stations closer together
At Dhoby Ghaut MRT station, there is a long walk to change from the NS Line to the NE Line, and vice versa.
The NE Line was built many years after the NS Line was operational. It was not possible to build the new station closer to the old station, as it might cause engineering and safety problems.
is there a solution? Give your views here.
The NE Line was built many years after the NS Line was operational. It was not possible to build the new station closer to the old station, as it might cause engineering and safety problems.
is there a solution? Give your views here.
Thursday, April 09, 2009
Bus stops as landmarks
I have a proposal to use bus stop as landmarks to get to a destination. Read the following. Details.
Wednesday, April 08, 2009
Fear and consequence of retrenchment
If you held a steady job for many years, and you hear that your company has to downsize, what do you do? If you are retrenched, how are you going to find a similar job in a difficult job market? How are you going to pay your bills?
If you have some savings to draw down for a few months or longer, you may be able to tide over the interim period before you find a new job. What if you do not have any savings?
You can pray that you will be spared. But what about your colleagues who are axed?
It is time for us to consider the need for unemployment insurance. If 10% of the workforce has to be axed, an unemployment insurance scheme should pay them, say, 50% of the previous earnings for a period of up to 12 or 24 months. The cost of the unemployment benefit should be paid by those who have jobs. It should cost about 2% to 3% of the payroll. It is a cost that is worth paying to spread the burden.
An alternative to unemployment insurance is a relief loan to pay the above sum to the retrenched workers. As this is a loan, it should be repaid in the future. Interest should be allowed to accumulate with the loan at the same rate paid by the Central Provident Fund.
I hope that an unemployment insurance or relief loan will be introduced by the Government soon, before more people face financial distress due to retrenchment.
Tan Kin Lian
If you have some savings to draw down for a few months or longer, you may be able to tide over the interim period before you find a new job. What if you do not have any savings?
You can pray that you will be spared. But what about your colleagues who are axed?
It is time for us to consider the need for unemployment insurance. If 10% of the workforce has to be axed, an unemployment insurance scheme should pay them, say, 50% of the previous earnings for a period of up to 12 or 24 months. The cost of the unemployment benefit should be paid by those who have jobs. It should cost about 2% to 3% of the payroll. It is a cost that is worth paying to spread the burden.
An alternative to unemployment insurance is a relief loan to pay the above sum to the retrenched workers. As this is a loan, it should be repaid in the future. Interest should be allowed to accumulate with the loan at the same rate paid by the Central Provident Fund.
I hope that an unemployment insurance or relief loan will be introduced by the Government soon, before more people face financial distress due to retrenchment.
Tan Kin Lian
AFP:Hong Kong watchdog slams brokerage in minibond scandal
5 Apr 2009
Hong Kong's securities watchdog has reprimanded a major brokerage for misselling controversial financial products backed by failed US giant Lehman Brothers, a spokesman said Sunday.
KGI Asia Ltd, which has more than 40,000 clients in Hong Kong, has agreed to repay 1.4 million Hong Kong dollars (180,000 US) to five people wrongly sold so-called "minibonds", the Securities and Futures Commission (SFC) said in a statement.
The minibonds have been at the centre of major scandal in the city, after they were sold to investors -- including many vulnerable retirees -- before their value collapsed when the US bank went bankrupt last September.
Following an investigation, the SFC found that KGI Asia had not adequately assessed the risk of the minibonds and that sales staff had not fully understood the products they were selling.
KGI Asia has agreed to fully refund the five clients, none of them professional investors, the SFC statement said. The brokerage has not admitted any liability.
"This outcome resolves our concerns about KGI's past sales practices in respect of Lehman Brothers minibonds, covers present losses incurred to their clients and provides assurance that these problems will not arise again in the future," said Mark Steward, the SFC's executive director of enforcement.
The move is the latest refund by a major financial firm in Hong Kong in the scandal, which has sparked multiple protests as investors claim they were sold the products on the understanding they were rock solid.
But legislators have complained that thousands of misselling cases have still not been dealt with by the regulators, and the firms that sold the products have been dragging their feet.
More than 40,000 Hong Kong investors had put a total of 15.7 billion Hong Kong dollars of their savings into minibonds and other complex products backed by the investment bank.
Former Wall Street icon Lehman Brothers collapsed in September under mountains of debt.
Hong Kong's securities watchdog has reprimanded a major brokerage for misselling controversial financial products backed by failed US giant Lehman Brothers, a spokesman said Sunday.
KGI Asia Ltd, which has more than 40,000 clients in Hong Kong, has agreed to repay 1.4 million Hong Kong dollars (180,000 US) to five people wrongly sold so-called "minibonds", the Securities and Futures Commission (SFC) said in a statement.
The minibonds have been at the centre of major scandal in the city, after they were sold to investors -- including many vulnerable retirees -- before their value collapsed when the US bank went bankrupt last September.
Following an investigation, the SFC found that KGI Asia had not adequately assessed the risk of the minibonds and that sales staff had not fully understood the products they were selling.
KGI Asia has agreed to fully refund the five clients, none of them professional investors, the SFC statement said. The brokerage has not admitted any liability.
"This outcome resolves our concerns about KGI's past sales practices in respect of Lehman Brothers minibonds, covers present losses incurred to their clients and provides assurance that these problems will not arise again in the future," said Mark Steward, the SFC's executive director of enforcement.
The move is the latest refund by a major financial firm in Hong Kong in the scandal, which has sparked multiple protests as investors claim they were sold the products on the understanding they were rock solid.
But legislators have complained that thousands of misselling cases have still not been dealt with by the regulators, and the firms that sold the products have been dragging their feet.
More than 40,000 Hong Kong investors had put a total of 15.7 billion Hong Kong dollars of their savings into minibonds and other complex products backed by the investment bank.
Former Wall Street icon Lehman Brothers collapsed in September under mountains of debt.
Thought for the day: Exploitation by the Elite
"The history of mankind is a history of the subjugation and exploitation of a great majority of people by an elite few by what has been appropriately termed the 'ruling class'. The ruling class has many manifestations. It can take the form of a religious orthodoxy, a monarchy, a dictatorship of the proletariat, outright fascism, or, in the case of the United States, corporate statism. In each instance the ruling class relies on academics, scholars and 'experts' to legitimize and provide moral authority for its hegemony over the masses." : Ed Crane
Fascism should more appropriately be called Corporatism because it is a merger of state and corporate power: Benito Mussolini
Ho Cheow Seng
Fascism should more appropriately be called Corporatism because it is a merger of state and corporate power: Benito Mussolini
Ho Cheow Seng
Tuesday, April 07, 2009
Banks get guidelines on treating customers fairly
4 April 2009
The Editor
Forum Page
Straits Times
I refer to the article “Banks get guide on treating customers fairly” (ST 4 April).
I congratulate the Monetary Authority of Singapore for taking the appropriate steps to address this issue. However, may I raise a matter of public concern?
Does this imply that in the past, it was all right for the banks to treat customers unfairly? For example, was it all right for a bank to design a complex financial product that give a poor return for the risks embedded in the product and sell the product to an unwary public, without disclosing the relevant information that are available and known by the product issuer?
Were there already laws in place that were supposed to protect the consumers against unfair or predatory practices?
I recall that there were specific requirements under the existing section 199 and 200 of the Securities and Futures Act and under Section 27 of the Financial Adviser’s Act.
A petition was signed by 983 people who alleged that they were misled into investing in several credit-linked notes, such as the Mini-bonds, High Notes, Pinnacle Notes and Jubilee Notes. This petition was lodged with the Monetary Authority of Singapore on 8 October 2008. It requested the MAS or the Attorney General to investigate if there were breaches of relevant provisions under the existing law.
To my knowledge, there was no announcement on the outcome of the investigation, or if such an investigation had been conducted.
If the investment banks that created the products or the financial institutions that sold the products had failed in their duty under the existing law, surely it is the responsibility of the authority to charge them in court and allow the matter to be decided by the court?
If the court had found that the law was vague, then a subsequent step should be taken to clarify the law through new legislation or regulations.
Let me illustrate with this example. Someone broke into a house and took away an expensive notebook computer. The owner lodges a report to the Police. Should the Police now issue a new guide to explain what is house-breaking and theft? Surely, it is the duty of the Police to charge the culprit, with sufficient evidence, and let the court decide on the matter, based on the existing law?
Tan Kin Lian
The Editor
Forum Page
Straits Times
I refer to the article “Banks get guide on treating customers fairly” (ST 4 April).
I congratulate the Monetary Authority of Singapore for taking the appropriate steps to address this issue. However, may I raise a matter of public concern?
Does this imply that in the past, it was all right for the banks to treat customers unfairly? For example, was it all right for a bank to design a complex financial product that give a poor return for the risks embedded in the product and sell the product to an unwary public, without disclosing the relevant information that are available and known by the product issuer?
Were there already laws in place that were supposed to protect the consumers against unfair or predatory practices?
I recall that there were specific requirements under the existing section 199 and 200 of the Securities and Futures Act and under Section 27 of the Financial Adviser’s Act.
A petition was signed by 983 people who alleged that they were misled into investing in several credit-linked notes, such as the Mini-bonds, High Notes, Pinnacle Notes and Jubilee Notes. This petition was lodged with the Monetary Authority of Singapore on 8 October 2008. It requested the MAS or the Attorney General to investigate if there were breaches of relevant provisions under the existing law.
