Sunday, October 26, 2008

It will be handled 'fairly'

XI'AN (China) - SINGAPOREANS aggrieved by their investment in Lehman Minibonds and DBS High Notes 5 will have their complaints handled 'fairly and properly', Prime Minister Lee Hsien Loong assured on Sunday in his first remarks on the issue. He said it was understandable that some investors had reacted emotionally as they lost their money in a sudden and unexpected manner, while others felt that the risks had not been adequately explained to them.

But ultimately, the banks do realise that it is in their interest to resolve the matter quickly and not let it drag on, he told reporters in the western Chinese city of Xi'an where he wrapped up his five-day visit to China.

'The banks have what they call reputational risk,' said PM Lee. 'In other words, if you do the right thing, your customers will remember you for a long time.
'If you do the wrong thing, customers and potential customers will remember you for a long time. The banks and financial institutions know this and have every interest in sorting this out expeditiously and fairly.'

In Singapore, about 10,000 retail investors have invested over $500 million into structured products linked to now-bankrupt Lehman Brothers. DBS Bank, Hong Leong Finance and Maybank said last week that they would look into complaints and fast-track vulnerable cases, prompting some investors to worry that they would be left out.

The Prime Minister repeatedly stressed the notion of fairness during his lengthy remarks on the issue yesterday, and added that instances of mis-selling would be investigated.

Mis-selling, at its simplest, means giving the wrong advice to potential investors. Beyond that, it can also mean a failure to help clients diversify their assets, non-disclosure of risks or not completing a proper fact-find to ensure the product being sold suits the customer.

Said PM Lee: 'Where there has been mis-selling, it has to be put right.

'Where there has been less than professional behaviour by the relationship managers, or where things don't measure up to the standards that the Monetary Authority of Singapore (MAS) expects when you promote the financial products, then the banks have to do the right thing.'

The MAS said on Friday that it would look into complaints of mis-selling, and added that an imminent review of the structured products industry would address such issues as better descriptions and labelling of products, as well as more professionally trained relationship managers.

http://www.straitstimes.com/Breaking%2BNews/Singapore/Story/STIStory_295167.html

COMMENT
It is encouraging for the Prime Minister to emphasise on fairness. I hope that fairness has to be seen in the eyes of the aggrieved person. It will be difficult for the aggrieved person to feel that he (or she) has been fairly treated, unless the matter is settled through mutual agreement or by a fair, independent adjudication.

Some businesses hold the view that there are 4 million customers and if a few of them gets angry, there are other customers for them to tap. They also think that customers have short memories.

17 comments:

Anonymous said...

This IS the real good news.

This is also the only one i feel deem worthy of believing so far thus into this fiasco.

This is the REAL beginning of things to take place, because the RIGHT people will sit up.

Anonymous said...

If I am the senior management of the bank, I may think along these lines.

1. 10,000 is a small number compared to the hundreds of thousands of wealthy migrants coming in every day.

2. If possible, just ignore them and concentrate on the new customers.

Not only the banks can think like this, NTUC Income is also thinking like this.

Unknown said...

Hi 1041PM

I absolutely agree with you.

"Lets just move on". thats what everyone will say.

Raymond T said...

Actually, I think what PM said was more of "Caveat Emptor" for those buying financial products. Of course the banks also have to do what is right as well.

Anonymous said...

It is time MAS takes preventive measures like addressing the products , the way products are recommended and the culture of the FIs to prevent a repeat of the fiasco.
1.Products in future have to undergo stringent test and check and specify the markets that they are intended for.
2.consultants must have enough knowledge and skill before allowed to deal with a particular group of products.
3.Consultants must stop product pushing or selling or risk being charged for mis-selling and misrepresentation.
4.Product selling or product advise should be banned and make need based selling compulsory
5. FIs must be sincere about giving fair dealing to consumers and not bullshitting as it has been in the past. It must have culture of consumer interest pervading all the way from the CEO to the frontline salespeople.CEO must be the first to be hauled up if there is any misconduct by the salespeople.
6.FIs should not have sham MISSION AND VISION STATEMENT hung on the wall and at customer service area for show to misrepresent their real motives . They should be hung in their pantry room and toilets to warn the staff of their committment to the statements when they are busy drinking coffee or tea or doing their business
7. Roadshows should be banned like in US, UK, and Australia. Hawking in the street and MRT sites or shopping mall should be considered an arrestable offence similar to illegal prostitution or solicitation
8..MAS should police and audit on these salespeople for mis-selling and misrepresentation individually and frequently.(currently if MAS were to audit the insurance agents or RMs NONE can escape for mis-selling and misrepresentation.It is so blatantly committed and it is so rampant)
9.MAS must enforce the laws and be seen to enforce and not pretend not to see.

law abiding consumer

Anonymous said...

Taken from ST Forum:

ABN Amro helping clients on Minibonds

I REFER to Mr Lawrence Loh's letter, 'Questions unanswered' (Oct 14).
As Mr Loh did not contact the bank to discuss his concerns regarding his Lehman Brothers Minibond series investment, we were made aware of his issues only through his letter published in The Straits Times Forum.

Unfortunately, we are unable to reply to his letter publicly as the bank has an obligation to observe strict client confidentiality. However, we are happy to address his concerns directly with him. Since the publication of the letter, a meeting has been set up with him to follow up with him on his investments and concerns.

We have taken proactive measures to help our clients deal with the situation. At this point, all our clients have been contacted and we will continue to advise them as the situation becomes clearer. We will continue to work with the Monetary Authority of Singapore and all parties concerned on behalf of and in the best interest of our customers.

