Saturday, December 20, 2008


Please take part in these surveys:

1. FISCA - Funancial Services Consumer Assocation
2. Compensation for Credit Linked Notes
3. Regular visitors to Tan Kin Lian's Blog
4. Collect 100,000 signatures

Mis-selling of ILPs in the UK

From TKL: I have not been able to accuracy of this information yet.

Dear Mr. Tan

According to one writer, these type of products (ILPs) were designed and sold in the UK in the 1980's & 1990's. A super regulator was brought in called the FSA to clean up an industry that to date has paid compensation to investors in the UK who have lost money in the region of GBP 15,000,000,000 (billion) using these exact same products. That is why they are now 'offshore' so insurance companies can continue to sell these very profitable products in poorly regulated markets in Asia.

Now that they cannot sell in UK or US, they come to Asia and other developing markets like UAE to sell. A foreign insurer sells this plan in Singapore as an offshore product, and MAS is clearing not supervising these offshore insurers. They will bring great harm to our people.

Thanks for your help.


Letter of confidentiality

Dear Mr. Tan,

The bank wishes to meet me on my complaint and asked me to sign the following letter of confidentiality. What is your view?


We refer to the meeting scheduled to take place today (“the Meeting”).
We agree that the Meeting will be held on a Without Prejudice basis.
By our signature of a copy of this letter we agree as follows:

1. We undertake:
a. not to record the proceedings or discussions during the Meeting (however we may take our own written notes during the meeting);
b. except as otherwise required by law, to keep the Confidential Information confidential and not to disclose it to anyone or use it for any purpose without our express written consent;
c. to ensure that the Confidential Information is protected from unauthorised disclosure or use.

2. We agree to inform you (to the extent permitted by law) of the full circumstances of any disclosure or upon becoming aware that Confidential Information has been disclosed.

3. The obligations in this letter shall survive the termination of any discussions or negotiations between the Bank and us.

4. We acknowledge and agree that each of the Bank and/or Related Person (defined to mean Bank’s officers, directors, employees, professional advisers or any of the Bank’s affiliates) may be granted an injunction or specific performance for any threatened or actual breach of the provisions of this letter by you.

5. No failure or delay in exercising any right, power or privilege under this letter will operate as a waiver.

6. The undertakings given by us under this letter are given to the Bank and also for the benefit of each Related Person. We shall keep the Bank and each Related Person fully and effectively indemnified on demand against each and every claim, loss, liability and cost which the Bank and/or a Related Person may suffer or incur as a result of any breach of the provisions of this Letter.

7. If the Account is held in the name of more than one person, our obligations under this letter are joint and several.

8. In this letter "Confidential Information" means without limitation, all discussions, statements, materials, information, document and records in whatever form and any material derived or copied therefrom concerning the Customer, Account, services by the Bank, transactions with the Bank, and any other matters in relation thereto disclosed or furnished to us before, during or after the Meeting, as well as the fact discussions are taking place, that the Meeting is held, that further discussions may be contemplated, and that this confidentiality letter has been entered into.

I suggest that you ask the bank to agree that the same conditions stated in the letter of confidentiality should apply to their side as well. It reflects fairness and natural justice. If not, you should not sign this undertaking.

California Governor order 2 day Unpaid Leave

By Michael B. Marois
Dec. 19 (Bloomberg) -- California Governor Arnold Schwarzenegger may force all state workers to take two days of unpaid leave each month to conserve money amid a record budget deficit and a legislative impasse over how to fix it.

The furloughs would begin in February and would last through June 1010, according to labor union officials who said they were briefed by the administration earlier today.

This is an excellent way to deal with a downturn. Take unpaid leave, which applies to all employees!

Cost of banks

One year ago, Royal Bank of Scotland paid US$100 billion for ABN Amro.

Today, this sum could buy:
Citibank $22.5 billion (74% down)
Morgan Stanley $10.5 billion (-72%)
Goldman Sachs $21 billion (-67%)
Merril Lynch $12.3 billion (-77%)
Deutsche Bank $13 billion (-71%)
Barclays $12.7 billion (-71%)
... and leave a balance of $8 billion:

Survey by FISCA - Financial Services Consumer Association

A pro-tem committee has been formed to plan the launch of FISCA (Financial Services Consumer Association).

The aims of FISCA are to eduate consumers on financial matters, help them to find the suitable financial products and to assist them on seeking redress on mis-selling and other complaints.