To my knowledge, there was no announcement on the outcome of the investigation, or if such an investigation had been conducted.
If the investment banks that created the products or the financial institutions that sold the products had failed in their duty under the existing law, surely it is the responsibility of the authority to charge them in court and allow the matter to be decided by the court?
If the court had found that the law was vague, then a subsequent step should be taken to clarify the law through new legislation or regulations.
Let me illustrate with this example. Someone broke into a house and took away an expensive notebook computer. The owner lodges a report to the Police. Should the Police now issue a new guide to explain what is house-breaking and theft? Surely, it is the duty of the Police to charge the culprit, with sufficient evidence, and let the court decide on the matter, based on the existing law?
Tan Kin Lian
Monday, April 06, 2009
Fat fees for speaking engagements
A reader pointed out that the leaders of the advanced democracies earn modest salary when they were in public service, but received fat fees for public speaking after their retirement from politics. There is an article in the Straits Times about the speaking fees received by a former politician.
These fees were paid by the commercial conference organizers, who were able to get the participants to pay the fees to make it viable.
They also get big corporate sponsorships It is likely that the big corporations, which made huge profits from the free market policies, now expect to assistance of the retired politicians in their lobbying. This is unsatisfactory, but is quite unfortunate.
We need a world, and leaders, that are more honorable. They should take care of the ordinary people, rather than for personal enrichment.
These fees were paid by the commercial conference organizers, who were able to get the participants to pay the fees to make it viable.
They also get big corporate sponsorships It is likely that the big corporations, which made huge profits from the free market policies, now expect to assistance of the retired politicians in their lobbying. This is unsatisfactory, but is quite unfortunate.
We need a world, and leaders, that are more honorable. They should take care of the ordinary people, rather than for personal enrichment.
Honesty and rationalisation
We think of honesty in terms of financial dealings. We also need to think of honesty in terms of speaking the truth.
If we make a mistake, we should admit it. We should not try to find some angle to explain it away. We should not "rationalise" our action, which is what smart but dishonest people are quite used to do.
If we do not know the answer, we can state the fact. We can seek advice. Or just give it a try.
In an artilce in the Straits Times today stating that Franklin Roosevelt was not sure about how to bring America out of the depression in the early 1930s. He took some bold steps, but admitted that he did not know if it would work. Barrack Obama is now taking the same approach to overcome the global financial crisis 80 years later.
There are some people who have never made a mistake in their lives, because they are able to rationalise it, and explain it away.
Tan Kin Lian
Saturday, April 04, 2009
Health care reform in the USA
Will insurers once again scupple the health-care reform? Article in Economist.
SCMP: Details urged on Minibond saga
Lawmakers are still seeking Monetary Authority chief executive Joseph Yam Chi-kwong's disclosure of its full report on the Lehman Brothers minibonds saga, after he cited reasons of public interest in not revealing it. Raymond Ho Chung-tai, chairman of the Legislative Council subcommittee investigating the matter, said if Mr Yam insisted on his position at an April 14 hearing, he and deputy chairman Philip Wong Yu-hong would arrange a closed-door meeting to ask for an explanation.
MY COMMENT
It seems that the authority can hide the truth, by citing public interest. This seems to be the practice in Singapore as well. I hope that we can have a more honest, open society, with greater transparency.
Survey: MAS guide on treating customers fairly
MAS has issued a new guide to banks on treating customers fairly. The yardsticks are:
1. Customers have confidence that they deal with financial institutions where fair dealing is central to the corporate culture
2. Financial institutions offer products and services suitable for their target customer segments.
3. Financial institutions have competent representatives providing customers with quality advice and appropriate recommendation.
4. Customers receive clear, relevant and timely information to make informed decisions.
5. Financial institutions handle customer complaints in an independent, effective and prompt manner.
What are your views on the existing situation and the new MAS guide? Survey.
1. Customers have confidence that they deal with financial institutions where fair dealing is central to the corporate culture
2. Financial institutions offer products and services suitable for their target customer segments.
3. Financial institutions have competent representatives providing customers with quality advice and appropriate recommendation.
4. Customers receive clear, relevant and timely information to make informed decisions.
5. Financial institutions handle customer complaints in an independent, effective and prompt manner.
What are your views on the existing situation and the new MAS guide? Survey.
Public Service
I respect the political leaders in the democratic countries, especially those of Europe and North America.
They entered politics as a public service. They desire to make life better for the people. They have strong values and beliefs (whether leaning to the left, right or center) and wish to influence the future of their nation.
They are happy to receive a remuneration of 3 to 10 times of the average wage of their ordinary people. They do not expect a remuneration that is 100 times or more (i.e. the salary paid in the private center for top exectives).
By accepting the modest remuneration of the public service, they are able to exercise some moral control over the excessive and unjustified salaries paid in the private center.
Tan Kin Lian
Friday, April 03, 2009
HK: Relief appears to be near for Lehman minibond holders.
There are sufficient grounds for disciplinary action against some bank staff accused of misselling the minibonds, according to the Hong Kong Monetary Authority.
And market sources say the Securities and Futures Commission is pushing big banks to follow in the footsteps of Sun Hung Kai Investment and settle with disgruntled customers.
HKMA executive director Raymond Li said yesterday that "a few cases are already at a very advanced stage of investigation,'' he said adding, "Should any case be concluded we would definitely tell the public."
According to procedures, anyone accused of misselling will have at least 30 days to make a representation and another 21 days to appeal if their explanations are rejected before their case goes public. As of yesterday, the HKMA had got 20,642 complaints, and 20,443 had cleared initial assessment.
So far, files have been opened for just 5,772 cases, of which 4,178 have gone through a preliminary investigation. Only 418 complaints relating to 16 banks were referred to the SFC.
Li blamed the slow progress on the reluctance of complainants to provide useful information in most of the cases.
But he reiterated that the authority will complete investigating at least 70 percent of complaints by March 2010.
"We are recruiting more staff both part-time and those on secondment to accelerate the process," he said. About 200 staff will be involved.
Li said a client's interest was the HKMA's priority, and if a settlement without punishment was the best solution it would get the authority's support.
And market sources say the Securities and Futures Commission is pushing big banks to follow in the footsteps of Sun Hung Kai Investment and settle with disgruntled customers.
HKMA executive director Raymond Li said yesterday that "a few cases are already at a very advanced stage of investigation,'' he said adding, "Should any case be concluded we would definitely tell the public."
According to procedures, anyone accused of misselling will have at least 30 days to make a representation and another 21 days to appeal if their explanations are rejected before their case goes public. As of yesterday, the HKMA had got 20,642 complaints, and 20,443 had cleared initial assessment.
So far, files have been opened for just 5,772 cases, of which 4,178 have gone through a preliminary investigation. Only 418 complaints relating to 16 banks were referred to the SFC.
Li blamed the slow progress on the reluctance of complainants to provide useful information in most of the cases.
But he reiterated that the authority will complete investigating at least 70 percent of complaints by March 2010.
"We are recruiting more staff both part-time and those on secondment to accelerate the process," he said. About 200 staff will be involved.
Li said a client's interest was the HKMA's priority, and if a settlement without punishment was the best solution it would get the authority's support.
The Whole Truth
Dear Mr. Tan,
Some people play with words to an extent that it is difficult to know the difference between the truth and lies.
If a business reduce the benefit significantly last year, can they now say that the action has benefited the customers, because they do not need to reduce the benefit further this year?
Similarly, can the government, after increasing tax and levy, now give a smal rebate and say that they are benefitting the taxpayer with the rebate?
REPLY
I agree with your view. It is now quite difficult to tell the difference between honesty and dishonesty. Mr. S Rajaratnam once said that there are difference between "the truth, the whole truth and nothing but the truth". We have to learn what is the "whole truth".
Submitting Income Taxi by e-Filing
I submitted my income tax returns for 2008 by e-filing.
IRAS has designed a sophisticated and expensive computer system for e-filing. It must have cost a lot of money. It was supposed to make e-filing easy for the tax-payer.
Unfortunately, it was very difficult - even for an internet savvy person like me. Why? It is a matter of mindset. The experts in IRAS designed a system that is convenient for them. They forget to make it convenient for the ordinary people.
What is a system that is convenient for ordinary people? Just provide a simple form to ask me to submit the details of my income and claim. Use a format that is convenient for the tax payer to fill in - not a format that is convenient for IRAS to do their workflow.
But, I have to commend IRAS for one excellent aspect of the system. They display the information that they have, taken from various sources, that are relevant for my tax computation. This includes my chartiable donations and topping up of CPF account for family members. I appreciate it very much.
I hope that IRAS will take my suggestion about making it easy for me to submit their annual return, especially for items that are not captured by IRAS.
Tan Kin Lian
Additional comments
It is easy to use e-filing, if you do not need to provide additional sources of income or other charges. However, it is quite troublesome to provide the additional information, for example on property, life insurance policies and deductions, as they are designed to be helpful to IRAS and not customer friendly. It is also difficult to search for the right places to provide the information, as they are placed all over several web pages and tabs.
