Photos from the Canadian Rockies

At a high point in Banff, overlooking the mountains of the Canadian Rockies.

You need a vehicle like this to travel in the glacier. The tourists uses a Snowmobile (like a bus with big wheels).

It is cold and windy at a glacier. 

Questions for the AGM of NTUC Income, 29 May 2009

I have submitted the following questions for the annual general meeting of NTUC Income on 29 May 2009. They summarised the questions sent to me from policyholders during the past year.

If you are a policyholder and wish to attend the annual general meeting, you can send your request to the cooperative secretary at this address (lakshmi.b@income.com.sg). You can also send in your own questions.

Questions for the Annual General Meeting of NTUC Income, 29 May 2009
I wish to ask a few questions on behalf of many policyholders who bought life insurance from NTUC Income on the understanding that it is a cooperative working in the interest of its policyholders.

NTUC Income reduced its bonus rates for several series of policies last year, in spite of excellent investment results. At the annual general meeting, the chairman gave the following assurances to the policyholders:

a) While special bonuses are not guaranteed, they are designed to ensure that the reduction in annual bonus is compensated. As I have indicated earlier, the new bonus structure is aimed at improving, the total payout to policyholders.

b) Should the special bonus in future reduce due to adverse financial conditions, we are committed to restoring it when conditions improve.

c) I have stated that this Board will look after the policyholders’ interests. Towards this end, the Board will ensure that the bonus allocated to policyholders result in payouts is fair and consistent with the experience of the Life Fund. 

There is an announcement that the bonus cut will be extended to all other series of policies this year.

My questions are:

1. What is the total amount of bonus that were reduced in 2007 and 2008 compared to the bonuses that would have been declared if the bonuses had been maintained at the same rates declared in 2006. Please provide the actuarial value of the bonuses that have been reduced, in millions of dollars, for the policies that were affected.

2. What is the amount of management and selling expenses incurred for the life insurance business for 2006, 2007 and 2008. Are steps being taken to reduce these expenses in line with the reduction in bonuses suffered by the policyholders?

3. Please explain how the reduction in bonus can achieve a better payout to policyholders? With the reduction in the bonus last year, was the cooperative able to invest the undistributed surplus to earn a higher return for policyholders?

4. Will the cooperative be able to maintain the special bonus payable on maturity and surrender, which was adjusted to compensate for the reduction in the annual bonuses? Is there any likelihood that the special bonus will have to be reduced, due to the global financial crisis?

5. For policies which have matured since the last AGM, was the cooperative able to meet the promise that the payout will be fair and based on the actual experience of the fund? Where the actual payouts were short of what is due to them, does the cooperative intend to make the appropriate adjustment for these policyholders?

6. Based on renewals made in recent months, what is the average rate of increase in motor insurance premium paid by policyholders who did not make any claim during the past year? Does the cooperative intend to control its expenses and claims to allow it to reduce the premium rates for its policyholders? What steps are being taken to achieve this goal?

Tan Kin Lian

Differential pricing for petrol

My friend pointed out to me the price of 1 litre of petrol, as displayed in a prominent sign at the petrol stations. The price was around CAD 1.05 in the morning and reduces in stages to CAD 0.95 at around midnight. The next morning, the price went back to CAD 1.05.

The petrol station used differential pricing to encourage some drivers to fill up the tank during the night hours. This helps to reduce the crowd at the petrol station during the working hours.  It is an interesting way to spread out the queue.  

Perhaps petrol stations in Singapore can consider a similar strategy? It seems to work quite well in Canada.

Wearing masks

I took a flight from Singapore to Vancouver. The only people in the plane wearing masks are  the flight crew and a few Singaporeans. The other passengers did not consider it necessary to wear masks. Were they irresponsible or unaware of the risk? 

I do not think so. I think that they know the risk and have decided that it is the risk is too small to take these precautions. Singaporeans tend to over-react.

Promises made at the NTUC Income AGM in 2008

Extract from speech by chairman of NTUC Income at the AGM

1. Some policyholders have raised specific concerns on the special bonus in blogs.  Allow me to address them.
   
   
   • While special bonuses are not guaranteed, they are designed to ensure that the reduction in annual bonus is compensated.  As I have indicated earlier, the new bonus structure is aimed at improving, the total payout to policyholders.
     
     
   • Should the special bonus in future reduce due to adverse financial conditions, we are committed to restoring it when conditions improve.
     
     
   • I have stated that this Board will look after the policyholders’ interests. Towards this end, the Board will ensure that the bonus allocated to policyholders result in payouts is fair and consistent with the experience of the Life Fund. 

NTUC Income's Bonus Cut

Dear Mr. Tan,

At last year's general meeting, the chairman of Income made certain promises to policyholders concerning the bonus cut. He said that bonuses will be declared based on the actual experience of the fund. Do you intend to ask the chairman about the steps that have been taken to declare fair rates of bonuses? It seems that Income knows how to cut bonuses and to spend money to give more incentives to insurance agents? What about giving a fair return to policyholders?

REPLY

I am in Canada now on a 3 week vacation. I will return to Singapore just before the annual general meeting. I have asked to attend the meeting which will be held on Friday 29 May.

I like to ask policyholders who are unhappy with the bonus cut to attend the annual general meeting and post the questions to the board. I have labelled my blog postings on the bonus cut separately. Click on the label "NTUC Income Bonus Cut".

The statement by the chairman at last year's AGM can be found here. NTUC Income's FAQ on bonus cut is found here.

Can policyholders help to identify the questions to ask the chairman at the AGM to be held on 29 May?

 

Scenes from Vancouver, Canada

Chinatown in Vancouver - second largest Chinatown in North America (after San Francisco).

Tulips in bloom in Vancouver. 

Skyline of downtown in Vancouver.

SCMP:Sanctions loom in Lehman investigation

The Monetary Authority is one step closer to sanctioning those guilty of misconduct in 48 cases that involved the sale of Lehman Brothers-linked investment products.

It had concluded its investigation into the 48 complaints and was considering disciplinary action, the authority said yesterday.

But it would decide on what action to take only after it had heard from those against whom the complaints were lodged.

"A number of cases are at a very advanced stage of the enforcement process. Before making a final determination in these cases, we have to go through due process to ensure fairness, including giving the subjects of investigation an opportunity to be heard," it said.

If found guilty, an executive officer of a financial institution could be withdrawn or suspended from office, and a financial practitioner's registration could be removed or suspended under the Banking Ordinance, an authority spokesman said.

An institution could have its registration revoked or suspended by the Securities and Futures Commission, be subject to a reprimand, a fine or a prohibition order. Employees of the firm who were involved could also be similarly sanctioned.

Some 48,000 Hongkongers lost most of the HK$20 billion they invested in credit-linked derivatives, such as minibonds, issued or guaranteed by Lehman Brothers when the US investment bank collapsed in September. Many of them have accused financial institutions that sold them the products of misconduct. By Thursday, the authority had received a total of 20,913 such complaints.