Are you interested to join FISCA? What are the services that you like to use? How much are you willing to pay towards the cost of running FISCA? Should FISCA be independent of funding by the business and Government?

Give your views in this survey:

No claim discount on motor insurance

Dear Mr. Tan,
Can you please advise me under what conditions can I request my motor insurance company to review their decision on my NCD. My NCD after one accident has been reduced to 20%


You can ask the General Insurance Association of Singapore or your own insurance company.

If you are not happy with the decision taken by your insurance company, you should find another insurance company.

Here are some telephone numbers you can call.

Friday, December 19, 2008

Financial product has high penalty


I am a financial adviser represenative. Being in the industry, I do not need to look too far for malpractice, misselling, misrepresentation. There are many greedy so-called advisors. They are not interested to recommend Enhanced Incomeshield or Myshield to you because the commissions are really pathetic. It's sad to see that this industry has degenerated to the current state.

It's really sickening to see some cheaters who just sell this V plan and earn $1m a year. The V plan is basically a regular premium investment-linked policy. It's an insurance contract. Everything is contractual - you need to follow the insurer's rules and terms. If you violate them, you will be penalised heavily. For instance, if you stop paying premium in the first 18 months, you will lose all your premiums paid.

The advisers tell you that you can exercise premium holiday after 18 months, bonus allocation. If you alter the terms & conditions of the insurance contract, there's a hefty penalty for you.

Do you know how much you pay for this product? For a premium of $3,200/month for 25-year term, the FA firms or banks will straight away receive about $40,000 in commission, then the adviser would get 60 - 80% of the amount. For 10-year term, the comm is about $16,000. the longer the term, the higher the commission. you see, money comes from somewhere. If the commission to the advisor is so good, no prize for guessing who pays for it. it's YOU my friend.

At $3,200/month, the total premium for 25 years is $960,000 my friend! How many people in singapore can afford this kind of premium, and can comfortably say that they are able to 'finish' it.

I had heard of people being sold $20,000 a month. those so-called advisers are beyond help. Eventually they will pay for their evil deed. they must be jailed for their sins.

You may ask why the they could sell so high a premium to their clients? The clients are equally greedy, about the 'bonus' allocation and the 'high' returns. The 'bonus' is something that you can see but cannot touch. Many people thought that they can cash out the gains after 18 months, but they will lose everything if you surrender in the first year.

This plan has been in the market for 2 years. We shall hear more news of people surrendering, especially in the current economic condition. i predict that this V plan and other similar plan from some offshore insurers will be the CDOs for the FA industry. I am eagerly awaiting more complaints or newspaper reports about this con job.

For those who surrendered and suffered big losses, please share your story, expose those who conned you and your hard-earned money. If you continue to remain silence, the misselling will become more rampant. More unsuspected people like the elderly will be sucked into.

Please help educate people by sharing your stories. or you may write to mr tan kin lian at, or visit his blog, or write to reporters like Lorna Tan of the Straits Times or Genevieve Cua of the Business Times, or Mr. Shane Tregillis of MAS' market conduct deputy MD.

I thank you for your contribution in building a better society.

High charges in this investment-linked plan


I have just given up on my V investment plan which lasted for 2 years. The investment return is poor (i.e. I lost over 30% of capital and the EURO adventurous fund performed very poorly) and the surrender penalty is very heavy.

What I really dislike about this plan is the lack of transparency and inflexibility, and particularly the lack of control of your funds. There are these expensive management fees and numerous charges. It is an expensive plan (i.e. at least $1,200 per month on a premium of $2,500 per month).

It would be better if you invest in an exchanged traded or index funds for long term investment. ETFs work like a stock and can be traded with minimal management fees unlike unit trusts or managed funds. You can dollar average your payment (when the stock price is low). The advantage is that you can buy and sell the fund (depending on the market) as YOU ARE in control. Right now equities are very low particularly for some blue chips shares. Do some research, be your own fund manager.

Just cut your losses and get rid of the plan. Remember you have to pay 10 years of this plan (otherwise you may incur penalty etc)! Your returns may be very unpredictable. 10 years of bondage to a fund which may not.