Buy Term Insurance
Dear Mr. Tan,
May I know which company you'd recommend for buying "Term", "Decreasing Term" and "Living Benefit" policies you described in your FAQ: http://www.tankinlian.com/faq/choice.html
REPLY
You can buy Term insurance from NTUC Income (they call it i-Term). But do not allow them to convince you to buy other life insurance policies.
You can also buy i-Term from Philips Securities. They sell i-Term offered by NTUC Income. You can find out from their website. All the best!
May I know which company you'd recommend for buying "Term", "Decreasing Term" and "Living Benefit" policies you described in your FAQ: http://www.tankinlian.com/faq/choice.html
REPLY
You can buy Term insurance from NTUC Income (they call it i-Term). But do not allow them to convince you to buy other life insurance policies.
You can also buy i-Term from Philips Securities. They sell i-Term offered by NTUC Income. You can find out from their website. All the best!
Relief loan is similar to early withdrawal from CPF
I have proposed that retrenched workers should be allowed to take a relief loan, offered by a Government agency, at an interest rate of 2.5% per annum. This should also be available to workers who suffered a drop of earnings due to a reduction in working hours.
This relief loan is similar to an unemployment benefit, but has to be repaid in the future. Interest on the loan can be accumulated with the principal. The borrower has the incentive to repay the loan earlier, to avoid incurring interest charges.
My proposal is similar to early withdrawal from the CPF. The loan incurs interest charge of 2.5%, which is similar to the interest earned on CPF savings. There is no additional cost to the borrower under my proposed relief loan scheme.
My proposal is intended to protect the integrity of the CPF as a saving plan for retirement. There is a reminder on the borrower to repay the relief loan. However, if the loan is not repaid, it will be repaid from the CPF savings at the time of its withdrawal.
My proposal will also offer relief to the retrenched worker in the case where there is no CPF savings to withdraw from, e.g. where the savings have been fully used to buy a property.
Tan Kin Lian
Thursday, April 02, 2009
Ready Pool of Part Time Workers
To employers. There is a ready pool of part time workers. They are willing to work for $6 to $9 per hour. You can choose a worker that stays near your place of business, and likes the type of work that you do. Go to this portal.
Click on employer. Sign up and select your workers. You can send a SMS for them to call you.
Intelligence Quiz
Wednesday, April 01, 2009
Compensation for Credit Linked Notes
If you have not been offfered or have rejected an inadequate offer of compensation, and you wish to lodge a complaint with FIDREC or take legal action, please provide your particulars in this survey.
10 highest paid politicians in the world
Report.
Annual salaries in USD
1. Lee Hsien Loong - Singapore Salary in dollars - $2.47 million
2. Donald Tsang Yum-Kuen - Hong Kong Salary in dollars - $516,000
3. Barack Obama - United States Salary in dollars - $400,000
4. Brian Cowen - Ireland Salary in dollars - $341,000
5. Nicolas Sarkozy - France Salary in dollars - $318,000
6. Angela Merkel - Germany Salary in dollars - $303,000
7. Gordon Brown - UK Salary in dollars - $279,000
8. Stephen Harper - Canada Salary in dollars - $246,000
9. Taro Aso - Japan Salary in dollars - $243,000
10. Kevin Rudd - Australia Salary in dollars - $229,000
A sense of loss for a Singaporean
Hi Mr Tan,
I have been following with interest your blog on and off especially during the period of "minibonds". I respect your sense of social justice and your courage and willingness to fight for the underdogs.
I myself have always been neutral to politics. I only write today because on the spur of the moment, I want to pass a few observations about the passing away of the Singapore I grew up in.
I am in my 30s. When I am young, I felt that the government was willing to develop us Singaporeans. Life was simple, relations with people were sincere.
That Singapore is no more. In almost any job I have worked, foreigners equal Singaporeans in number, sometimes they exceed. Even when you interact with people, the locals don't care for and about the locals. Money is all everyone thinks about. Perhaps it is because we are all forced to struggle with the influx of so many FTs.
When we need employers to give us a chance, we find that the job has gone to some more experienced FT. But they were given chances, even sponsored to take courses, back in their own countries to hone the skills that they have today.
I have been following with interest your blog on and off especially during the period of "minibonds". I respect your sense of social justice and your courage and willingness to fight for the underdogs.
I myself have always been neutral to politics. I only write today because on the spur of the moment, I want to pass a few observations about the passing away of the Singapore I grew up in.
I am in my 30s. When I am young, I felt that the government was willing to develop us Singaporeans. Life was simple, relations with people were sincere.
That Singapore is no more. In almost any job I have worked, foreigners equal Singaporeans in number, sometimes they exceed. Even when you interact with people, the locals don't care for and about the locals. Money is all everyone thinks about. Perhaps it is because we are all forced to struggle with the influx of so many FTs.
When we need employers to give us a chance, we find that the job has gone to some more experienced FT. But they were given chances, even sponsored to take courses, back in their own countries to hone the skills that they have today.
All familial ties are no more; we have became disposable entities to our companies and our bosses. It is a very lope-sided system where the employer is king. Even some bosses, used to maids, treat employees in the same disposable manner. Forget about receiving any training, you are paid to serve them. Retrenchment and dismissal is sometimes the excuse of poor senior management. The same goes for the present government.
I am neither bitter nor resigned. I am just sad that I cannot identify this country with the one I knew and grew up in. You might tell me I am being sentimental, we must all adapt to the world, there is no free lunch. Yes I have heard that many times. And home-grown Singaporeans are largely a docile bunch willing to bend over backwards with the govt. But why does it seem that the govt makes our problems worse instead of better?
You are very capable man. By writing to you, I don't dare to aspire for anything. I have signed your petitions and I have written encouraging messages on your blog. I just want to share with you, Singaporean to Singaporean, the loss of the soul and essence of my country.
I am neither bitter nor resigned. I am just sad that I cannot identify this country with the one I knew and grew up in. You might tell me I am being sentimental, we must all adapt to the world, there is no free lunch. Yes I have heard that many times. And home-grown Singaporeans are largely a docile bunch willing to bend over backwards with the govt. But why does it seem that the govt makes our problems worse instead of better?
You are very capable man. By writing to you, I don't dare to aspire for anything. I have signed your petitions and I have written encouraging messages on your blog. I just want to share with you, Singaporean to Singaporean, the loss of the soul and essence of my country.
High charges give poor return
A participant at the CASE forum gave this statement. He said that he had invested in unit trusts for the past many years. Two years ago, on his retirement, he calculated the return on these unit trusts and found that it gave an average of about 3% annually. This is a poor return, considering the long period of investment. He has decided that to avoid all types of investments.
If he had invested for such a long period, his return should have been more than 6% annually. It is likely that his fund was badly managed, e.g. in speculative investments, or had high charges that are taken away from his return.
There is a segment of the fund management industry that behaved unethically. The fund manager takes away big fees, but were not able to achieve a good return to the investors. The fees take away a large part of the return and gave a poor net return to the investor.
Many life insurance products also offer a poor return, of 3% annually or less. Considering that inflation must have been around this level, the poor return is just able to match inflation. For investors who took our their money earlier, the high front end fees led to a big loss of their savings.
Be careful of bad financial products. Many financial products fall in this category!
Proposal to solve the global economic crisis
We are facing a global economic and financial crisis. People are scared to spend. They want to save money, in case they lose their job and need the money to spend at that time.
The reduction in consumption is causing the economy to slow down badly. Businesses are hurt. They are not able to get encough sales to pay their expenses. They have to close down and retrench their employees. This will lead to a downward spiral.
The collapse of the value of property and other assets cause people to feel poor. They also cut down their spendings.
Actually, the people still own the same houses and assets. They now believe that these assets are worth little, when one year ago, they thought that the assets are worth two or three times more.
All this is just a matter of the mind. It is also called confidence. If we can get people to believe that they are rich, that their assets are worth more than they can fetch today, we can revive the global economy.
Read this proposal.
Tackling the credit crunch
Many small businesses find it difficult to get credit from the banks. Here is my proposed solution.
Tuesday, March 31, 2009
Local transport within a town
Is there a need to create a local transport service (using light bus or private cars) to serve a town? Give your views in this survey.
Here are the survey results.
Handling injury claims
Dear Mr. Tan
Mark Lim, Executive Director of GIA has posted a comment to my views about motor insurance claims. I thank Mr. Lim's for his comments.
I think that Mr. Lim as not understood the part of my comments regarding personal injury claims. The increase in personal injury claims is not because of fraud by lawyers, doctors, workshops and members of the public working together. I never said or implied this.
I do not know why Mr. Lim is suggesting that I should make a police report. I put the increase down to injured parties being better informed of their legal rights. Even if the injury was a minor one, the injured party has the right to seek legal recourse. So, in the example given by me, there was nothing wrong in the conduct of the workshop owner referring the injured motorist and his wife to a lawyer to claim for damages. There is no criminal misconduct.
In the past some insurers have screamed fraud at some of the soft tissue injury claims, but a further anlysis and examination by their own appointed specialists revealed nothing untoward and the injured parties were awarded damages by the courts.
In this respect, I agree with Senior Counsel Michael Hwang (in his letter in the ST Forum) that if there was nothing the lawyers and doctors would not be able to make out something and the courts would not have agreed.