Hours before the announcement the authority's chief executive, Joseph Yam Chi-kwong, told a Legislative Council hearing that mis-selling was inevitable because of the variable quality of bank employees.

Responding to criticism by financial services legislator Chim Pui-chung that the authority had not fulfilled its regulatory duties, Mr Yam said: "It is like crime ... always exists in the society. Are law enforcement departments responsible for that?"

The authority recently hired 40 more employees to handle complaints of mis-selling, he said, and would continue its recruitment to raise the current number of 243 officers to 300.

Peter Chan Kwong-yue, chairman of the Alliance of Lehman Brothers Victims in Hong Kong, welcomed the possible sanctions in the 48 cases.

Mr Chan also said the alliance was arranging a meeting with the Bank of China (Hong Kong) to discuss compensation.

In yet another protest, dozens of investors stormed the Citibank headquarters in Central in the afternoon. They were removed by police in the evening.

Perils of global banking

Dear Mr. Tan,

This article shows how global banks have packaged toxic products to be sold to investors. Please highlight this in your blog.

Electric powered vehicle

Singapore is spending $20 million to test the use of electically powered vehicles. I have a suggestion to expand the scope of this project and develop a better system, based on the concept of "personal automated transport". Read here.

Pleasant weather in Vancouver, Canada

The weather in Vancouver, Canada, is pleasant, around 5 to 10 degrees Centigrade. It is cold, but not harsh. 

A Singaporean that migrated to Canada 15 years ago told me that he enjoys the weather in Canada. When he returns to Singapore occasionally to see his mother, he finds Singapore's weather to be too hot and humid. 

He said that many Singaporeans who have lived in temperate climates for 10 years or longer share the same opinion.

Low Job Satisfaction

Read my articles and the comments in The Online Citizen.

Lower alert level for Influenza A (H1N1)

I appreciate the decision taken by the Minister for Health in reducing the alert level for Influenza A. It is a bold decision to recognise that the threat is not serious, at least based on the information that is available now.

There is still a small risk that things can turn worse. When that happens, it will be appropriate to raise the alert level. I hope that this will come to pass, similar to other health concerns that have surfaced in recent years. 

We do have many big challenges to worry about,  such as restoring the health of the global economy.  We should not divert our attention to other matters that are not serious at this time.

Someone mentioned that Influenza A could be a black swan event. Really? There are other black swan events that could occur, such as an earthquake, terrorist attack or nuclear explosion.

Tan Kin Lian

Strong recovery in Singapore stockmarket

The Singapore stockmarket recovered by 50% from 1400 to 2100 (on the ST Index) over the past two months.

I did not buy any shares during this period, so I missed the rally. But I did not sell any shares either, during the decline from 2400 to 1400. So, they cancelled out.

This illustrates the importance of staying invested, for a long term investor. If one gets out of the market, when conditions are gloomy, one is likely to miss the rally. It is difficult to time the market. It is better to invest for the long term, and take a long term view.

Even the experts like Warren Buffet adviced investors to take a long term view and invest over a time frame of 10 years or longer.

Alaska

I will be in Alaska for the next three weeks. I may not be able to access my emails or the internet during part of this period.

Survey: Competition and Fair Trading

When we buy a car, we have a competitive market giving a large choice of car models. After buying the car, we have to approach the manufacturer for certain special parts, e.g. a replacement electronic key. The manufacturer does not allow other people to provide the key.

What is a fair price to pay for the car? Is it $30, $300 or $3,000? A non-electronic key can be made at a cost of $10. An electronic key is more expensive, but is $300 or $3,000 fair? If some manufacturer can make an electronic key for $150, should another menufacturer charge $300 or $1,000? 

Is there any party responsible to address complaints of consumers? 

Give your views in this survey.

Here are the survey results.

Are bonuses declared fairly?

Dear Mr Tan,
I have come to realise my folly in buying substantial insurance for myself and family ranging from endowments, whole life, etc. All along, I am told buying insurance is also saving for the future - how wrong I have been. Now I am aware that term life is still the best in terms of value. Now I have to consider how to handle the current policies that I have, especially those where I have to pay for "life".

Last month, I received a Bonus Notice that informed me of the reversionary bonus for 2008 (Endowment policy). I was told that "Due to current market conditions, your Projected Matuity Value at this point in time is revised to $71,491 from $87,786. This revision is done to reflect the reduction in value of the fund's assets."

I bought this policy in 1997. The yearly premium of $1,400 is deducted from my CPF OA account. At that time, the projected return is much more than if I leave the money in CPF. In Feb 2008 that I was told the projected maturity value is $87,786, with a yield to maturity of 4.41%.

In one year, I am now informed of this drastic reduction in just 2 sentences. What I cannot comprehend is the way life insurance company is able to decide unilaterally whatever value they want to reduce even when it affects the insurance buyers so much. In that case, the insurance buyers always lose, insurers always win.

In good times, the insurers make money, then in bad times, the insurance company still make money by just reducing bonuses on the insurance policies. There is no equity. Will you help me to understand why this is so?

REPLY 
The question that you asked has troubled me a lot in the past two years.

When I was in charge of NTUC Income, I made sure that the policyholders are given a fair deal. In bad years, the bonus are reduced, but in good years, the bonus are increased.

I now get the impression that many insurance companies are not practicing a fair approach in treating their policyholders.

I suggest that you should raise your question with MAS or with the Consumer Association of Singapore (CASE) and see if they are willing to take up this point as a matter of public interest or consumer protection.

SCMP: Minibond meetings

Minibonds meeting. About 50 investors who suffered losses after buying Lehman Brothers' minibonds protest at the Hong Kong Association of Banks in Central yesterday. They asked to meet association chairman Peter Wong Tung-shun, and their five-hour protest ended after the association agreed to arrange a meeting between the two sides on Thursday.

China Daily: are leaders retired?

"Public interest would not be adequately served by making known the names of the redundant leaders. It is more important to publicize where the dismissed leaders are placed.

 

Otherwise, there is every risk of the ejected excess being placed in positions elsewhere. The process calls for the utmost transparency.

 

Once a leader, always a leader until retirement, seems to have become a tacitly prevalent rule. As a result, quite a number of people do their best to get promoted not for doing a better job but for the benefits of the position.

 

Leadership entails not only benefits but also accountability. Unless the principle of acountability is enforced, just trimming the flab will neither raise efficiency nor make leaders discharge their duties in a responsible manner."

May the rulers be righteous

Dear Mr. Tan Kim Lian, 

While I am inspired by your selfless effort to embark on the mission of educating Singaporeans on issues relating to insurance, financial investment and current affair, I think it is a matter of dire urgency to educate Singaporeans on the importance of political awareness. This will decide if Singapore as a society has a bright future. 