ProTrader - learn trading in a simulated environment

Read about this simulated game here:

You can play the game here:

1. create an account will your user name and password
2. login
3. click on play
4. select the game
5. enjoy (the game comprise of 10 virtual days .. wait until end of the game)

This game teaches you the skill on day trading, based on the economic news. You can practice many times to get a feel of how the news impact on the price movements of various financial products.

This is for FUN. It is not suitable for long term investors.

Survey - visitors to my blog

72 people replied to the survey.

Professional, manager 39%
Sales, support, admin 34%
Retired 18%
Homemaker, student 9%

Age group
Up to 30: 25%
31 to 50: 39%
Above 50: 36%

How frequently do you visit:
Daily: 56%
Several times a week: 34%
Several times a month: 5%
Occasionally 4%

Survey - Compensation on CLN

148 investors participated in the survey.

What is the minimum percentage of compensation that you will accept"

30% 7.6%
50% 47.2%
70% 45.1%

Are you prepared to take part in a class action and spend up to $5,000
Yes 59.3%
No 40.7%

Volunteers to help get 100,000 signatures

A group of volunteers have set up this blog to help collect 100,000 signatures for me.

Hi everyone!

We have set up a blog to generate interest in getting the 100k signatures for Mr Tan Kin Lian. We would like to invite everyone to come visit our blog here:

Please feel free to drop your comments on the articles posted at our blog. We welcome all contributions.
Also, if you would like to signup as one of our volunteers , please do drop us an email at
Do tell all your friends about it too! Thanks!


Thursday, December 18, 2008

Regular visitors to Tan Kin Lian's Blog

I wish to collect particulars of regular visitors to my blog. Please provide the information requested here (all fields are optional). You can also tell me what you like best and what new information you like to see.

US Lawyers Visiting Hong Kong

Patrick Daniels, the leading counsel of the proposed class action towards HSBC, has come to HK in the last two days. He explained several important points for the case:

1) HSBC is not considered to be the defendant simply because it is the trustee. Actually, according to the minibond programme prospectus, it's shown that issuer of the minibonds (i.e. Pacific International Finance Limited), is WHOLLY owned by HSBC Cayman, and its directors are also supplied by HSBC.

2) Mr. Daniels is therefore looking into the role and responsibility of HSBC in designing, creating and operating the product, which should not be called as "bonds" as they are highly complicated deriviatives and not suitable for retail investors.

3) Class action can be commenced whenever potential clients agree on it. HK investors are still meeting and discussing whether to launch it or not, and seeking for leading plaintiffs at the same time.

HK Banks set up legal fund

Dec 18, 2008

HONG KONG - HONG KONG banks that sold financial products backed by collapsed firm Lehman Brothers will provide HK$100 million (S$18.6 million) for a potential US legal battle on behalf of investors.

The 18 banks will put up the cash to challenge claims by Lehman's US lawyers that any proceeds from a proposed buy-back scheme would have to be first turned over to liquidators and not investors, the Hong Kong Association of Banks said.

'The distributors (banks) are prepared to provide finance to the trustee of up to US$100 million to assist it in the performance of its duty to protect the interests of investors,' the association said in a statement released late on Wednesday.

The move is the latest twist in the saga over compensation for thousands of Hong Kong investors who bought the so-called minibonds on the understanding their money was safe.

The collapse of Lehman Brothers in September meant the value of their investments dropped dramatically, which sparked protests across the city from investors who say they were missold the products.

The financial hub's government and the banks who sold the products then proposed for the banks to buy back the minibonds at market value, a process that was meant to begin this month.

But a unit of HSBC in the United States, which is acting as the trustee for the Hong Kong banks in the liquidation, has been told the move to compensate the investors here could be illegal under US law, the statement said.

The local banks have therefore 'decided to continue the buyback only after these legal issues have been clarified and addressed and the market value can be determined unless, in the meantime, the minibonds are redeemed early as a result of action taken by the trustee,' the statement said.

More than 40,000 Hong Kong investors - including many retirees - had put a total of HK$15.7 billion of their savings into minibonds and other complex products backed by Lehman Brothers. 

Buying a property - get a property report

I went to StreetSine ( to search for a new property in the city area (district 1, 2, and 3) for a friend. I found a few suitable condominiums with reasonable prices. I was able to see the price trend and identify a few properties listed for sale. I transferred the details into MyOrganiser (provided by StreetSine).

I send messages to the agent handling these properties. Two agents called me. They were only interested to ask for my offer price. They were not able to provide details about the properties.