We need to think out of the box regarding the escalating personal injury claims. For example, when I was heading the Claims Department in NTUC Income, we had a unit that took the pro-active approach in handling personal injury claims. Injured parties were offered fair compensation even before they submit their claims. We also give them a list of running down firms which were not in the NTUC Income's legal panel for them to check on the fairness of our offers. In taking this approach, we saved on legal costs which can add 50% to 100% to the final payout amounts on those cases that we closed successfully..
If insurers cannot handled the personal injury cover profitably, maybe this portion should be handed over to the State like in New Zealand, (where the State handles and the claims are paid out on a no fault basis.)
I have just received an affirmation last week (24/3/2009) from Mr. Tan Kin Lian, that "[w]hile you were in Income, we must have made more than $40 million in profits over the few years that you headed the department." So I do know what I am talking about!"
Freddy Neo
Former general manager, NTUC Income
Mark Lim, Executive Director of GIA has posted a comment to my views about motor insurance claims. I thank Mr. Lim's for his comments.
I think that Mr. Lim as not understood the part of my comments regarding personal injury claims. The increase in personal injury claims is not because of fraud by lawyers, doctors, workshops and members of the public working together. I never said or implied this.
I do not know why Mr. Lim is suggesting that I should make a police report. I put the increase down to injured parties being better informed of their legal rights. Even if the injury was a minor one, the injured party has the right to seek legal recourse. So, in the example given by me, there was nothing wrong in the conduct of the workshop owner referring the injured motorist and his wife to a lawyer to claim for damages. There is no criminal misconduct.
In the past some insurers have screamed fraud at some of the soft tissue injury claims, but a further anlysis and examination by their own appointed specialists revealed nothing untoward and the injured parties were awarded damages by the courts.
In this respect, I agree with Senior Counsel Michael Hwang (in his letter in the ST Forum) that if there was nothing the lawyers and doctors would not be able to make out something and the courts would not have agreed.
We need to think out of the box regarding the escalating personal injury claims. For example, when I was heading the Claims Department in NTUC Income, we had a unit that took the pro-active approach in handling personal injury claims. Injured parties were offered fair compensation even before they submit their claims. We also give them a list of running down firms which were not in the NTUC Income's legal panel for them to check on the fairness of our offers. In taking this approach, we saved on legal costs which can add 50% to 100% to the final payout amounts on those cases that we closed successfully..
If insurers cannot handled the personal injury cover profitably, maybe this portion should be handed over to the State like in New Zealand, (where the State handles and the claims are paid out on a no fault basis.)
I have just received an affirmation last week (24/3/2009) from Mr. Tan Kin Lian, that "[w]hile you were in Income, we must have made more than $40 million in profits over the few years that you headed the department." So I do know what I am talking about!"
Freddy Neo
Former general manager, NTUC Income
Housing crisis in USA
FIRST POSTED IN MARCH 2008 (1 YEAR BACK)
What can be done to solve the housing crisis in USA? Some measures being proposed include the following:
a) Government to take over the mortgages
b) Help for borrowers to repay their debts
c) Incentives to encourage new buyers of houses
What is the solution? Singapore faced a similar crisis between 1996 to 2003, when the property market dropped by 30% for private and HDB properties. An effective measure was introduced by MAS, which stablilised the market and led to a recovery in 2007.
What is this measure? Perhaps a similar measure can be introduced in USA ?
HERE IS THE ANSWER:
The MAS allowed a borrower to refinance a mortgage loan with the CPF savings taking lower priority. The lender does not have to worry that the property price has fallen below the purchase price leading to negative equity, as the CPF savings is exposed first. This allows the lender to take a long term view and give time for the housing price to recover (which happened subsequently).
Individual legal action in Subordinate Court
I am discussing with a lawyer to take up individual legal action in the subordinate court against a financial institution for mis-selling of the minibond or credit linked note. The claim can be for an amount up to $250,000. The legal fees and cost, including payment to the defendent's lawyer, will be capped not exceeding $10,000.
As this is an individual action, the claim can move quickly as it does not involve a class action. If you are keen to consider this option, please provide your particulars in this survey.
We will arrange a meeting to explain the approach and consequences. You can consider this approach, if your investment is between $100,000 to $250,000.
Monday, March 30, 2009
Restructuring of the bonus
Dear Mr. Tan
NTUC said that the restructuring of the bonus allowed them to maintain the bonus last year. What does this mean? How does the restructuring help the policyholders get a better return?
REPLY
I do not understand their statement. I suggest that you attend the annual general meeting of NTUC Income and ask the chairman to explain this statement.
Here is my guess. As Income has reduced the bonus sharply last year, perhaps there is no need for them to make a further reduction. But, I suspect that the special bonus will be cut this time, quite drastically.
But, for the older series which was not affected last year, I read that the bonus will be restructured this year, i.e. the bonus will be cut as well.
Generally, it is fair for bonus to be reduced in a bad year, provided that the reduction is done fairly. I did not like the approach taken in the bonus restructuring, as it is difficult to maintain transparency and fairness. Some policies were cut, and others were not. Some were cut more than others. I also do not like the high expenses that were incurred and paid out of the insurance fund.
This is why I decided to terminate two of my policies where the bonus were cut, even though I had to suffer a penalty. I am now considering to terminate my remaining life insurance policies.
NTUC said that the restructuring of the bonus allowed them to maintain the bonus last year. What does this mean? How does the restructuring help the policyholders get a better return?
REPLY
I do not understand their statement. I suggest that you attend the annual general meeting of NTUC Income and ask the chairman to explain this statement.
Here is my guess. As Income has reduced the bonus sharply last year, perhaps there is no need for them to make a further reduction. But, I suspect that the special bonus will be cut this time, quite drastically.
But, for the older series which was not affected last year, I read that the bonus will be restructured this year, i.e. the bonus will be cut as well.
Generally, it is fair for bonus to be reduced in a bad year, provided that the reduction is done fairly. I did not like the approach taken in the bonus restructuring, as it is difficult to maintain transparency and fairness. Some policies were cut, and others were not. Some were cut more than others. I also do not like the high expenses that were incurred and paid out of the insurance fund.
This is why I decided to terminate two of my policies where the bonus were cut, even though I had to suffer a penalty. I am now considering to terminate my remaining life insurance policies.
Bad working experience with a global bank
Hi Mr Tan
I joined an insurance company recently and left within a year. The way the head of the life division managed was totally unacceptable to me. Due to the financial crisis, they reduced the headcount by half. I took the retrenchment package and left.
It was a very bad experience to work with this global bank but realised that the dark side of the truth. I am not surprised why the world financial system came to a sudden breakdown. Many so-called highcaliber management were only keen to spend, take fat bonus and use creative was to present result and figures. They cover up the losses and shown the revenue figures. To me, the bubble should have been burst long ago.
I joined an insurance company recently and left within a year. The way the head of the life division managed was totally unacceptable to me. Due to the financial crisis, they reduced the headcount by half. I took the retrenchment package and left.
It was a very bad experience to work with this global bank but realised that the dark side of the truth. I am not surprised why the world financial system came to a sudden breakdown. Many so-called highcaliber management were only keen to spend, take fat bonus and use creative was to present result and figures. They cover up the losses and shown the revenue figures. To me, the bubble should have been burst long ago.
Sunday, March 29, 2009
Intelligence Quiz
Try this quiz. This is based on the quiz created by Albert Einstein. Sign up and account and login.
Saturday, March 28, 2009
Survey: Ministers in the Prime Minister's Office
Are we having too many ministers in the Prime Minister's Office, including senior ministers? Survey.
Here are the survey results.
Ministers in PM Office
Lee Hsien Loong
Goh Chok Tong
Lee Kuan Yew
S Jayakumar
Lim Boon Heng
Lim Swee Say
Lim Hwee Hua
Ministers in PM Office
Lee Hsien Loong
Goh Chok Tong
Lee Kuan Yew
S Jayakumar
Lim Boon Heng
Lim Swee Say
Lim Hwee Hua
Thought for the week - Anger
Contributed by Ho Cheow Seng
Thoughts for the Week
"He who is not angry when there is just cause for anger is immoral. Why? Because anger looks to the good of justice. And if you can live amid injustice without anger, you are immoral as well as unjust." Aquinas
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"I don't know a more irreligious attitude, one more utterly bankrupt of any human content, than one which permits children to be destroyed."-- Daniel Berrigan
"I don't know a more irreligious attitude, one more utterly bankrupt of any human content, than one which permits children to be destroyed."-- Daniel Berrigan
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"I have the audacity to believe that peoples everywhere can have: three meals a day for their bodies, - education and culture for their minds - and dignity, equality and freedom for their spirits" Dr. Martin Luther King, Jr.
"I have the audacity to believe that peoples everywhere can have: three meals a day for their bodies, - education and culture for their minds - and dignity, equality and freedom for their spirits" Dr. Martin Luther King, Jr.
Cheating and the rule of law
Here is the definition of cheating in the criminal code of Singapore.
Cheating – Whoever, by deceiving any person, fraudulently or dishonestly induces the person so deceived to deliver any property to any person, or to consent that any person shall retain any property, or intentionally induces the person so deceived to do or omit to do anything which he or she would not do or omit if he or she were not so deceived, and which act or omission causes or is likely to cause damage or harm to that person in body, mind, reputation or property, is said to "cheat". For example, A cheats if he intentionally deceives Z into a belief that A means to repay any money that Z may lend to him when A does not intend to repay it, and thereby dishonestly induces Z to lend him money. Cheating is punished with imprisonment of up to one year, or a fine, or both.