For too long, the ruling elites have successfully succumbed the population into political apathy through undemocratic oppression, threats of litigation and many other shrewd social engineering strategies. At the same time, the past few decades have seen economic prosperity largely because of the world economy and the hardworking culture of the local population who just wanted to earn a decent living. This complacency with a good life of the population has encouraged the ruling elites to justify their one-party rule by advancing the fallicious argument that the "too-good" life Singaporeans are enjoying cannot afford a two-party system and instilling the fear of not having the right talents to run the country, except those handpicked by the founding father. 

This politcal apathy is a "killer" for the well being of Singapore. Foremost is to educate Singaporeans that a policy decided and implemented by the ruling elite, without thorough debate, discussion and scrutiny by the citizens, could end up having a disastrous impact on the future generations. This is not always felt immediate or the near term but until many years later. Some good examples are the elitist "graduate mother scheme", "the stop at two scheme", "Speak Mandarin scheme suppressing the proliferation of dialects", the victimisation of "Nanyang University" for political motive, and even the use of CPF for investment and housing has now become a constant concern for retirement. 

Therefore, I urge you to focus your effort on educating Singaporens to speak up politically. Do not be complacent with the "good" life we have had, we must continue to play our part as responsible citizens and in all fairness to our children, our children;s children, to monitor, scrutinise and question polices mandated by the ruling elites. Singaporeans have to become aware that the ruling elites are not messiahs, saviours, gods, otherwise we would not have the current financial crisis we are going throught right now with the huge GIC and Temasek looses of monety belonging to Singaporeans. 

Available for rental: Thomson View #17-xx

This 2 bedroom apartment (1,300 sf) is available for rental in May 2009. Monthly rental $2,100. View details. Interested? send email to kinlian@gmail.com

Insurance company disallow revival of policy

A friend approached me for help. He took a policy more than 10 years ago. Recently, he overlooked to pay his premium and his policy "lapsed". He wanted to revive the policy after one year, but was told that this is not allowed.

I asked him to get the reply in writing. From my understanding, a policy should be allowed to be revived within a few years, as long as the policyholder is able to provide evidence of good health. In this case, the lapsation was due to an oversight, due to poor service by the agent and the office in not reminding the policyholder.

In the policy condition, there is a provision for an automatic premium loan or for a paid up policy. These options should be explained to the policyholder. It was not done, as my friend was not told about them.

Sometimes, the agent wanted to get the policyholder to take up a new policy to replace the old policy. This could be a reason why they said that the policy cannot be revived.

In my friend's case, he called the office. I wonder if the customer service office is also adopting the same approch, to get the policyholder to take up a new policy? If this is the case, it will be unethical and against the interest of the policyholder.

This could be another example of taking the policyholder "for a ride". By getting the reply in writing, it will be possible for the policyholder to lodge a complaint with FIDREC or with MAS. 

Tan Kin Lian

Advice from three religion on how to handle debt

Read this.

Terminating existing policies

Dear Mr. Tan,

I read in your blog that you have cancelled a few NTUC policies recently. Can you explain your reasons?

REPLY

I have stopped full time work and my children are grown up. I do not need the coverage under the life insurance policies now.

I could keep the policies as an investment, but I found the return to be quite low. In recent years, the investment yield has been rather low and the expenses incurred by the NTUC Income  have increased significantly. This has resulted in a severe cut in the bonus rates payable on the policies.

Even in a good year (e.g. 2007), the bonus distributed has not been commensurate with the good results. I have lost confidence in getting a fair return and have decided to terminate most of my policies.  I can get a better return by investing on my own or in a low cost unit trust.

Contractor Particulars

I need your help to provide particulars of contractors (e.g. plumber, electrician, air con, refigerator, repairman, etc) that you use regularly or who have dropped flyers into your letter box. I wish to invite them to join a Contractors Portal. Please enter the details here.

Are we over-reacing to Influence A (H1N1)?

The World Health Organisation has raised the alert level for Influenza A (previously called swine flu) to 5. When it moves up to level 6, it is a full blown pandemic.

A pandemnic meams that the infection has spread to all the continents. But the fatality rate of the infection is still quite low at this time. Not many people die from Influenza A. More people died from ordinary flu than from Influenza A.

Two doctors told me that the measures being taken, such as wearing masks, are not necessary at this stage. It is more important to wash the hands to remove the virus.

A few friends have cancelled their overseas holidays, losing the money that they paid for the tours. It is rather wasteful and the risk is quite low. Perhaps, they are alarmed by the coverage in our newspapers and the advisory given by our Government.

President Barack Obama said that "We should be concerned, but not alarmed". By all means, take some precautions, but do not over-react in implementing the harsh measures - unless things get much worse than now.

Tan Kin Lian

 

Additional points: 

The fatality level of Influenza A is 3%, compared to 65% for avian flu. More details here.

Latest update: 4 May 

Report from Mexico said that there were only 19 confirmed deaths from Influenza A, instead of nearly 200 deaths reported earlier (which was over-stated). Less people are now infected.  

Is Singapore over-populated with foreigners?

E-mail sent to me

There is no denying that every 1st world country needs foreigners to supplement its citizens to help drive its economy. BUT, is Singapore over-doing it?

	Population	Citizen	Non-citizen
Norway (2008)	4,799,300	93.7%	6.3%
Finland (2008)	5,326,314	97.3%	2.7%
Singapore (2006)	4,017,733	74.0%	26.0%
Singapore (2008)	4,839,400	65.4%	34.6%

 

Unfair treatment of policyholders

I have received many requests from policyholders seeking advice on the problems that they encountered with their insurance company and what they can do. They are caused by unfair administrative requirements or commercial decisions taken by the insurance company. 

My general impression is that the policyholders have been badly treated by the insurance company and have been made to lose money as a result of the unfair treatment.  

I advise them to lodge a complaint with FIDREC. The website is www.fidrec.com.sg. If they need advice on how to lodge a complaint and is willing to pay $500 for the assistance, I can recommend someone to handle it for them. If they know how to handle the complaint on their own, they can save on this cost.

I am very sad to see so many consumers being badly treated by the financial institution. The situation seems to be getting worse in recent years. I hope that the Monetary Authority of Singapore will carry out an investigation into the practices of these financial institutions. 

Tan Kin Lian

Surrender of AIA poilcy

Dear Mr Tan,
I have a AIA financial guardian policy purchased in 1990. My premiums are paid annually all these years. Last year, I decided to surrender the policy. I sent the form through the mail, as the former insurance agent has long left the company.

Two months later, I received a letter from AIA informing me that the unpaid premium has been advanced as a policy loan. The customer service hotline told me that I needed to put up a Request to change the payment of the premium to quarterly mode so that they can refund me on pro-rated basis of the APL amount.

Please advise me what action I can take against AIA if they still insist that they did not have the change of request form and refuse to refund me the pro-rated amount of the loan outstanding that they have deducted.