StreetSine told me that they will be providing a comprehensive report about a specific property for a modest fee (maybe $35). It contains a lot of detailed information about recent transactions, price trends, nearby comparable properties, amenities, etc. This is worth investing, so that I can make the right decision.

I wish to encourage property agents to make use of this comprehensive property report. When you respond to a potential buyer, ask for the e-mail address and mail the report to the buyer. This will put you ahead of all the other property agents and show that you are able to handle the potential buyer in a professional manner. You will get more business by acting in the right professional way.

Investors of failed structured products to know outcome of complaints by mid—Jan

Channel NewsAsia - Thursday, December 18

SINGAPORE : The Monetary Authority of Singapore (MAS) on Wednesday said investors who have bought failed structured products will know the outcome of their complaints by the middle of January.
Investors had alleged that distributors had mis—sold the products and misrepresented the risks.

Minibond investor Ismail Deen was told last week that his complaint is still being looked into. He is one of nearly 5,000 investors who have complained to 10 financial institutions (FIs).

Like Mr Ismail, most investors of DBS High Notes 5, Lehman Minibonds and the Jubilee Series notes will get some answers by mid—January. Final checks are being done on some complaints.

Shane Tregillis, deputy managing director, Market Conduct Group, MAS, said: "That is to take into account the recommendations of the independent persons and to make sure they have taken into account any investigation findings, and also to check for consistency."

MAS said 9—in—10 complainants have been interviewed.

FIs have also decided on 80 per cent of the cases, but have yet to inform investors. For clear—cut cases though, investors have already been told of the outcome.
The central bank has been working with financial institutions in the past 10 weeks.
Mr Tregillis said: "We have been visiting, checking ourselves just to ensure the process, looking at the teams... the FIs have put in place in recent weeks, some of them are up to 100 people."

MAS said the FIs will review the complaints in a non—legalistic manner and it will be based on principles of fairness. However, they are expected to take legal defence if the investors decide to take them to court.

The central bank also said investors should be prepared to bear responsibility for their investment decisions. — CNA/ms

Encourage bank relationship managers to do the right thing by confessing to mis-selling

Written by Ng E-Jay (sent by e-mail to Tan Kin Lian)
18 Dec 2008

Mr Tan Kin Lian has revealed on his blog that he was approached by a bank relationship manager who wishes to confess to giving wrong information to investors of failed credit linked notes due to his ignorance about the risks of the product.

According to Mr Tan, this relationship manager has agreed to sign a statement, and will be approaching other relationship managers who are in a similar position to do likewise.

This relationship manager should be applauded for doing the right thing.

However, Mr Tan Kin Lian also revealed that the bank had, in Mr Tan’s words, “put pressure on him (the RM) by stating that he would be held personally responsible to compensate the customers, if he admitted to giving the wrong information.”
Such a threat by the bank is in clear contravention of the Financial Adviser’s Act (Chapter 110).

Under the Financial Adviser’s Act, the Financial Adviser (in this case, the bank) is responsible for the conduct of the Representative (the relationship manager) in respect of providing financial advisory services. If the Representative has mis-sold a product, whether out of ignorance or willfully, the Financial Adviser must take responsibility for it, and also decide whether or not to take action against the Representative. In the case of criminal activity, the Financial Adviser is obliged to lodge a police report, or give an explanation to MAS why a police report is not lodged. These rules are found in the Financial Adviser’s Regulations, which is subsidiary legislation enacted by MAS in support of the Financial Adviser’s Act.
A wrongful act cannot be covered up by telling the Representative to keep quiet about it. That would be outright fraud, the most serious offence under the Financial Adviser’s Act.

Furthermore, Section 68(1) of the Financial Adviser’s Act states that “A person is not excused from disclosing information to the (Monetary Authority of Singapore), pursuant to a requirement made of him under this Part, on the ground that the disclosure of the information might tend to incriminate him.”
Hence, it is not only morally right for the relationship manager to disclose that he has mis-sold a product, he is in fact required to do so under the Act.
We should encourage all Represenatives in similar situations to do the right thing by confessing to mis-selling the structured products and credit linked notes.
In my opinion, MAS should issue a blanket amnesty for all Representatives who mis-sold the credit linked notes due to ignorance. This would encourage more of them to come forward.