A Singapore lawyer told me that the attorney general will only prosecute cheating when it is in the public interest. So, if a citizen is cheated and lodge a complaint, the attorney general may not take up the case.
My friend told me that in America, the attorney general will look out for cheating cases and prosecute the culprits. They do not wait for a complaint to be lodged.
It seems that the system is different between Singapore and America. I am not sure what is meant by "the rule of law", when the law is only enforced at the discretion of the authority.
Cheating – Whoever, by deceiving any person, fraudulently or dishonestly induces the person so deceived to deliver any property to any person, or to consent that any person shall retain any property, or intentionally induces the person so deceived to do or omit to do anything which he or she would not do or omit if he or she were not so deceived, and which act or omission causes or is likely to cause damage or harm to that person in body, mind, reputation or property, is said to "cheat". For example, A cheats if he intentionally deceives Z into a belief that A means to repay any money that Z may lend to him when A does not intend to repay it, and thereby dishonestly induces Z to lend him money. Cheating is punished with imprisonment of up to one year, or a fine, or both.
A Singapore lawyer told me that the attorney general will only prosecute cheating when it is in the public interest. So, if a citizen is cheated and lodge a complaint, the attorney general may not take up the case.
My friend told me that in America, the attorney general will look out for cheating cases and prosecute the culprits. They do not wait for a complaint to be lodged.
It seems that the system is different between Singapore and America. I am not sure what is meant by "the rule of law", when the law is only enforced at the discretion of the authority.
MAS consultation paper: Unlisted investment products
Read the proposals contained in this consultation paper.
Here is an explanation by a law firm.
I conveyed the views contained in this paper to the CASE forum on 28 March 2009.Publish Post
Friday, March 27, 2009
Survey: motor insurance claims
Give your views on how to prevent sharp increase in motor insurance premiums. Survey.
Here are the survey results.
Sale of toxic products
A pharmaceutical company has discovered a new drug that is a seemed to be effective in curing certain types of cancer. According to an internal document, the drug used certain ingredients that may be harmful to people. Due to the rush to bring the new product to the market and to make big profits, the company was not able to complete the tests to identify and remove the harmful effects.
They were able to find two countries where the health regulators were willing to allow the drug to be sold to the public with a warning, "The new drug may, in some situation, be harmful for consumption".
The manufacturer advertised the positive aspects of the drug and many people bought it. Those who read the warning were told not to worry about it, as it was not likely to happen. After a few months, many people die from the drug, which turned out to be more toxic than expected.
The families were told that the patients should have paid attention to the warning. They had taken their own risk with their eyes open.
They were able to find two countries where the health regulators were willing to allow the drug to be sold to the public with a warning, "The new drug may, in some situation, be harmful for consumption".
The manufacturer advertised the positive aspects of the drug and many people bought it. Those who read the warning were told not to worry about it, as it was not likely to happen. After a few months, many people die from the drug, which turned out to be more toxic than expected.
The families were told that the patients should have paid attention to the warning. They had taken their own risk with their eyes open.
Language, literature and culture
In recent years, I have learned to realize about the special quality of language, literature and culture. The language of any people is developed through the collective efforts of the best people in that culture, namely the writers, poets, and philosophers. The values of a people is embedded in their language. They have to work together in harmony, so that their thoughts can be explained and understood in the language.
It is the talented people that are able to write the lyrics and musics to their popular songs. I learned some of these songs to appreciate the culture of the people in other nations.
Recently, I met a 80 year old professor who was able to recite the entire famous poem by William Wordsworth, "Daffodils". He learned it more than 60 years ago, in school and in remained with him throughout his life.
I believe that the learning of language, literature and culture will build a better people. I hope that our schools will re-look at the syllabus and build a more considerate and thinking people.
Tan Kin Lian
Thursday, March 26, 2009
Proposal - Financial services safety board
There is discussion in USA about passing legislation to create a financial services safety board. It is similar to my proposal for certain experts to certify financial products to be safe and fair to consumers.
http://www.newsday.com/business/ny-usfina056058126mar05,0,23991.story
http://finance.yahoo.com/print/expert/article/moneyhappy/121849
http://www.newsday.com/business/ny-usfina056058126mar05,0,23991.story
http://finance.yahoo.com/print/expert/article/moneyhappy/121849
A sense of fairness
Americans are outraged at the bonuses being paid to the top executives of AIG's financial products. Here are people who took big bets, lost and felt that they should be retained with fat bonuses to clean up the mess. The public felt that this is so unfair.
There was another past incidents were the Americans were outraged. President's Clinton's plane, Air Force One, was delayed in taking off, as the President was having his hair cut. The barber has to complete the job, get off the plane, before it could take off. This caused a delay in the departure of many flights. The public was outraged. They felt that it was inconsiderate of President Clinton to cause so much inconvenience to other people.
Our leaders in the corporate world and in government has to learn to respect the ordinary people, and be considerate to them. They should display a sense of humility and fairness. They cannot act arrogantly and regard the ordinary people as "lesser mortals".
There was another past incidents were the Americans were outraged. President's Clinton's plane, Air Force One, was delayed in taking off, as the President was having his hair cut. The barber has to complete the job, get off the plane, before it could take off. This caused a delay in the departure of many flights. The public was outraged. They felt that it was inconsiderate of President Clinton to cause so much inconvenience to other people.
Our leaders in the corporate world and in government has to learn to respect the ordinary people, and be considerate to them. They should display a sense of humility and fairness. They cannot act arrogantly and regard the ordinary people as "lesser mortals".
ST Online: Don't break CPF piggy bank, but...
Editor
Straits Times
I REFER to the Ministry of Manpower's response last Saturday to readers' calls for earlier Central Provident Fund (CPF) withdrawal.
The response that it is not a good idea as breaking the piggy bank would lead to temptation to draw more and more from the CPF does not address the main point raised by readers.
What they ask for is not to break the piggy bank. But for members who already have funds above the Minimum Sum, why can't the CPF Board release the excess funds to those who are now struggling to live?
Why hold on to excess funds and make them wait till they reach 55, when they and their families are struggling now?
With the pain and stress these individuals and their families are going through, will they even make it to 80?
Tun Ah Heng
Straits Times
I REFER to the Ministry of Manpower's response last Saturday to readers' calls for earlier Central Provident Fund (CPF) withdrawal.
The response that it is not a good idea as breaking the piggy bank would lead to temptation to draw more and more from the CPF does not address the main point raised by readers.
What they ask for is not to break the piggy bank. But for members who already have funds above the Minimum Sum, why can't the CPF Board release the excess funds to those who are now struggling to live?
Why hold on to excess funds and make them wait till they reach 55, when they and their families are struggling now?
With the pain and stress these individuals and their families are going through, will they even make it to 80?
Tun Ah Heng
MAS consultation paper - sale of unlisted investment products
I suggest that the product issuer should be required to disclose the charges that they are taking away from the investment product for their distribution cost, expenses and profit margin. Under the current regime, this informtion is not required to be disclosed.
The disclosure should be done at two levels:
a) the prospectus should specify the maximum charges that can be taken away from the investment for the various items of expenses.
b) an annual report should be presented to show the accounts of the fund.
Unit trusts have to disclose the charges and to render an annual statement of the fund. These requirements are more important in the case of the unlisted investment products.
I am not sure if this point has been adequately addressed in the new regulatory requirements that is being proposed in the consultation paper. I hope that someone can check this point and inform me.
CASE forum on MAS consultation paper
CASE will be organising a public forum to gather feedback in response to the latest guidelines put up by the Monetary Authority of Singapore (MAS).
The proposals were formulated based on MAS' review of the sale and marketing of unlisted investment products after the current global financial crisis led to the failure of several structured notes in Singapore. The public is invited to comment on the proposals to strengthen the regulation of the sale and marketing of unlisted financial investment products. CASE will then channel the responses to MAS.
Details for the forum are as follows:
Date: Saturday, 28 March 2009
Time: 10am - 12pm
Venue: NTUC Business Centre, Level 8, Theatre Room 801
1 Marina Boulevard, Singapore 018989
The forum will include a presentation on the paper and a Q & A discussion with a panel. Refreshments will also be provided.
For more information, please refer to the MAS website here and the consultation paper released here.
Interested parties are requested to RSVP to rsvp@case.org.sg or fax to 6467 9055 by 27 March 2009.
Lim Si Hui Jean (Ms.)
The proposals were formulated based on MAS' review of the sale and marketing of unlisted investment products after the current global financial crisis led to the failure of several structured notes in Singapore. The public is invited to comment on the proposals to strengthen the regulation of the sale and marketing of unlisted financial investment products. CASE will then channel the responses to MAS.
Details for the forum are as follows:
Date: Saturday, 28 March 2009
Time: 10am - 12pm
Venue: NTUC Business Centre, Level 8, Theatre Room 801
1 Marina Boulevard, Singapore 018989
The forum will include a presentation on the paper and a Q & A discussion with a panel. Refreshments will also be provided.
For more information, please refer to the MAS website here and the consultation paper released here.