REPLY
It is not fair for the insurance company to impose administrative barriers that will cause you to lose money. You can lodge a complaint with FIDREC. See www.fidrec.com.sg.

Worried about AIA's future

Dear Mr Tan,
With the current news about AIG I would greatly appreciate your advice on whether I should continue to pay my insurance for Basic Life and Financial Guardian policy with AIA which is due to mature in March 2046.

Would you pay the premium if you were me? Does MAS guarantee any payment for insured products? The policy has been in force for more than 10 years.

REPLY
I suggest that you ask for information about the cash value now and in 5 years time. You can compare the premiums that you will pay for the next 5 years. You can decide whether to continue with the policy. Read my FAQ.

Regarding the security of AIA, you do not need to be concerned about it. AIA policyholders are covered under a separate insurance fund in Singapore. It is also protected by the policyholder protection fund.

You can search my blog for the past articles on this matter. Search "AIA" and see if you can find any of the articles.

Financial Guardian - a difficult decision

Dear Mr. Tan,
I purchased a life policy known as 'Financial Guardian' from AIA in 1993. My understanding from my insurance agent then was that the policy has the concept of 'critical year' where the policy will be 'self paying' from the critical year onwards, and this critical year is around the 13th year after the start date of the policy.

Recently, I received a package from AIA which listed two options which I have to choose one of them. It seems that the accumulated dividend is not sufficient to fund future premium payments after the critical year.

Option 1 is for me to continue paying the premiums. Along with this option, I have to declare that "I understand that dividends and the critical year are not guaranteed and there is both upside and downside potential depending very much on the investment experience of my policy. However after due consideration, I elect to contimue paying the premiums."

Option 2 is to stop paying the premiums. For this option, I have to agree that "I understand that accumulated dividends and interest earned will be used to fund future premium payments for my policy in accordance with Option 2 "Premium Reduction" of the Dividend Options as provided for in the policy contract.

I also understand that once/if accumulated dividends and interest are exhausted, I will have to:
* restart paying my premiums; or
* convert my policy to Reduced Paid Up status; or
* take a loan advanced against the cash values of my policy for payment of premiums for my policy.

I understand that interest at such rate as may from time to time be stipulated by AIA will also be charged on this loan. I also understand this loan will be offset against any benefits paid from my policy."

For Option 2, it also mentioned that any supplementary benefits attached to it will be terminated when my policy is converted to a paid up policy.

Could you please advise on which is the better option to choose?

For each of these options, could you please highlight what are the disadvantages/pitfalls that I should consider before making my decision?

What does it mean by my supplementary benefits would be terminated when my policy is converted to a paid up policy for Option 2? Is supplementary benefits referring to the riders?

With AIG going thru' financial crisis and requiring bail-out in the USA, is it advisable for me to choose Option 1, ie to continue paying the premiums? Or should I elect for Option 2 now and then wait and see how AIG/AIA rides out the current financial crisis?

Looking forward to hear from you. Any advice that you could provide in this area, would be very much appreciated.

REPLY
Please get advice from the AIA agent or their company. You have to decide based on your needs.

Here are some general remarks. It is better to take option 1 and continue paying the premium. Under option 2, you are probably charged a high interest rate (perhaps 6% ore more) for the loan that is taken to pay the premium. Why pay a high interest rate on the premium loan?

I think that AIA should be quite safe, as it has a separate life inurance fund protected under Singapore law. It should be sheltered from the problem of AIG.

Critical year offer - seek advice from CASE

Hi
15 years ago, my father bought me an AIA insurance with critical year feature.

Now, AIA has mailed me to choose 2 options - 1) continue premium 2) pay from dividends till zero then start cash payment ago. Alternative is 3)support program, but no explanation whatsoever 4) adjudication.

If I don't choose, it will be taken as I were to accept AIA position. I am confused which is the better option. I was hoping for someone to initiate class action, but till now none forthcoming. I would like your advice on this.

REPLY
I suggest that you consult the Consumer Association of Singapore, CASE.  They have handled many of these cases i n the past.

Wrong advice about bonuses

Hi Mr. Tan
I was misled into buying insurance for all these years, thinking that the lump-sum amount paid to insurance will be like fixed deposit, and that once bonuses are declared, the surrender value in the benefit illustration shown will be guaranteed.

I did ask the agent about the guaranteed and non-guaranteed part but the answer was to look at the surrender value shown in the BIPS, which she claimed will be payable to me on surrender.

I have now found out that the terminal bonus and future reversionary bonuses are not guaranteed, which was not advised to me. Please advise me if I got a case against them.

REPLY
It is the duty of the agent to advise you correctly. If you were mis-informed, you should take the following steps:

a) Lodge a complaint to the management of the insurance company, giving facts about the mis-representation by the agent

b) If the insurance company does not give you a satisfactory solution, you can lodge a complaint to FIDREC. Details are in www.fidrec.com.sg. If you need legal or other advise, you should be willing to pay $500 for someone to advice you. I will not be able to look into your complaint, as it takes a lot of my time.

Party Whip in Parliament

Mr. Tan Kin Lian

Can you write a simple an article on how the PARTY WHIP works in parliament voting. I am interested and puzzled. My understanding is that all PAP MP must vote according to party line, regardless the MP’s constituencies view or the MP’s personal view on the subject being put to vote.

My simple understanding is as follows:

[1] MP is the representative of his constituencies. His vote speaks for the people who vote for him. We can see in US or UK that senators or MP would not vote simply it is party line. They vote in accordance to their constituency. For example, I could be a right-winged conservative, but my constituency is gay by large majority. When I am called to vote, I have to respect my constituencies’ wishes. If I don’t subscribe to this “democratic process” then I have to quit as MP or go elsewhere and win others vote to be an MP.

[2] The vote count is a statistical and historical record of the decision making process. The ratio of the majority will be a precious guide to how policy is implemented and how future decision making would to be made. For example, if a bill is passed with large majority then we know it is with the people, and it can be implemented with higher conviction and pace. However, if a bill is passed with slim majority, it would have to be executed with great compassion, care, circumspect, gentleness etc, because there is still a large minority who think otherwise.

[3] I think it is inconsistent when a person debate against a bill, and voted for it eventually. I find it hard to understand and reconcile. For example, if a MP were to speak against building of Casino, he has to vote against, when the vote is being called.

Can you write something to educate me, because I find that Singaporeans need to know more about how it works and the principal behind this policy.

CASHEW NUT

REPLY (revised)
You are right about the practice in Singapore and in the USA. In Singapoer, the MP has to vote according to the party line (unless the whip is lifted - which is seldom allowed). In the US, the Congressman votes according to his personal conscience (usually guided by the views of his constituents) and is not bound to vote according to the Party line. 

However, apart from Singapore, I know that the whip is also practiced in the UK. In this system, the concept is that the people vote for the policies of the party in power. The MPs are obliged to vote for the policies of the ruling party, as decided by the top leadership. This is to prevent a MP changing party and toppling the Government. In some countries, this is considered to be necessary to prevent a MP being bought over by money politics.