It is also very clear to anyone who is an industry practitioner that banks have high sales quotas for their relationship managers and exert tremendous pressure on them to meet those sales quotas.

Furthermore, the Financial Adviser’s Regulations make it clear that Representatives should only sell products in which they have competence. Since the Lehman-linked structured products deal heavily in arcane instruments like Credit Default Swaps (CDS) and Collaterialized Debt Obligations (CDO), it is not likely that the majority of Representatives would have the competence of explaining these underlying instruments to clients and appropriately advising them on the risks involved.
It is the banks and other financial institutions which should take full responsibility for the structured products fiasco.

MAS Ensures Progress in Complaints Resolution

Singapore, 17 December 2008...

MAS today provided an update on steps taken to ensure that the 10 financial institutions (FIs) that sold DBS High Notes 5, Lehman Minibond programme notes and Merrill Lynch Jubilee Series 3 LinkEarner notes deal with investors’ complaints in a rigorous and fair manner.

2 Over the last 10 weeks, MAS has been working closely with the independent persons (IPs) who were appointed to oversee the complaints handling and resolution process to ensure that the FIs make good progress in handling and resolving their customers’ complaints. MAS’ investigations are also progressing.

MAS review of process and assessment framework
3 In consultation with the IPs, MAS conducted on-site visits to assess the handling and review of complaints, including observing the internal review panels in action. Following these visits, a few FIs were asked to increase their resources, including engaging external firms to supplement internal staff where necessary.

4 We are working with the IPs to ensure that each FI has a robust assessment framework to identify indicators of potential mis-selling and offer fair financial settlement where appropriate. The IPs have provided feedback to MAS on how the FIs have applied the framework across a sample of actual cases. We are also ensuring that the assessment framework is consistent across FIs.

MAS’ investigations and regulatory actions
5 MAS is also looking at FI-wide issues, such as the selling practices and policies within each FI, as part of its formal investigations. The investigations cover, among other matters, the FI’s due diligence into the structured notes, the procedures used at the point of sale, including how the FI ensured that the notes were sold to clients whose investment objectives and risk tolerance matched the risk profile of the notes, and the training and supervision of relationship managers. As part of these investigations, MAS is requiring each FI to produce documents relevant to these matters and is interviewing senior management.

6 MAS has worked with the IPs to ensure that any potential FI-wide issues identified in the course of investigations have been incorporated into the assessment of individual complaints. Where issues have been identified, we will take into account the extent to which the FI accepts responsibility and deals with complaints rigorously and fairly before deciding on the appropriate regulatory measures or sanctions to be taken.

Progress of complaints’ handling and compensation
7 As of 14 December 2008, the 10 FIs have received 4,978 formal complaints: 815 for the DBS High Notes 5, 4001 for the Lehman Brothers Minibond programme notes, and 162 for the Merrill Lynch Jubilee Series 3 LinkEarner notes. All the FIs now have teams working long hours to meet the MAS’ review targets. In some cases, these teams comprise 100 to 120 case officers. Consistent with MAS’ expressed views, the FIs have agreed to review complaints based on principles of fairness rather than taking the strict legal position that they would if the matter went to court.

8 Over 90% of the complainants have been interviewed and FIs’ internal review panels have come to provisional decisions on approximately 80% of these cases. Most FIs are resolving complaints according to MAS’ timeline. Others need to put in more effort to catch up. MAS and the relevant IPs are monitoring their progress closely.

9 Based on the current case load, the FIs have informed MAS that they aim to complete the reviews for all except the more complex cases by no later than end January 2009. Some clear-cut decisions have already been communicated to investors.

10 Shane Tregillis, Deputy Managing Director, Market Conduct Group, MAS, said, “We have asked the FIs to conduct some final due diligence on the remaining complaints to ensure that they have taken into account the IPs’ recommendations, likely issues arising from any MAS’ investigation findings and to check for general consistency in the application of the complaints resolution framework. This is expected to take a few more weeks. Although these steps will extend the current timetable for communication to investors by a few weeks, we believe that the final outcome will better serve investors’ interests. Accordingly, most investors can expect to hear from their FI on the outcome of the review of their complaint starting mid January 2009.”

11 However, from a review of a sample of cases, it seems clear that some complainants should be prepared to take responsibility for their investment decisions. MAS will provide a further update on the complaints resolution process at the end of January. Mr Tregillis added, ”We are working closely with the independent parties to ensure that all of them meet our requirements in reviewing and resolving complaints. MAS will continue to oversee the process to ensure all customers’ complaints are resolved rigorously and fairly.”