Interested parties are requested to RSVP to rsvp@case.org.sg or fax to 6467 9055 by 27 March 2009.
Lim Si Hui Jean (Ms.)
A better way to regulate housing agent
26 March 2009
Editor
Forum Page
Straits Times
A better way to regulate housing agent
Senior Minister of State Lim Hwee Hua reported in Parliament that the Government is reviewing ways to strengthen the regulatory framework for housing agents. This is in response to complaints about malpractices by housing agents.
The measures being considered are:
1. raise professional standard of agents
2. quality and training requirements
3. dispute resolution framework
4. enforcement framework
This is similar to the regulatory framework used for the sale of life insurance and investment products. It has failed to deal with the problem of the mis-selling of credit linked notes and other financial products that are bad for consumers.
This approach relies on the principle of the free market - provide information for consumers to make their decision. The crux of the problem - the information is provided by the seller, who makes a bigger profit or commission by mis-informing the consumer. There is a serious conflict of interest.
If this approach is adopted, the regulator has to look after the interest of the consumers, and to take appropriate action against "cheating". Cheating is a crime - and include making an unfair profit by misleading the other party.
In my view, a better alternative is to have a strong regulator to set the rules for the market. An example is the regulation on the sale of medicine and food products. These products are tested to be safe and suitable for consumption. The regulator can carry out the test or engage independent experts to do the work. But the regulator take the responsibility to put the stamp on the product.
I prefer a system where the regulator licenses the agents and sets the professional standards of ethics and conduct. If the agents fail to meet the standard, they should be removed. This is similar to the licensing of doctors, lawyers and other professionals.
The regulator has the option to outsource the actual assessment to a professional or self-regulatory body, but this body should have the "teeth" and backing of the regulator. I wish to say that stronger regulation actually benefits the majority of ethical agents and create a better market for all parties.
I hope that the Government will consider the above suggestions.
Tan Kin Lian
Editor
Forum Page
Straits Times
A better way to regulate housing agent
Senior Minister of State Lim Hwee Hua reported in Parliament that the Government is reviewing ways to strengthen the regulatory framework for housing agents. This is in response to complaints about malpractices by housing agents.
The measures being considered are:
1. raise professional standard of agents
2. quality and training requirements
3. dispute resolution framework
4. enforcement framework
This is similar to the regulatory framework used for the sale of life insurance and investment products. It has failed to deal with the problem of the mis-selling of credit linked notes and other financial products that are bad for consumers.
This approach relies on the principle of the free market - provide information for consumers to make their decision. The crux of the problem - the information is provided by the seller, who makes a bigger profit or commission by mis-informing the consumer. There is a serious conflict of interest.
If this approach is adopted, the regulator has to look after the interest of the consumers, and to take appropriate action against "cheating". Cheating is a crime - and include making an unfair profit by misleading the other party.
In my view, a better alternative is to have a strong regulator to set the rules for the market. An example is the regulation on the sale of medicine and food products. These products are tested to be safe and suitable for consumption. The regulator can carry out the test or engage independent experts to do the work. But the regulator take the responsibility to put the stamp on the product.
I prefer a system where the regulator licenses the agents and sets the professional standards of ethics and conduct. If the agents fail to meet the standard, they should be removed. This is similar to the licensing of doctors, lawyers and other professionals.
The regulator has the option to outsource the actual assessment to a professional or self-regulatory body, but this body should have the "teeth" and backing of the regulator. I wish to say that stronger regulation actually benefits the majority of ethical agents and create a better market for all parties.
I hope that the Government will consider the above suggestions.
Tan Kin Lian
Wednesday, March 25, 2009
TKL Intelligence Quiz
Try the intelligence quiz at this website. It is based on the famous quiz purportedly created by Albert Einstein. It is free for the initial period. Contests will be organised later, when sponsors are found.
The book is now available at all the airport outlets and major bookstores islandwide, including: Borders, Kino, Harris, Times News Link, MPH, Times, The Commercial Press & selected Popular outlets.
Price: $7.90
The book is now available at all the airport outlets and major bookstores islandwide, including: Borders, Kino, Harris, Times News Link, MPH, Times, The Commercial Press & selected Popular outlets.
Price: $7.90
Earth Hour on Sat 28 March 8.30 pm
Support this call. Pass the word around.
EARTH HOUR: 28th March, 8.30pm - Sign Up. Switch Off. Make A Difference.
EARTH HOUR: 28th March, 8.30pm - Sign Up. Switch Off. Make A Difference.
Big increase for motor insurance claims - the reasons
The General Insurance Association, representing the insurance companies, have introduced a Motor Claim Framework in May 2008, with the aim of controlling the inflated claims. It did not work and has, in fact, resulted in more claims being submitted to the insurance companies. Here are the reasons.
1. In the past, insurers encourage private settlements if the damage was small, i.e estimated repair cost less than $1,000. This was so that motorist can continue to enjoy their NCD. Under MCF, all accidents have to be reported to the insurers and claims will as a matter of course, be made. We all know that when insurers are involved, the workshops jack up the repair cost. From a repair of a few hundred dollars, the price is now a few thousand dollars.
2. The assumption is that the appointed workshops help the insurers to control the repair cost. This is not true because they in fact are out to make a good profit from the insurers. They put up high estimates. And some of them bribe motor surveyors to overlook many items which may be overpriced or which repairs/replacements may not be necessary. The trick is to overblow their repair estimates for the appointed surveyor to go through the motion of cutting a few items. This give the appearance that the surveyor has done his job. The going rate, I understand is for workshops to pay $100 per case to surveyors to gloss through the repair estimates. That is why the tender system is still the best to get around this.
3. Workshop owners work with lawyers and educate motorists on their legal rights with respect to personal injury claims. In the past, small injuries or soft tissue injuries may be overlooked. Now workshops refer them to lawyers to claim. I know of a person who was involved in an accident two years ago when a taxi collided into the rear of his car. He and his wife suffered slight pain in the neck. The workshop owner told them to claim for the injury and referred them to a lawyer to assist. That is why personal injury claims (especially for soft tissue injuries) have increased in recent years. I think most of these claims are genuine. In the past, they did not surface because people did not think of seeing a doctor and claiming if the injury was not serious.
Freddy Neo
(Mr. Freddy Neo was previously the general manager for general insurance in NTUC Income. )
1. In the past, insurers encourage private settlements if the damage was small, i.e estimated repair cost less than $1,000. This was so that motorist can continue to enjoy their NCD. Under MCF, all accidents have to be reported to the insurers and claims will as a matter of course, be made. We all know that when insurers are involved, the workshops jack up the repair cost. From a repair of a few hundred dollars, the price is now a few thousand dollars.
2. The assumption is that the appointed workshops help the insurers to control the repair cost. This is not true because they in fact are out to make a good profit from the insurers. They put up high estimates. And some of them bribe motor surveyors to overlook many items which may be overpriced or which repairs/replacements may not be necessary. The trick is to overblow their repair estimates for the appointed surveyor to go through the motion of cutting a few items. This give the appearance that the surveyor has done his job. The going rate, I understand is for workshops to pay $100 per case to surveyors to gloss through the repair estimates. That is why the tender system is still the best to get around this.
3. Workshop owners work with lawyers and educate motorists on their legal rights with respect to personal injury claims. In the past, small injuries or soft tissue injuries may be overlooked. Now workshops refer them to lawyers to claim. I know of a person who was involved in an accident two years ago when a taxi collided into the rear of his car. He and his wife suffered slight pain in the neck. The workshop owner told them to claim for the injury and referred them to a lawyer to assist. That is why personal injury claims (especially for soft tissue injuries) have increased in recent years. I think most of these claims are genuine. In the past, they did not surface because people did not think of seeing a doctor and claiming if the injury was not serious.
Freddy Neo
(Mr. Freddy Neo was previously the general manager for general insurance in NTUC Income. )
Tuesday, March 24, 2009
NTUC is less pro-society now
Hi Kin Lian,
Are you aware of how NTUC Insurance has evolved since you left?
I entered the industry (as an independent advisor) the same year you left NTUC in 2007. I'm a newbie here. But it does not prevent me from observing (with a sigh), that NTUC, the company you led for a long time, has changed since you left - from an organisation that prides itself for being pro-society to a somewhat changed "organism".
NTUC used to be tolerant towards people whose health are not in "tip-top" conditions. I attribute it to its role of being a pro-society co-operative, putting more emphasis in social goodness rather than profit/loss (that's what the guys there always say). It's a humane organisation.
Of course, ultimately bottomline counts. But now, for unknown reasons, the same organisation is suddenly turning its back on the people it's supposed to serve. So much so that it has tightened its procedures so drastically, resulting in people being rendered uninsurable for slight ailments, ie, not in tip-top conditions. It wants to have a sure-win situation?
That's why I say its a systemic problem. Because if this toughness continues, many Singaporeans, especially the older folks, will be without insurance/ medical coverages. Imagine how huge an issue it can be, in an era of aging population, increasing medical expenses etc. I can't comment whether it's due to a change in management philosophy. But for any person who cares (& I think you might), I would say that this is a Mini-bond in the making. Some time, some how, things will blow up. And it can be quite disasterous.