In my view, the US system is better. It ensures that the laws in the country better reflect the wishes and aspirations of the population. It also encourages greater transparency and discussion on the issues affecting the future of the country. It allows the citizens to be better engaged.

Crisis of Credit Visualised

Dear Mr. Tan
How are you? I am a regular visitor to your blog. Just thought I would share this nice link, The Crisis of Credit Visualized. Very nice and easy to understand animation. May be your visitors to the blog might enjoy it too.

 

Regards

Niranjan

Looking for a tailor

Dear Mr Tan

I am looking for a tailor to help me do some work for my sofa. I will buy all the material and travel to the fellow's place, as long as he/she can take my instruction to do the work. I wonder if you could find a way (eg publicising on your blog on through the part time match portal) to help me find such a person.

Any contact? Send email to mengwee.tan@gmail.com

The difference between rich and poor

Read this.

Complaints to FIDREC

If your claim for compensation has been rejected by the financial institution, you have to file a complaint with FIDREC within 6 months of the rejection letter. If you pass this deadline, FIDREC will not entertain your complaint.

It cost only $50 to get FIDREC to adjudicate your complaint. It is worth spending this money. If you need assistance to strengthen your case in preparing your complaint with FIDREC, someone (who is knowledgeable about this matter) is willing to do it for a modest fee. You can send your request to kinlian@gmail.com.

 

Asian culture

I am looking for a word that best describe the dress, musical instrument, cuisine, dance, sport of each Asian country. Please suggest suitable words. Example:

National costume
kimono, humbong, sarong,

Cuisine
bulgogi, sushi, dim sum, satay, prata,

Musical instruments
er hu, zitar

Singaporeans need to overcome negative traits

Read my article in The Online Citizen and the comments of other readers.

SCMP:Working behind the scenes for the good of all

Beijing is sparing no effort to help the Hong Kong government reduce the number of disgruntled Lehman Brothers minibonds holders likely to take to the streets on July 1. An informed source said Bank of China (Hong Kong), one of the major banks still at loggerheads with victims over compensation, had been asked to seek a settlement by the end of June. He said Beijing was in a position to sway BOCHK's decision.

The Standard:Banks sold minibonds even as Lehman sank

Sealed findings of a report into the sale of Lehman Brothers minibonds reveal that banks continued to push the ill-fated products and recommend them to vulnerable customers up to a month before the bank collapsed.

The deleted sections of the Hong Kong Monetary Authority report, embargoed since December, show 87 of 238 complaints that institutions continued to sell Lehman minibonds even as the bank's credit quality deteriorated during August and September last year.

It also cites 102 complaints that banks sold Lehman minibonds to vulnerable customers including the elderly and illiterate, 15 cases of customer risk appetite being incorrectly assessed due to computer system error and 34 of mistakes in documentation. The HKMA had agreed to give censored parts of the report only to a Legislative Council subcommittee probing the Lehman fiasco for closed-door discussion, but legislators insisted on revealing them to the public.

It had warned legislators not to reveal details of the censored material as it could be incorrect and lawmakers were bound to discuss the issue at yesterday's hearing, subcommittee chairman Raymond Ho Chung-tai said.

``The disclosure of the omitted part may have a negative impact on people taking civil action and the Securities and Futures Commission in negotiating with sellers of Lehman products,'' HKMA chief executive Joseph Yam Chi-kwong told legislators at his third hearing on the controversy.

``Any legal challenge due to the disclosure of the full report before investigations are completed is the last thing we want to see.''

Yam will attend another hearing on May 8 and the subcommittee has summoned his deputy Choi Yiu-kwan to appear on May 26.

The Hong Kong Association of Banks has expressed concern over the disclosure in a letter to the subcommittee, Ho added.

Yam said there was a rise in complaints related to structured product sales last year, and that although the HKMA recorded 178 cases between 2003 and 2008, only one institution was punished.

``We are not trying to harbor banks. We take the cases seriously and will not let [banks] go if misselling is confirmed,'' he said.

Survey: Financial advise

Financial advisers are required to make a financial needs analysis of their client and to have a suitable basis for giving their advice on implementing a financial plan?

How is this advise given? 

Many clients have approached me for advice, because they are confused with what the adviser told them. This is most unsatisfactory. The financial adviser earned $1,000 or more in commission and did not give a satisfactory explanation.  

I suggest that the advise should be given in simple language in a format that is understandable by the client.

I also suggest that a set of the documents supporting the advise should be given to the client. The client can give the advise to another person for a second opinion. This will ensure that the quality of the advice given by the first adviser is satisfactory and conforms with some best good practice standard.

At present, the financial adviser is required to lodge their advice to the advisory firm and a supervisor is required to audit the advice. As the supervisor works for the same firm, this does not give sufficient protection to the consumer on the quality of advice and the suitability of the products.

What are your views on this matter? Particpate in this survey.

A considerate person

I visited Nanyang Junior College to give a talk to the students. After arriving at the school, I found several empty Visitors parking lots next to the main entrance. The remaining lots, presumably used by the teachers, were all occupied.

It is so easy to find these parking lots. This is a wonderful welcome to any visitor to the school. 

The principal was considerate in giving priority to the visitors. He also made sure that there were sufficient lots reserved for the visitors. 

I have visited many other places where all the parking lots were occupied by the staff. Some of the empty lots were "reserved for the staff". These places do not consider the visitors or customers to be important, and were accorded low priority.

I hope that more people in Singapore can be considerate, like the principal of Nanyang Junior College.

Tan Kin Lian

HK Council enters minibond fray

The Consumer Council for the first time will use its Consumer Legal Fund to help a Lehman Brothers minibond investor sue a bank to recover losses amounting to HK$500,000. Johannes Chan Man-mun, chair of the action fund, yesterday said the case has the potential to be used as a test case to clarify important legal principles and establish precedents for better consumer protection.

He said it was chosen as it involved four major factual and legal issues found in the buying of Lehman Brothers- related products.

"It involves misrepresentation, the exemption clause in the bank, inadequate disclosure of material facts, and the fiduciary relationship between the bank and its consumers."

He declined to disclose any details except that the case does not involve elderly people or the underprivileged.

Chan said they have to be very careful in bringing the case to court as public money is involved, but he is optimistic about the outcome.

He said the litigation might take 1 to two years before being heard at the High Court, and perhaps two years if it goes to the Court of Final Appeal.

Asked if the case will end up like 11 of the 82 applications for legal assistance that were withdrawn after the bank decided to settle, Chan said settlement would be a good thing for the consumer to get at least part of the money back.

The 11 applications were withdrawn after settlement that involved about HK$4.8 million.

He said litigation can begin as early as one or two months from now, as the investor had signed and returned an agreement with the Consumer Legal Action Fund yesterday.