Wednesday, December 17, 2008

Bank RM has courage and integrity


A RM of a bank called me. He is willing to come forward to sign a statement that he has been giving the wrong information about the credit-linked notes to the bank customers, due to his ignorance. He will be contacting other RMs to come forward and make a similar statement.

He told me that his bank had put pressure on him by stating that he would be held personally responsible to compensate the customers, if he admitted to giving the wrong information. He said that, when he sold the notes to the customers, he was not aware about the actual risks of the notes, due to the complexity of the structure and the poor training given to the RMs.

I told this RM that the bank does not have the right to hold him financially responsible for the honest mistake, especially as most of the other RMs were also poorly trained about these notes. It would be wrong for the bank to expect the RMs to tell a lie now to cover up for the mistakes.

I will arrange for these RMs to get legal advice and to make a statutory declaration about the actual statements and assurances that they gave to the customers about the notes.

I wish to call other RMs to step foward and be ready to make this statement. Please act honestly and with courage, and do what is right and fair. If you are willing to make this statement, send an e-mail to I will get a large group of RMs to make this statement, so that you will not be standing alone.

Offer of compensation

Some investors are getting offers from the distributor (financial institution) to compensate at 30% of the invested sum. They are given a deadline to accept the offer. If they do not accept, the offer expires and they get a rejection letter from the distributor.

They ask my views on whether to accept this offer. It is difficult for me to give this advice. My view is that a fair offer is 50% of the amount of loss (i.e. difference between the invested sum and the current market value).

Some investors feel that 50% is inadequate and wish to fight for a higher compensation. Other investors feel that they should accept the offer of 30%, as this is the best under the circumstances.

What is your view? Please reply to this survey:

SCMP:Lehman claims' bill HK$257m

17 Dec 2008
Joyce Man Joyce Man and Paggie Leung

Seventeen banks have so far paid a total of HK$257 million to settle 616 claims brought by Hong Kong investors in financial derivatives which lost much or all of their value when US investment bank Lehman Brothers collapsed three months ago.

The figures were disclosed yesterday by the Hong Kong Monetary Authority, which said banks were in the process of settling a further 1,000 claims involving investments of HK$429 million.

The authority did not disclose the amounts involved in individual settlements.

Last week, Democratic Party lawmaker Albert Ho Chun-yan said banks had paid HK$ 30 million in compensation to about 60 investors in financial products issued or guaranteed by Lehman Brothers.

The police commercial crimes bureau has received more than 5,000 complaints from investors.

The bureau had taken statements from 2,566 of the 5,184 complainants, the Democratic Party said after party lawmaker Kam Nai-wai met the head of the bureau, Chief Superintendent Chan Yiu-kwok, yesterday.

The bureau was seeking legal advice on whether any crimes may have been committed, Mr Kam said.

He expressed dissatisfaction with the speed with which the bureau was handling the cases, and claimed many of them had obvious evidence of criminality.

Some 43,700 Hongkongers invested HK$15.7 billion in derivatives linked to Lehman Brothers, which sought bankruptcy protection amid the global credit meltdown. Most bought minibonds – high-risk, credit-linked products which derived part of their value from the performance of complex underlying assets.

Many of those who bought minibonds claim bank staff mis-sold them as low-risk investments in wellknown companies.

The Monetary Authority has received nearly 20,000 complaints about Lehman Brothers-related products. It has referred more than 200 to the Securities and Futures Commission for investigation of possible misconduct by banks. It is still investigating another 3,700-plus complaints and is seeking more information about a further 11,072.

Financial advice

Dear Mr. Tan

Please see newspaper Today B1: MAS clearly said, if a broker recommended aproduct to an investor and convinced the investor to buy the product, then the IFA or broker is not longer acting merely as an introducer or executor but is providing financial advice. In this instance, the relevant provisions of the Financial Advisors Act would apply.


Means testing for subsidised wards

If you have wish to be treated in a subsidised ward and you have an income that exceeds the means testing level, you will receive a lower level of subsidy. The difference is 15% of the bill.

More details are found here in this article:

Statement from Ministry of Health website:

Tuesday, December 16, 2008

Downgrade to Medishield

I wish to downgrade from a private Shield to Medishield. I have a lot of trouble with this request.