REPLY
I suggest that you write to the secretary general of NTUC, Mr. Lim Swee Say. I hope that he will respond to your feedback.
Are you aware of how NTUC Insurance has evolved since you left?
I entered the industry (as an independent advisor) the same year you left NTUC in 2007. I'm a newbie here. But it does not prevent me from observing (with a sigh), that NTUC, the company you led for a long time, has changed since you left - from an organisation that prides itself for being pro-society to a somewhat changed "organism".
NTUC used to be tolerant towards people whose health are not in "tip-top" conditions. I attribute it to its role of being a pro-society co-operative, putting more emphasis in social goodness rather than profit/loss (that's what the guys there always say). It's a humane organisation.
Of course, ultimately bottomline counts. But now, for unknown reasons, the same organisation is suddenly turning its back on the people it's supposed to serve. So much so that it has tightened its procedures so drastically, resulting in people being rendered uninsurable for slight ailments, ie, not in tip-top conditions. It wants to have a sure-win situation?
That's why I say its a systemic problem. Because if this toughness continues, many Singaporeans, especially the older folks, will be without insurance/ medical coverages. Imagine how huge an issue it can be, in an era of aging population, increasing medical expenses etc. I can't comment whether it's due to a change in management philosophy. But for any person who cares (& I think you might), I would say that this is a Mini-bond in the making. Some time, some how, things will blow up. And it can be quite disasterous.
REPLY
I suggest that you write to the secretary general of NTUC, Mr. Lim Swee Say. I hope that he will respond to your feedback.
Survey: How will you vote in the General Election (1)?
The hot topic now is the next general election, which may be held in 2009. How will you vote? Give your views in this survey.
Please pass the word around to your friends and invite them to give their views in this survey. I like to have many people to participate, so that the results can be more representative of the population.
UPDATE
Here are the survey results based on 206 replies. The results are quite close to the results based on 149 replies. This shows that the results are not affected by the size of the sample, provided that the initial sample is quite large (say 50 replies)
Tutoring, temp work can pay off
Monday, March 23, 2009
MAS Consultatation paper - simple insurance products
To MAS
This consultation paper is for regulation on investment products. I suggest that the regulation should make clear that life insurance products that provide only insurance protection (and do not have any saving or investment return) do not require to have any adviser.
This will allow life insurance products, such as term insurance, accident insurance and medical insurance, can be marketed without the involvement of a financial adviser. This will reduce the cost of distributing the simple insurance products.
It also avoids the conflict of interest, where unethical advisers may influence the consumer to buy an unsuitable product that pays a bigger commission to the adviser.
Tan Kin Lian
MAS Consultation Paper - Toxic Investment Products
Under the consultation paper, the issuers are required to provide more clearer information about complex financial products. But, the question is, will this approach prevent the sale of toxic products?
The credit linked notes, which were allowed to be sold, were toxic because they carry 5 to 8 times the risk of ordinary bonds. The issuer was able to package these toxic products and offer a low rate of return to the unsuspecting investors.
It will be difficult for the ordinary people to understand the risk of these products. They have to rely on the adviser. If the adviser is not aware of the risk, then the chance of mis-selling is high.
There is already an existing requirement for the issuer to provide relevant information about the product that is registered for sale to the public. If the authority is not willing to enforce this requirement under the existing regulation, will the "better disclosure standard" prevent a similar problem from recurring several years into the future?
A better solution is to have independent experts to certify the risk of the product. This independent experts must be appointed by the approving body and not by the product issuer.
If the independent experts cannot certify the products to be fairly designed and described, the authority should not allowed the product to be sold.
This is similar to the certification of drugs. If the drugs is not tested to be safe and effective, it is not allowed to be sold to the public.
I hope that MAS will consider this point. I shall be submitting this suggestion in reply to the consultation paper.
The credit linked notes, which were allowed to be sold, were toxic because they carry 5 to 8 times the risk of ordinary bonds. The issuer was able to package these toxic products and offer a low rate of return to the unsuspecting investors.
It will be difficult for the ordinary people to understand the risk of these products. They have to rely on the adviser. If the adviser is not aware of the risk, then the chance of mis-selling is high.
There is already an existing requirement for the issuer to provide relevant information about the product that is registered for sale to the public. If the authority is not willing to enforce this requirement under the existing regulation, will the "better disclosure standard" prevent a similar problem from recurring several years into the future?
A better solution is to have independent experts to certify the risk of the product. This independent experts must be appointed by the approving body and not by the product issuer.
If the independent experts cannot certify the products to be fairly designed and described, the authority should not allowed the product to be sold.
This is similar to the certification of drugs. If the drugs is not tested to be safe and effective, it is not allowed to be sold to the public.
I hope that MAS will consider this point. I shall be submitting this suggestion in reply to the consultation paper.
Survey: Politician Ratings
Who will you vote in the next general election? Survey.
Here are the preliminary survey results, based on 49, 112 and 178 replies. The latest rating has a more balanced distribution by age group.
Disclaimer. The people who participate in this survey do not reflect the population at large. This survey attracts a larger proportion of people who are unhappy with the Government.
It is more important to look at the relative ranking of the politicians in the PAP and the alternative parties.
AUD, NZD on way of recovery
The AUD and NZD dropped by about 30% a few months ago. It stayed at that level for a few months. They are now starting to recover. I saw that NZD had increased 10% during the past week .The AUD has recovered by 5%. Perhaps, the previous drop was too sharp and it is now reaching its fair level. But interest rate in AUD and NZD are now quite modest (compared to the high rates previously).
Sunday, March 22, 2009
Proposal to solve the global crisis
Here is my proposal to solve the global crisis. I hope that the US government will be considering an approach along a similar line. The strategy is to stabilise housing prices at replacement cost, less depreciation.
Buying a new HDB Flat
A Singaporean who worked in China for nearly 10 years. While in China, be bought a private property. He sold it on returning back to Singapore, after completing his contract.
He is barred from buying a new HDB flat due to the following condition. I find this condition to be unfair to him. I advised him to consult his Member of Parliament.
Ownership / Interest in Property
You, your spouse, any occupiers listed in the Application Form or their spouses must not own or dispose any other flat, house, building or land* or have an estate or interest at any time within 30 months before the date of application, or between the date of the application and the date of taking possession of the new flat.
* includes but is not limited to HUDC flats (whether privatized or not), properties acquired by gift, properties inherited as beneficiaries under a will or as a result of the Intestate Succession Act, private properties, commercial properties and industrial properties, as well as properties owned / acquired / disposed through nominees regardless of whether any of these properties are located in Singapore or overseas.
He is barred from buying a new HDB flat due to the following condition. I find this condition to be unfair to him. I advised him to consult his Member of Parliament.
Ownership / Interest in Property
You, your spouse, any occupiers listed in the Application Form or their spouses must not own or dispose any other flat, house, building or land* or have an estate or interest at any time within 30 months before the date of application, or between the date of the application and the date of taking possession of the new flat.
* includes but is not limited to HUDC flats (whether privatized or not), properties acquired by gift, properties inherited as beneficiaries under a will or as a result of the Intestate Succession Act, private properties, commercial properties and industrial properties, as well as properties owned / acquired / disposed through nominees regardless of whether any of these properties are located in Singapore or overseas.
Save money with a basic Medishield plan
Hi Mr. Tan,
I find that the premium for private Shield has become more expensive at the older ages. My father is 76 years old and my mother is 69 years old. Shall I continue to insure them under Incomeshield M Plans, or switch back to Basic MediShield? If there is a need, we can visit a private hospital and pay out of our savings.
REPLY
If your parents find the premium for private Shield to be too expensive, it is better to switch back to Basic Medishield. They can go to subsidised wards in Government hospitals, rather than private hospitals. You can switch back to basic Medishield at anytime, even after gae 70.
I find that the premium for private Shield has become more expensive at the older ages. My father is 76 years old and my mother is 69 years old. Shall I continue to insure them under Incomeshield M Plans, or switch back to Basic MediShield? If there is a need, we can visit a private hospital and pay out of our savings.
REPLY
If your parents find the premium for private Shield to be too expensive, it is better to switch back to Basic Medishield. They can go to subsidised wards in Government hospitals, rather than private hospitals. You can switch back to basic Medishield at anytime, even after gae 70.
Fraud alert - insurance claim
Dear Kin Lian,
I like to report to our motor insurer about a suspicious accident with this vehicle on 19 Mar 09; (detail provided). The driver; man aged 50 something.
I notice from my right side mirror, he approached very close towards my right side and appears to deliberately hit my right rear side and bumper.
I got down checking and finding that his vehicle already had a bad pre-existing damage on his front lefts side that supposes to collide with me (it is a deep dent and paintwork scratches) but my car was only slightly scrapped. I confronted him and he drives off after a verbal exchange.
I was suspicious because I have been in front of him all the time and keeping on a straight path within my lane. And also my vehicle slightly damaged but he and his female passenger kept blaming me for cutting into his path.
He probably attempt to induce fraudulent insurance claim for his existing damage. To protect other motorist; any similar accident claim involving this vehicle should be carefully investigated.
REPLY
I suggest that you lodge a report with the Police. It is their duty to investigate such matters.
I like to report to our motor insurer about a suspicious accident with this vehicle on 19 Mar 09; (detail provided). The driver; man aged 50 something.