Ajay Mathur
Head of Retail Banking
ABN Amro Bank N.V.

Anonymous said...

This is indeed with encouraging but lets hope that it will be translated into action by MAS and the FI and not NATO only.

Unknown said...

Hi 11.23

besides hoping, sad to say, i feel that's all we can do.

also, the MAS report in ST paper today (sunday), about the review of the upcoming structured products, just points to how inefficient, or poor execution of MAS's duties & responsibilities, this far.

All that "actions" that it mentions should have long been done, not ONLY now! Sigh. So disappointed, before all this, I actually thought very highly of MAS,but now....

Anonymous said...

Hi mr. Tan ,

It is encouraging but we can only hope for the best.

The driving force is still our 'gathering' at Speaker corner. We must make use of this platform to make more Singaporean aware of this 'event'.
Also hoping that more victims (of toxic structured products) will attend the comng Saturday-evening activity at Speaker corner.

Anonymous said...

don't understand what they mean by professionally trained RMs. But what i do know for RMs to be professional is first to comply with section 27 of the FAA and use the need approach to help the customers. RMs must have this attitude of helping the consumers to meet their financial future and not thinking of how to sell them a product to make a commission.
Second, to upgrade themselves in financial planning and investment in order that they can help.If they do not have the knowledge how can they help the consumers.
Hope they don't behave like insurance agents who like to claim they are sincere and caring when they know nothing about insurance let alone investment.
To be professional means you are honest and competent and will use the most appropriate means to help consumers meeting their needs.
To paraphrase the HKMA CEO reminder to FIs and the consultants that the market exists not to serve the interest of the the consultants or FIs but the consumers' interest.
Hope financial consultants will live to their name and title to consult with their cleints and not to dump useless and toxic products on them.

Anonymous said...

I hope the banks involved do get the hints from PM's comments. While the total number of customers affected may not be large but to large retail banks like DBS, Maybank, HLF, SCB, the affected customers and their families and friends will spread the bad feelings towards these banks if they are not given a fair treatment. In my view, this is what PM's message is all about - Reputational Risk!!

Anonymous said...

The money invested in Minibond is actually my children's savings. I brought them to bank to put their savings into FD and was convinced to take up minibond instead. Now I tell my 3 children their 28 years (total) savings could be all gone. They were very sad and cannot understand why. But certainly they now feel bank is a dangerous place and I have no wish to have them growing up distrusting banks. Hopefully I will be able to tell them the bank is paying them back the money and bring some smile back to faces. Sometimes I really blame myself for bringing them to bank that fateful day.

Anonymous said...

Anonymous said...

don't understand what they mean by professionally trained RMs. But what i do know for RMs to be professional is first to comply with section 27 of the FAA and use the need approach to help the customers. RMs must have this attitude of helping the consumers to meet their financial future and not thinking of how to sell them a product to make a commission.
Second, to upgrade themselves in financial planning and investment in order that they can help.If they do not have the knowledge how can they help the consumers.
Hope they don't behave like insurance agents who like to claim they are sincere and caring when they know nothing about insurance let alone investment.
To be professional means you are honest and competent and will use the most appropriate means to help consumers meeting their needs.
To paraphrase the HKMA CEO reminder to FIs and the consultants that the market exists not to serve the interest of the the consultants or FIs but the consumers' interest.
Hope financial consultants will live to their name and title to consult with their cleints and not to dump useless and toxic products on them.

1:36 AM


to be very honestly, to be Professional is NOT to do any of the above

to be Professional is to follow boss order closely, meet his target he set for you every month by every means necessary WITHOUT implicating your boss, and keep your mouth shut and smile pretty

pls open your eyes to the Real World

Unknown said...

Finally PM has touched on this recent outcry of investors who have lost savings via the structured products sold by FIs. His positive comments will help the FIs to act and hopefully, fast and not dragging their feet. Ultimately, investors have to be accountable to themselves only and not assuming to rely on the government. Having said, everyone wants to achieve higher returns for investments, it is plausible that greed for more is the motivation for investing into such credit-link products. Remember reading an article on MyPaper that there are discrepancies between what MAS has laid out in the regulatory framework and actual transactions taken place in the FIs.
Wonder if those who sell financial and investment-linked products in FIs are trained and sanctioned by MAS?
Looks like more stricter rules have to be put in place.

Anonymous said...

The RMs , the FAs, the insurance agents are govened by the same law, the FAA and they take the same stupid licensing exams which equip them nothing but to tell lies , to mis=sell and to misrepresent.
There are exsiting laws but they are meant for history and not to be enforced or to regulate the RMs , the insurance agents and the FAs.The section 27 of the FAA specifies how all these people should conduct themselves with consumers but these people take short cut and push products that results in mis-selling .These people are not qualified but only qualified to spew rubbish

Anonymous said...

This India FT Ajay asks victims to approach his bank ABN directly (instead of exposing to media). But feedback from others in this Blog says his ABN bank completely ignore and abuse and refuse to consider refunding victims of his structured products. He will feel more pressure when his misdeeds are exposed to the public, esp in Europe.

CC said...

Our PM has shown he has what it takes to be a wise leader.
I hope the FIs will act fairly to resolve this and restore the trust that the customers have placed with them.
Of course, they have their shareholders to answer to. But their superb tai chi moves displayed so far has only angered and alienated customers even more. Our patience is running out.

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