My enquiry to the insurance company was not properly answered. I was given a form to cancel my private Shield, but there was no mention about the downgrade to Medishield. I have to ask again for them to answer this question.

I search the CPF website. They said that the member can downgrade from a private Shield to Medishield at any time, but did not indicate how this can be done. I have to write to them for instructions - as I am not able to find the instructions in the website.

I prefer to be self-insured and pay out-of-pocket for my hospital charges. However, if the medical charges are very expensive, I can opt to be treated in a subsidised ward.

Fair charges on life insurance policy

If a policyholder save $500 a month for 20 years and earn 5% per annum, the gross gain for the period will be $76,000. However, the total deduction to cover the various charges is likely to take away about 45% of this gain. This will leave a net gain of about $41,000 only. This reduces the yield to 2.8%. The reduction in yield is 2.2% (which is rather high).

A fair deduction should be about 25% of the gross gain. This will give a better return to the policyholder, about 4.1%. The reduction in yield is 0.9% (which is quite fair). This reduction is to cover the cost of life insurance, expenses and profit margin.

During the time that I headed a life insurance company, I was able to give a better return to the policyholder by keeping the expenses low and giving a larger share of the profit to the policyholders. They were able to get a better return. The reduction of yield for an endowment policy is about 1%.

Here is a rule of thumb, if you are buying a life insurance policy:

> look at the assumed yield
> look at the net yield, after deducing the charges
> calculate the reduction in yield
> if the reduction is 1% for an endowment policy or 1.5% for a whole life policy, the yield is fair.
> if the reduction in yield exceed these benchmarks, the charges are probably too high.

You can ask the insurance agents to point out these figures that should be shown in the benefit illustration for the policy.

Fair compensation from insurance companies

Dear Kin Lian,

Here are two articles from Bloomberg News. They illustrated the tactic employed by insurers in U.S, as taught by Mckinsey.

One paragraph said: "State Farm changed its approach to settling claims after
McKinsey & Co., a New York-based consulting firm, told the insurer it could increase profits by paying out less in auto accident claims and home disasters, according to evidence presented in civil court cases."

Another paragraph said: " When a policyholder files a claim, first make a low offer,
McKinsey advised Allstate. If a client accepts the low amount, Allstate should treat the person with good hands, McKinsey said. If the customer protests or hires a lawyer, Allstate should fight back."

I hope local insurers won't adopt the same approach for more profit. Please take good care of yourself.


I will explore giving the proposed Financial Services Consumer Association (FISCA) a role to help members get fair compensation for their insurance claims. This will make it more valuable for members to join FISCA. This service will be available for existing members only, in respect of a claim that arises after they have joined FISCA.

Search for a private property

I started to search for a private property, as the property prices must have corrected. I went to StreetSine and found it to be very useful. Here is the link:

I looked for new condominium projects in districts 1, 2 and 3 and saved them in MyOrganiser. I looked at each project, to see the price trends and the properties available for sale. Several of the projects have shown a 20% reduction in price in recent months. The price may fall another 10% to 20% more, but it is time to understand the market.

There is a useful SQI index which gives points for the amenities in the nearby areas. Most importantly, I could see the map and the distance to the MRT station.

I was able to view "List Nearby Properties" to see the properties that are available for sale. I was able to send a SMS to the advertiser, which is usually a property agent. This is a convenient way to search for a property.

Offer of voluntary assistance

Mr. Paul Smith wishes to offer voluntary assistance to anyone who needs help in the following areas:

> writing complaints to banks
> writing complaints to FIDREC
> give moral support
> attend interview with bank or FIDREC

If you need his help, you can e-mail him at

Mr. Smith's wife invested in a credit linked note. She had a difficult time to making the complaint to the bank. Mr. Smith helped her during the process. He finds that the bank did not treat the customer fairly. He now wishes to offer his voluntary assistance to other customers who faced similar difficulty.

Mr. Smith is willing to help the investor in the interview with the bank or FIDREC, but he needs the investor to sign a mandate for him to attend the interview.

Monday, December 15, 2008

Distributor can recover the compensation from the issurer of the credit linked notes

Some investors asked me if they can expect the distributor to compensate for 50% of the loss, when they only earn 3% to 5% as commission to distribute the product. Perhaps 30% is adequate.