I notice from my right side mirror, he approached very close towards my right side and appears to deliberately hit my right rear side and bumper.
I got down checking and finding that his vehicle already had a bad pre-existing damage on his front lefts side that supposes to collide with me (it is a deep dent and paintwork scratches) but my car was only slightly scrapped. I confronted him and he drives off after a verbal exchange.
I was suspicious because I have been in front of him all the time and keeping on a straight path within my lane. And also my vehicle slightly damaged but he and his female passenger kept blaming me for cutting into his path.
He probably attempt to induce fraudulent insurance claim for his existing damage. To protect other motorist; any similar accident claim involving this vehicle should be carefully investigated.
REPLY
I suggest that you lodge a report with the Police. It is their duty to investigate such matters.
Financial planning for newborn
Hi Mr. Tan,
I'm doing some financial/insurance planning for my newborn. I plan to purchase a Vivolife Policy (Sum Assured: $50K), with monthly premium of $86 payable over 10 years. And another term insurance (Sum Assumed: $100K), with monthly premium of $12. Is it recommended to do so?
In addition, to start a saving plan to accumulate his education fund in 20 years time. I would need some advise on which is the better option below;
Option 1: Monthly premium of $100 into Investment-Linked Product or Endowment Plan (PayMyUni under Income) ?
I'm doing some financial/insurance planning for my newborn. I plan to purchase a Vivolife Policy (Sum Assured: $50K), with monthly premium of $86 payable over 10 years. And another term insurance (Sum Assumed: $100K), with monthly premium of $12. Is it recommended to do so?
In addition, to start a saving plan to accumulate his education fund in 20 years time. I would need some advise on which is the better option below;
Option 1: Monthly premium of $100 into Investment-Linked Product or Endowment Plan (PayMyUni under Income) ?
Option 2: Initial sum of $5K for Investment-Linked Product, with yearly top-up of $1K. Btw, which is the product worth investing in?
Option 3: Lump sum of $10K into SAIL (Income Policy), with projected return of $24K in 20 years.
REPLY
I am not familiar with the Vivolife product, but I understand that it has high charges (to pay commission to the agent) and gives a poor return to the policyholder. You can search my blog for comments from people who are familiar with this product.
Read this FAQ about saving for your child's education.
REPLY
I am not familiar with the Vivolife product, but I understand that it has high charges (to pay commission to the agent) and gives a poor return to the policyholder. You can search my blog for comments from people who are familiar with this product.
Read this FAQ about saving for your child's education.
Worse than being retrenched
Dear Mr. Tan,
I was forced out by my ex-company(a listed local company) recently, without any form of compensation. I had been there for X years and the reason they gave was that the company has not planned for such exercise and even they do, they do not give it to ‘non-performing’ employee like me. While I did not agree to my ex-supervisor’s appraisal rating on me, I had no choice but to resign on my own or else my company will dismiss me!
Mr. Tan, do u think I have ground to approach MOM for help in seeking some form of remuneration package from my ex-company?
REPLY
I suggest that you talk to Ministry of Manpower and get their advice. You can also talk to your Member of Parliament.
SCMP:New bank rules should better protect customers
Asymmetric information is not an elegant phrase, but it is a useful economic concept by which to analyse situations that involve conflicts of interest - and whether, and how, they need to be regulated. A salesman who tries to promote a product is asymmetrically disadvantaged because he does not know - and can only guess - the size of your wallet. It is not so with banks, which have privileged access to clients' financial information and have often exploited it to sell risky financial products. The Lehman Brothers minibond fiasco has exposed that danger and become a catalyst for regulatory change. Hopefully, better supervision of banking activities, which will come into force this year, will bring more protection for clients and their financial information.
The banks have fought hard to resist changes, arguing at one point that knowledge of clients' finances enables banks to tailor services to their needs. Leaving aside this obviously self-serving argument, regulators around the world have been having the upper hand as a result of the global financial turmoil - and Hong Kong is no different. Instances of apparent mis-selling of Lehman minibonds have helped generate intense pressure on banks to adopt new regulations.
The new rules require banks to separate traditional banking services, such as deposit-taking and making loans, from retail securities and investment services. One of the most irritating and unfair bank practices in recent years has been allowing counter tellers to look at clients' bank books during ordinary transactions and then promote dodgy investment or insurance products. Under the new rules, they can no longer do so. Furthermore, one bank department cannot share clients' information with another to promote sales without their express consent. Recordings of investment transactions will be made and retained for at least seven years. In cases involving the sale of risky products, a third staff member needs to review the transaction. It is not clear what amounts to high-risk investments these days when the share prices of some US banking and insurance giants are behaving like penny stocks. Even the shares of locally beloved HSBC have plunged to lows most investors found scarcely imaginable.
The new rules will not ban all instances of cross-selling. That would not be desirable, because banks offer mostly legitimate investment products. But they should offer better protection to customers.
The banks have fought hard to resist changes, arguing at one point that knowledge of clients' finances enables banks to tailor services to their needs. Leaving aside this obviously self-serving argument, regulators around the world have been having the upper hand as a result of the global financial turmoil - and Hong Kong is no different. Instances of apparent mis-selling of Lehman minibonds have helped generate intense pressure on banks to adopt new regulations.
The new rules require banks to separate traditional banking services, such as deposit-taking and making loans, from retail securities and investment services. One of the most irritating and unfair bank practices in recent years has been allowing counter tellers to look at clients' bank books during ordinary transactions and then promote dodgy investment or insurance products. Under the new rules, they can no longer do so. Furthermore, one bank department cannot share clients' information with another to promote sales without their express consent. Recordings of investment transactions will be made and retained for at least seven years. In cases involving the sale of risky products, a third staff member needs to review the transaction. It is not clear what amounts to high-risk investments these days when the share prices of some US banking and insurance giants are behaving like penny stocks. Even the shares of locally beloved HSBC have plunged to lows most investors found scarcely imaginable.
The new rules will not ban all instances of cross-selling. That would not be desirable, because banks offer mostly legitimate investment products. But they should offer better protection to customers.
Singapore Equity Investments
Dear Mr Tan Kin Lian,
We are a team of independently opinionated Singaporean retail equity investors in Singapore and our website is at www.sgdividends.blogspot.com. We would hope that you will allow our link to be placed on the bottom right corner of your blog with the other external links you have.
About us
Basically, the objective of our blog is to create investment awareness and set Singaporeans to think more about their investments.
We try to be different and state our own opinions instead of relying on what the crowd says or what analysts reports says. We do not recommend stocks, but instead, show data and fact derived from Reuters, SGX website or company financial reports/ announcement and present to our readers and hopefully, they can form their own judgement.
Hope to hear from you =)
Stephen Lim
SGDividends
We are a team of independently opinionated Singaporean retail equity investors in Singapore and our website is at www.sgdividends.blogspot.com. We would hope that you will allow our link to be placed on the bottom right corner of your blog with the other external links you have.
About us
Basically, the objective of our blog is to create investment awareness and set Singaporeans to think more about their investments.
We try to be different and state our own opinions instead of relying on what the crowd says or what analysts reports says. We do not recommend stocks, but instead, show data and fact derived from Reuters, SGX website or company financial reports/ announcement and present to our readers and hopefully, they can form their own judgement.
Hope to hear from you =)
Stephen Lim
SGDividends
US Treasuries - the next bubble?
It is not safe to invest in US Treasuries. When inflation returns, this investment will also drop in value. It may be safer to invest in stocks now. Read this article.
Creating jobs in a global crisis
I heard on CNBC TV that the banks are still not lending money. They take a lot of money from the Fed at low interest rate and invest the money in US Treasuries and other safe assets to make the spread. Meanwhile, businesses cannot survive due to lack of credit. More people will lose their jobs.
There is no point in giving money to the banks or to businesses. They cannot survive, if there is no demand for their products. People are scared to spend, so they have to save their money to prepare for the bad times. The global economy will collapse, if things continue to spiral downwards. Fear will fear on itself.
The same condition will apply in Singapore. It is important for the Government to recognise the failure of the current system, and to implement a new approach. The Government can create many new social services jobs to keep people occupied and do some useful work in the following areas:
a) Take care of the elderly people
b) Take care of babies
c) Provide local transport
d) Provide tuition
These jobs can be at $6 per hour or at an specified rate (sufficient to balance supply and demand). 70% of the cost can be paid by the Government (subject to a maximum of $600 per month for each worker) and 30% can be paid by the user.
For example, an eldercarer can make a house visit at $30 per visit. Each nurse can make 3 visits a day to earn $90. The government pays $21 per visit (subject to a cap of $600 a month for each carer). The user pays $9 a visit. The carer can visit clients near their home, to reduce the travelling cost.
A person can provide local transport for $1.00. The user pays $0.30 with $0,70 paid by the Government. If the operator takes 100 passengers a day to earn $100 a day and incurs expenses of $60, there is a net income of $40.
The Government expenditure will keep people employed at a modest income level, and offer a service to improve the lives of people. As the income is quite low, there will be a temporary measure. When the economy recovers, these people will find other higher paying jobs and the supply for this service will dininish. If there is still a demand for this service, the Government subsidy can be reduced to achieve a better balance of supply and demand.
I hope that this type of innnovative approach will be adopted in some countries or in Singapore.
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