The council up to last Friday received 11,229 complaints related to Lehman Brothers, with 624 out of 943 cases processed reaching settlement with the banks involving HK$217.8 million.

According to the council, the remaining 319 cases are unresolved as the banks have declined to settle.

The council was criticized for taking so long to process the applications after the collapse of the US firm in September last year.

http://www.thestandard.com.hk/news_detail.asp?pp_cat=30&art_id=81411&sid=23624060&con_type=1 

Hong Kong Legislative Hearing - Blacked Out Portion Release

Lehman probe 'uncovers five suspect areas'
Minibonds 'mis-selling' revealed

Parts of a report into the Lehman Brothers minibonds saga withheld from the public revealed five categories of suspected mis-selling, a source said yesterday.
These mainly involve the selling of such products to unsuitable investors, the source, who is close to the legislature, said.

The observations were included in a report by the Hong Kong Monetary Authority sent to the financial secretary in January, but were blacked out from the reports disclosed to the public.

Eight pages of the report, which had been blacked out, featured summary observations of more than 200 cases the authority investigated, the source said. Observations on those cases seemed to agree with claims by victims that many had been sold minibonds, but the risks were not fully explained. The report identified the practice of selling Lehman Brothers minibonds to people who were over 65, illiterate or had only primary school education as the most common type of suspected mis-selling.

Hong Kong investors lost billions of dollars on minibonds guaranteed by Lehman when the US investment bank went bankrupt in September. Despite their name, Lehman minibonds are not corporate bonds but complex, high-risk derivatives.
Another category of suspected mis-selling involved the marketing of minibonds to investors just as their fixed time deposits matured, which may have misled them into thinking minibonds were equally low-risk.

The report also identified cases of minibonds being sold in August and September as the extent of the subprime mortgage crisis in the US was becoming clear. The report questioned whether there had been sufficient market analysis before the minibonds were sold. It also noted documentation irregularities such as missing signatures, and indications of an inadequate risk analysis system.

Yesterday, the chairman of the legislature's subcommittee investigating the minibonds saga, Raymond Ho Chung-tai, said its members had unanimously decided there was no justification for the blackout.

He said members would now use this information in their continued questioning of the monetary authority's chief executive, Joseph Yam Chi-kwong, on Tuesday and may include the information in its own report. However, the source said there was a possibility the authority may wish to initiate judicial proceedings against such a disclosure.

An authority spokesman said it had no comment, but the chairman of the Hong Kong Association of Banks warned that disclosure could affect Hong Kong's status as an international financial services centre. "If there is customer information there - it might affect Hong Kong's status as an international financial centre, because if you disclose customer information, then those customers may no longer want to do business in Hong Kong," said Peter Wong Tung-shun, who is also HSBC's executive director. He said the association would send a letter to the authority to reflect these concerns.
Peter Chan Kwong-yue, chairman of the Allied Victims of Lehman Products, welcomed the disclosure, and said he hoped it set a precedent for the banks to disclose their own internal investigations.

"It also sends an important message because it is a slap in the face of Joseph Yam," he said, referring to the chief executive of the monetary authority

Land banking and property scams

Read this.

Creating or destroying value?

Business should create products that give value to customers. If the cost is $X and the value to the customer is $Y, then the business is entitled to keep the difference to cover its marketing cost, expenses and profit.

For tangible products, the customer can assess the value of $Y by looking at the price of similar products. 

For financial products where the future value is uncertain, such as shares, structured products, life insurance and land banking products, it is difficult for the customer to know the real value. This allows the experts (i.e. financial advisers or businesses) to exploit the ignorance of the consumer by giving misleading advice.

The technique is to give the promise of a future value that is not likely to arise. For example, that the asset will appreciate in value. Usually, this is based on looking at the price movement in the past and selecting a period that shows the most favourable results. This is misleading.

All businesses, if it is runned well, will give a modest rate of return. If inflation is 2% per year, a return of 5% is reasonable. If the business projects a return of 15%, it is not reasonable. The business is taking excessive risk, e.g. through leveraging, or playing a speculative bubble, such as the US housing market (funded by subprime mortgages).

The promoters of these financial products take in a lot of money from investors by making unachieveable promises. They take away a large portion of their money in marketing expenses and profit. The leave the investors with assets that have depleted in value. Eventually, the investors have to realise their investments at a big loss.

Look at the history of many time share, land banking, structured products and life insurance products. While some of these products, give good value, the majority of these products destroy value for the investors.

Be careful about these types of financial products. Do not believe that the assets will appreciate in value. Often, there is someone behind that will cream off your gains and leave you with a poor yield.

Tan Kin Lian

 

The case for public transport

Read this.

UK: Call to help vulnerable customers

Read this.

UK: Banks face fine for poor service

I hope that MAS will implement similar measures in Singapore. Read this.

China Daily: Secret Lehman report to be aired

HONG KONG: The Legislative Council (LegCo) subcommittee inquiring into the Lehman Brothers minibonds saga Friday decided to ignore the Hong Kong Monetary Authority (HKMA) request to keep parts of the authority's report confidential.

Subcommittee chairman Raymond Ho Chung-tai told reporters after a meeting Friday that the subcommittee disagreed with HKMA chief Joseph Yam's argument that disclosing the portion would violate public interest, the Banking Ordinance, and affect the authority's investigation.

"The chapter six (the portion in question) of the report is not targeting at any individual bank and person. It only contains some general information," he said. "We believe that disclosing the information will help the investigation. The disclosure will only create positive impact, but not negative ones. It is more appropriate to disclose."

It is expected that the concerned portion is related to the problems observed by the HKMA in 238 cases.

The problems can be classified into five categories. Half of the cases are related to the sales of the products to elderly, persons with low education, or those who invested excessively in the products. Some of the cases involved inaccurate assessment of clients' capability to bear risk, others concern lack of signatures on documents.

But the HKMA has not reached any conclusion on these cases, and the Securities and Futures Commission is still following up.

The LegCo subcommittee will have an open hearing Tuesday, which will have Yam continue his testimony.

Kam Nai-wai, a subcommittee member, said a special meeting will be held should the HKMA launch a judicial review against the disclosure.

He said disclosing the information will help investors who may have been victimized by unethical sales practices, to settle with banks.

"The public will know what the HKMA has found over the past months concerning the sales practices of banks. The public and the victims of the saga will know what constitutes bad sales practice, and know what practices are adopted by the banks," he said. "This helps us find out the truth."

Chan Kwong-yue, spokesman for the Alliance of Lehman Brothers Victims, supported disclosing the report.

"We will know more about the structural bad sales practices of banks," he said. "We will then know what kind of bad practices are recognized by the HKMA."

But Hong Kong Association of Banks chairman Peter Wong had reservations about disclosing the information.

"Clients' personal information may be contained in the report. This will affect Hong Kong's role as an international financial center because clients will not do business in Hong Kong if their information is at risk of being leaked," he said. "At this stage, we cannot see how the disclosure will help the tackling of the incident."