I suggest that the distributor should compensate 50% and get the subrogation rights to recover their loss from the issuer of the credit notes. Apart from Lehman Brothers, the other issurers are still in business and are able to compensate the distributors. The distributors can also seek to recover their loss from the receiver of Lehman Brothers.

By acting in this manner, the distributors will be able to win back the trust of their customers, and also reduce their actual loss.

AsiaOne: Slip sliding into depression


..'With the economic downturn, it's important to help people keep things in perspective and not catastrophise,' he said.

That is what Ms Tan (not her real name), a communications executive, 50, has been doing.

She lost $50,000 in investments in DBS High Notes 5.
She said she kept the news from her husband for fear of starting a fight and lost a lot of sleep wondering how she would pay for her younger child's university education.

Ms Tan said she felt worse when she realised that she might either have to borrow money or delay retirement to make up for the loss.

Being in control of the family finances made it easier for her to keep her worries to herself although she felt the stress each time her husband talked about money.
It left her feeling mentally weary and constantly distracted. However, with support from relatives who lent a listening ear and by making a concerted effort to think positive, she has since recovered her spirits.

'I certainly was upset at first. But after a point, I felt it was time to move on and not dwell on the loss,' she said.

A crooked product or a crooked system?

Read this blog:

A tongue-in-cheek poem:

Sunday, December 14, 2008

Helplines - for managing mental stress

Samaritans of Singapore (SOS. 24 hrs) 1800-221-4444
Singapore Association for Mental Health Helpline 1800-283-7019
Care Corner 800 Hotline (in Mandarin, 10am-10pm daily) 1800-353-5800
Touchline Mon-Sat (10am-10pm)(for 13 to 25 year olds) 1800-377-2252
BABES (For teenage girls facing pregnancy crisis) 1800-833-6666
Pregnancy Crisis Service Mon-Fri (9am-5pm), Sat (9am-1pm) 6339-9770
Association of Women for Action and Research Helpline (AWARE) Mon-Fri (4pm-10pm) 1800-774-5935
National Family Service Centre (FSC) Helpline 1800-2255-372
SENIORS helpline (for older persons and their care-givers) 1800-555-5555
TOUCH Caregivers Centre 1800-352-1622
SAGE helpline Mon-Fri (9am-5pm), Sat (9am-1pm) 1800-3538633
Alcoholics Anonymous 6475-0890
Eating Disorders Helpline - Tel: 6345-3435 (10:00am - 4:00pm Phone Mail Mon-Fri
Source :

Coping with rising health care cost in Singapore

Read this article:

And the discussion in The Online Citizen

Mental depression and suicide

Dear Mr Tan KL,

I refer to the following comments in your post

Anonymous said...
I have thought of suicide as well. The way MAS and government have acted in not helping me, I feel really depressed. Each time I see the words UOB Kay Hian I have much resentment and depression that I have lost the family's life savings. If it goes on this way and I do not get back the money, I can't face the family and subject them to difficult life ahead. Worst, I have no regular job now. It only takes me some courage to kill the children and end my life with my wife. Never felt so miserable in my life. Now I understand what depressing life a 40+ has when there's no job and money but full of life stress.
If we end our life, I will make it clear we will return to haunt UOB Kay Hian and those responsible for minibond.

Anonymous said...
I can feel how you are feeling now, as I am also in the same situation. However,if you are gone now, the FIs won't feel bad. You must transform your anguish into energy to fight. Not only for yourself and your family, but against your enemy who had put you in this agony.

I'm concerned that these two victims are so depressed as they've been pushed to a dead end and may resort to some foolish act. If you have volunteers who are well trained in counselling pls help them to overcome this difficult period.


For those who need conselling help, please refer to any of the organisations shown in the attached blog:

ERP and MRT in Singapore

By courtesy of Loh Hon Chun:
Even Adolf Hitler complains about the ERP and MRT in Singapore.

Video of my speech at Speaker's Corner - 13 Dec 2008

View the video recordings of my speech here:

Last Meeting on Speaker's Corner, 27 Dec 2008

I will be holding the last meeting at Speaker's Corner on 27 December 2008.

The separate groups, according to the product (e.g. minibond, high notes) will be holding their seperate meetings at their preferred locations. If you are interested to join the group, you should contact the group leader.

I will use my blog to update the investors on subsequent developments regarding the legal action and other matters.

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