Tan Kin Lian's Blog: Look at the Product Advice

Tuesday, October 14, 2008

Look at the Product Advice

Hi Mr Tan,
I am one of the investors in Minibond. I would like to share with the rest of the investors on what I have found out in the Product Advise Report.

In my Product Advice Report, under the section Recommendations and Acknowledgement, it was written that I want to invest in bonds (which was what I said to the Financial Planner) but the Financial Planner recommended minibond to me which invest in CDOs. As I bought 3 series of Minibond from 3 different financial planners, all told me that I was investing in bonds issued by the corporations listed in the brochures. I have since written my complaint to the distributor, FIDReC, one of the three well-respected individuals to oversee the relevant FIs’ complaints, my MP and HSBC Trustee.

Maybe, you can advise those investors who bought these structured products to take a look at the Product Advice Report and see whether there was any evidence of misrepresentation by the financial planners.

On a separate note, I noticed that the prospectus was only given to investors weeks (at least 3 weeks) after investors have bought the structured notes. Is this the correct and acceptable practice by MAS? Shouldn't the financial institutions give out the prospectus (like the case in IPOs although I know not many people read them) before investors invest in these structured products since MAS already approved their products and prospectus?

KK

REPLY
It is wrong for the financial institution to give the prospectus a few weeks after the product was sold. You can mention this point in the statutory declaration (affidavit).

5 comments:

Anonymous said...: Me too! I did mention to the RM I only want to invested in bonds. Even Unit trust bonds fund is not in my considering list. THe RM insist they are small scale bonds for individual investor. Now I realized it is not bond at all. THere are 100 to 150 companies in their CDO list and even including a reasurant business. It is cheating.
I am an engineer for automotive design, when some parts designed wrongly, we have to call back all cars nowonder how big the lost is.

When a finanaical product designed wrongly, should not they call back the wrong product?; October 14, 2008 8:21 AM
Anonymous said...: MAS is perpetrating product pushing by allowing product advise.
By opting for product advice implies that the consumers knew the product well enough to buy on a voluntarily basis. Product advice will absolve the RMs of the responsibility of recommendation. This is a trap and the RMs exploited the trap without letting the consumers know that they are bearing the risk. This is unethical of the RMs to shift the responsibility to the customers.
MAS must change this. The uncles and aunties don't know they have been misled; October 14, 2008 8:55 AM
Anonymous said...: Whether the prospectus is given before or after sales, it makes no difference. One can hardly understands what is written in the prospecuts. It is so technical. Even a PhD holder also have difficulties. I am a CHFC holder, yet I too find it so "chimp".

Basiclaly alot of things are protecting the interest of the bank, the RM, the issuer, etc.. etc.. BUT not the investors. There are disclaimers everywhere. To them as long as they have given you a copy, the rest is your problem. If you are in further doubt, you should consult your solicitor or professional adviser, that's what is normally written.

I just remembered a case about my friend. According to her, she went to the bank to enquire about her FD which is one month to maturity. The banker recommended she do a pre-termination and re-invest. The banker explained it pays a high coupon of 9% and capital protected, full-stop, no further mentioned. And when she was still thinking about the 9%, the banker took out form. Without wasting time, the banker tick and cross-out everything on her behalf (self-asked and self-answered without even gave her a chance to question them what it means). No fact find or risk profile done prior to recommendation. It is like sell to you first then tick your risk according to the product and the amount you intend to put in. Frankly, it is not easy for investor to ask the banker question because you really don't know what question to ask in the first place. I think this is the case with most people. So next time must bring a recorder to record your conversation with the banker or bring along professional help.; October 14, 2008 10:31 PM
Donaldson Tan said...: Capital protected doesn't mean you will back at least your capital when the investment scheme terminates or expires. It only means the funds arising from the investment scheme is actively managed.; October 18, 2008 3:33 AM
odakyu said...: Dear Mr Tan,

I've followed your website's procedure, also went thru interview by the FI. All I got is a reject letter. I bought Pinnacle notes series 10 from OCBC Securities.

My case is closed by them just 2 weeks ago. My ground is the consumers are misrepresented by the marketing materials that were used by the FIs. I'm contemplating to bring the case to FiDREC. Will we have a case? Is there any leaders co-coordinating Pinnacle Notes Series 10? I will be much willing to join you and strengthen our case and ground.; January 14, 2009 4:51 PM