A spokesman of HKMA declined to comment.

Survey: Job satisfaction of Singaporeans

A Business Times report quoted a survey showing that Singaporeans have low job satisfaction - the second worst in the world (Japan is the worst). What are the key factors? Give your views in this survey.

Here are the survey results.

Get a better return from CPF retirement account

Mr Tan,

I bought the annuity in 2002 with my CPF. At that time I have faith in the Company. Today if I wish to surrender, they will pay me $X ( after about 6.5yrs ) And if I were to continue with the annuity policy, I will get about $Y p.m. 

I have substantial savings and have not make any withdrawal from my CPF. I have been following the development and I do not expect INCOME to pay any attractive yearly bonus.

 I am not sure is it better off if I had not take up this annuity and leave this sum in my CPF retirement account which many of my colleagues had done. I am prepared to keep the sum in my CPF. I am still working and no financial problem. Pls advise whether I should surrender the policy..

REPLY

It is better to terminate the annuity and put the money back into the CPF special account. The surrender value that you get now represents a return of 3.9% p.a. for the last 6.5 years. It is slightly lower than the 4% given by CPF on the special account, but the loss is slight and can be ignored. It is better to look forward and get (hopefully) a better return from the CPF in the future. All the best!

Hong Kong: Legislators to lift lid on minibond probe secrets

Legislators plan to defy the Hong Kong Monetary Authority by making public portions of an investigation report into the Lehman Brothers minibonds saga that the de facto central bank wants to keep confidential.

Raymond Ho Chung-tai, chairman of the subcommittee probing the minibonds saga, said legislators will use the confidential portions of the report for discussion at public hearings.

A source says the among details the HKMA wants to keep confidential is the finding that around 50 percent of the 238 complainants are people who traditionally have a lesser appetite for risk – the elderly and those who are not well educated.

The next subcommittee hearing on Tuesday is expected to be a fiery meeting because legislators are expected to make some of the confidential findings public in the presence of HKMA chief executive Joseph Yam Chi-kwong.
http://www.thestandard.com.hk/breaking_news_detail.asp?id=13921&icid=1&d_str=20090424

A young person interested in politics

Hi Mr Tan,

I went tru the survery and read some of the comments in the post... just like to add:

I'm 27, just an average skilled worker, holding a diploma, getting 2k+ a monthly. Like most sg kids then, I have no interest in politics nor policies the white immortals came up with. I always thot: wats it gotta do with me? After all, I'm just another ordinary guy, interested in stuff like computers and have no interest in politics.

Fast forward 20 years and then we will realise: whats it gotta do with me? everything.

I have come to realise in recent years: Every scheme every policy every act, no matter how small affects us. It pains me to see how incompetent the current govt is. Its no joke whenever u seek help or answers, u are pushed into a chain of merry go rounds whereby each recipients declare someone else is responsible.

The media furthers this cause by dropping red herrings or changing the subjects to make govt related bodies look good.

Look at the recent Current affairs. Which agency or leader have ever declared "yes its our mistake. we will do watever we can to learn and not repeat" ?

Every single one starts by declaring "its not my fault. Everyone else is to blame" and then finds a scrapgoat, if not then its "everyone went in with their eyes open".
Whatever happened to govt is meant to serve the people, instead of the other way around now?

Its a sad state that singapore has fallen to, what has happen to inspirational leaders like the current Obama, hell, even the past LKY? Now they "fix oppositions and buy votes" if cannot? then declare "public order act" and use the army in case they lose. What is this? This is not the sg i knew when i was younger, or maybe i was so ignorant then.

The younger generations... they dont see these things. I never did then either, after all you cant blame them. What do pple care about in the teens? sports, bgrs, entertainment, games etc... Politics is 'boring stuff' for 'adults'. At least I used to think so.

If i were given a chance to get into politics now, i would snap at it, not becos of fame or fortune. I dislike fame, and I think i am already fortunate. The only reason to why I would want to get in, is only to be a voice of the oppressed and the repressed, to keep ministers in check or at the least, make them stay honest. I'm no noble man, being just a normal ordinary citizen, but I dislike injustice, and to think that I used to think such things dun usually happen in our sparkling clean Singapore.

Yet we STARE at it every single day, and still they want to whitewash every event and highlight their "achievements" and gloat about their paycheck. 6 times the POTUS paycheck? Where's 6 times the responsibility? All i see is 6 times the taichi, perhaps there is a correlation between higher pay and less responsibility after all. If not, how do people hold multiple directorships and run every inc at the same time? Somebody has got to keep them honest, and make them work for their paycheck.

I hope Singapore never experiences what Thailand is going tru... but I feel that like many people after they climb all the way to the top of the ivory tower, sometimes they need a good fall to be more down to earth. Bend a branch too much, eventually it will snap. Its a precarious balancing act those people are doing, how long before the "mortals" get sick and tired of being treated like idiots and being taken for a ride? For me, its probably too late to get my say into politics. If I knew then wat i knew now, i would have chose a much different path. The day President Ong stepped down was the day the govt 'won'. What we have left, is just a mascot doing the biddings of the mastermind.

A certain character from a action movie once told a "hero" in his fight against corruption: "you either die a hero, or live long enough to see yourself become the villian".

For me, I waitng for a new dawn in singapore government. Failing which, I'm setting my sights on New Zealand. I heard the grass there is not only greener, but a lot less hectic.

(name deleted)

Commuters have to accept transfers

Here are my ideas to improve the bus service.

Improve the public bus service

Read this letter to MyPaper.

Protecting consumers

This article is published in The Online Citizen.

Jobs in service industry

Many department stores in Jakarta employ many sales assistants. They have the time to provide customer service. The sales assistants earn a minimum wage (about USD 100 per month), but this is sufficient to meet the cost of living. It creates many jobs for the young people.

I hope that our service sectors in Singapore take the same approach and employ more people to improve customer service. During the current economic downturn, many people (young and older) will be happy to have a job, even if the wages are low.  Being employed is better than being unemployoed, and remaining idle, at home.

They will learn the experience of customer service, which will be useful for the future quality of life in Singapore.

As many businesses are watching their cash flow, perhaps some government funding can be given for these customer service jobs?

Tan Kin Lian

SCMP:Eightfold rise in funding to investigate bank gripe

The Monetary Authority will spend HK$138 million this year to handle complaints against banking services - an eightfold increase on last year, before US investment bank Lehman Brothers went bankrupt.

It spent HK$17 million in this area last year. In the new plan, most of the money, some HK$84 million, will be used to pay for extra staff to handle complaints.

The funding was detailed in the authority's annual report published yesterday - which also revealed that Joseph Yam Chi-kwong, its chief executive, enjoyed a pay rise of 15.44 per cent last year, pocketing HK$11.93 million.

Mr Yam, one of the best paid central bankers in the world, saw his fixed pay rise 8.38 per cent to HK$7.783 million, while his performance-linked variable pay increased 15.87 per cent to HK$3.176 million. He also received other benefits.

The authority's three deputy chief executives averaged HK$7.04 million, and the 13 executive directors averaged HK$4.20 million.

Democratic Party lawmaker Kam Nai-wai said he was unhappy at Mr Yam's salary increase. He said that as the authority unveiled in January a full-year investment loss of HK$74.9 billion for the Exchange Fund, he could not find a reason why Mr Yam could enjoy such a large pay rise.

Mr Kam said the eightfold increase in spending to handle complaints against banking services was a reflection of underspending and understaffing in the authority's investigation efforts before the Lehman Brothers debacle.

Civic Party lawmaker Ronny Tong Ka-wah said Mr Yam's pay rise was incomprehensible. He questioned how HK$138 million would be spent as he had not seen any obvious results from the investigative work already done by the authority into matters relating to Lehmans Brothers.

Hong Kong investors lost billions on minibonds guaranteed by Lehman Brothers. They have urged Mr Yam to give up his bonuses and cut his pay for the Exchange Fund losses and what they said was poor regulation of banks that had dishonestly selling some financial products.

The authority said on March 27 it would freeze the salaries of Mr Yam and about 600 employees this year. Last year it reduced their variable pay - similar to a bonus - by 30 per cent. This cut the bonus to the equivalent of two months' pay on average, down from 2.9 months in 2007.

The city's de facto central bank budgeted staff costs of HK$656 million for the year, a rise of 3.96 per cent, making up 78.5 per cent of the total administrative expenditure budget of HK$836 million. In the report, Mr Yam described the global meltdown as "some of the most dramatic events in living memory". He said local banks were not insulated from the crisis, with profitability deteriorating and cost-to-income ratios rising.

Excellent facilities at Changi Airport

I am now using the Laptap Access point outside of my departure gate at Changi Airport. The facilities are excellent. It is more convenient to me than the DBS Asia Treasures Lounge which I used previously, and is located in a different terminal. If I do not have a laptop, I can use the free internet terminals which is also available here. 

 

DBS Asia Treasures Lounge

I have been a customer of DBS for more than 30 years. A few years ago, they offered me the membership of the Asia Treasures lounge in Changi Airport. I did not use the facilities initially.

Last two years, I used the facilities regularly for my trips to Jakarta. Recently, DBS decided not to renew my membership on its expiry. Their explanation was that my asset under management fell below $1 million.

I do not recall have met this $1 million mark when the membership was first offered to me. DBS must have raised the requirement for people who used the facilities regularly. So, current profit is more important than past relationship. This is the new value system in Singapore.

I have learned to accept the new world, but I do wish for the old world where long term relationship is treasured.

Tan Kin Lian

Contingency fee system

I discussed with a law professor in a local university. Is it good for Singapore to adopt a contingency fee system for legal practice?

We came to the conclusion that it is useful under certain circumstances and for the following reasons:

(a) Where the litigant cannot afford the legal fees to take up a case against a large organisation

(b) Where the lawyer is in a better position to judge the merit of the case and should take the risk of the outcome.

If more cases are tried in court, it will lead to a better understanding of the law. This will be good for the society.

Tan Kin Lian

The Standard:Minibond anger directed at Donald Tsang

About 850 angry Lehman Brothers minibond investors yesterday called for Chief Executive Donald Tsang Yam-kuen to step down for failing to help them.

The Alliance of Lehman Brothers Victims claimed 3,000 protesters, wearing red headbands bearing the Chinese character for angry, joined a march from Causeway Bay to the central government offices.

Among the group were some Singapore and Taiwan investors who also urged the Hong Kong government to handle the issue faster. The protesters vented their anger by hitting a drum, pasted with Tsang's photo, outside the government headquarters.

A Singapore investor said her government has resolved 70 percent of about 8,000 cases through judgment. "It seems the Singapore government is more reactive. It takes too long here [Hong Kong] and the compensation is too little," she said.

Alliance chairman Peter Chan Kwong-yue criticized the authorities for not carrying out their responsibilities and hit out at the Securities and Futures Commission for allowing banks to sell the minibonds, and police and the Department of Justice for not following up the complaints.

Chan was angry over Tsang's silence. "He has not showed concern to the investors since October. It is so disappointing," he said.

Democratic Party lawmaker Kam Nai-wai said he hopes Financial Secretary John Tsang Chun-wah will explain the incident to the Legislative Council.

A government spokesman said it has requested the Hong Kong Monetary Authority and the Securities and Futures Commission to seriously handle the complaints.

"We note that two SFC-licensed minibond distributors have agreed with the SFC to make a voluntary offer to purchase from their eligible clients all outstanding Lehman Brothers minibonds at a price equal to the principal amount invested.

So far, there are about 6,000 cases in which voluntary settlements have been reached or are soon to be reached with the banks concerned."

Where are the jobs?

The unemployment rate in USA is now at 8.5% and is expected to increase to 10%. The unemployment rate in many countries Europe has been over 10% for many years. 

The unemployment rate in Singapore may appear low by international standards, but it is seriously under-reported. Due to the lack of employment benefit, many people do not bother to report that they are looking for work.

Minister of Manpower Gan Kim Yong advised graduates to take any job, rather than sit at home. But, where are the jobs? There are insufficient jobs for the large number of people looking for work. Those with jobs work long hours, to justify their cost to the employer. This is the outcome of the free market system.

If we continue to believe in the free market and in globalisation, it will take a long time for a solution to be found. The free market system has finally broken down, and yet economists and  policymakers do not want to face the reality that it is a failed system.

We need a better system (other than the free market) to distribute the work among the people in the world in a fair manner. This will give a better quality of life to all people. 

Tan Kin Lian

Bonus cut on life insurance policies

Dear Mr. Tan,

I received a letter fror my insurance company that they are cutting my bonus. I know that the global economic situation is bad, but I feel that there is no need for a big cut. After all, the insurance company made big profit last year, and they did not increase their bonus rate by much. Is it fair?

REPLY

I agree with your views. There is lack of transparency in the manner in which the bonus has been cut. Some policies have a bigger cut in bonus compared to other policies. It seems that the old plans have bigger cut compared to the newer plans, as the insurance company hopes to sell their new plans. 

It is important that insurance companies should treat all policyholders fairly and that the bonus must be distributed fairly based on the actual experience of the insurance fund. It is not fair for an insurance company to withhold profits in good years and make a big cut in bad years.

If you wish to provide feedback on the bonus cut on your policy, you can give details here. It will be kept in confidence.

Survey: Getting our young into Politics

Mr. Lee Kuan Yew said that young people are not interested to go into politics. He quoted the example of his grandson, who is now on a scholarship.

I like to carry out this survey to get the views of a wider group of people. Please participate.

Here are the survey results.