Saturday, December 27, 2008

Speaker's Corner, 27 Dec 2008 - Speech

Speaker’s Corner 27 Dec 2008

1. Meetings at Hong Lim Park
The first meeting for investors of the credit linked notes was held on 11 October 2008. This was followed by another 9 meetings. The first 8 meetings were held at weekly intervals while the last two meeting was held at fortnightly intervals. Today’s meeting is the 10th and final meeting to be held at Hong Lim Park for the credit linked notes.

You may wonder why Hong Lim Park was chosen to be the venue for the meeting. The most important reason is that it is free and is available at any time. However, it is not quite convenient, due to the lack of facilities. There is no sound system and everyone had to stand. On a few occasions, we had to share the use of the park with other activities. It rained on one meeting.

Still, it is a wonderful experience for us to meet at Hong Lim Park and to get to know each other.

2. Petitions
During the past three months, a total of four petitions sent organised, of which three petitions were presented to the Monetary Authority of Singapore.

The first petition dated 10 October and signed by 983 people, asked the Government to look into any possible wrong doings by the financial institutions that created and marketed the credit linked notes.

The second petition dated 17 October and signed by 277 people, asked the MAS to investigate the sales training given by the financial institutions to their representatives who sold the credit linked notes.

The fourth petition dated 31 October and signed by 1,073 people, asked the MAS to review the complaint handling process of the financial institutions, to set up an independent unit to receive the complaints and to encourage the financial institutions to adopt a collective approach in offering fair compensation to the investors.

These petitions were presented to the chairman and executive director of MAS and were acknowledged. My requests to meet with the chairman or senior management of MAS were declined. I received replies that any development would be communicated to the public through media releases.

Up to now, we have not received any communication on whether the specific requests contained in the petitions had been considered or implemented.

3. Complaint Handling Process
We have received reports that about 5,000 complaints had been received by the financial institutions that sold the credit linked notes. The MAS had issued a statement that the complaint handling processes of these institutions had generally met their expected standard.

We have not been provided with information on the number of people that have received full or partial compensation for the alleged mis-selling of the product. A small number of the so-called vulnerable investors had been compensated. Although the actual number is not disclosed, this is estimated to account for less than 2 percent of the investors.

The perception of the investors is quite different from the MAS. Many investors found the complaint handling process to be carried out in an unfair and unsatisfactory manner.

The anecdotal reports from any investors are that their complaints of alleged mis-selling were rejected by the financial institutions.

MAS had required the financial institutions to give their decision on each complaint within four weeks. This deadline appeared to have been not met. There are many reports from investors that they had not received any decision after six weeks or longer.

The next step for the investors is to lodge a complaint with the dispute resolution center, called FIDREC. From our survey, a small number of investors had taken this second step to lodge their complaints. Most of the investors intend to take this second step, but the process has been extremely slow and difficult.

4. Collective legal action
Many investors had indicated that they will join in a collective legal action against the financial institutions. It will be correct for me to say, on their behalf, they had taken this decision with great reluctance and difficulty. They would have preferred a more amicable way to get fair compensation for their financial loss.

I like to ask the investors to join the different groups representing the different types of credit linked notes, namely the Minibonds, High Notes, Jubilee Notes and the Pinnacle Notes.

The leaders of these groups will be holding separate meetings next year for the investors. As each group is smaller, it is easier to arrange a more conducive place to hold an indoor meeting.

Each investor group is also setting up a website and an e-mail list to communicate with their members. The key activities of these groups are to educate their members, provide assistance and advice, and to organise the collective legal action.

I shall be in touch with the leaders of these groups and to co-ordinate the activities of the various groups, if required.

5. My blog
I will continue to keep all investors updated through my blog,

I wish to thank a few volunteers who had been providing me with daily updates of news and articles from other sources. I have put the relevant articles in my blog. I encourage the investors to the postings in my blog to keep in touch with the developments.

6. Conclusion
I am sorry that there was little progress in getting fair compensation for your financial losses, in spite of the great efforts that were put in by many people. We have tried many different approaches, but keep hitting a stone wall – even tough we keep our eyes “wide open”.

During the past three months, we have made many friends from among the investors and volunteers. Let us continue our friendship and continue our efforts to seek fair compensation for the investors, although the future efforts will be done outside of Hong Lim Park.

Let me wish all of you, all the best for 2009.

Tan Kin Lian

Survey - based on 25 responses

I studied many years ago, that an unbiased survey based on 25 replies give quite reliable results.

I now have the chance of seeing this theory put into action. I have analyzed the survey results based on2 5 replies, and compare the results with 50 and 100 replies. The results given are quite close. It means that the results based on the first 25 replies are quite reliable.

I shall be showing the results for 25, 50 and 100 replies to various surveys here, if the survey did reach 100 replies.

Friday, December 26, 2008

Seminar for Minibond Investors

A seminar, titled " Minibond Victims: The Way Forward In 2009 " will be held soon. The details are:
                                      Date:  Tuesday 30th December 2008
                                      Time: 7 to 9 .30 pm (registration starts at 6 pm )
                                      Venue: Singapore Polytechnic Graduates Guild House
                                                      1010 Dover Road Singapore 139658
                                      Admission: Free (Register online here)
                                       (Click here for a map to locate the SP Guild House ) 

The agenda for the evening:

                                        - Welcome 
                                        - Introduction (Mr Tan Kin Lian)
                                        - The Way Forward: The Plans For 2009 
                                        - The National Minibond Data Collection Exercise 
                                        - The Start Of Legal Efforts: Leonard Loo
                                        - Q & A

Don't miss this important seminar as the legal efforts to protect the interests of Minibond customers get into full swing! Mr. Loo has confirmed that he will have a Senior Counsel (SC) on board his legal team so come down and listen to his deliberations. 

Register early for the free seminar  as there are only 250 seats !(please ensure you have registered with the Minibond Group before you participate in the seminar).

Thought for the day - the world is a dangerous place

Contributed by Ho Cheow Seng

"The world is a dangerous place to live; not because of the people who are evil, but because of the people who don't do anything about it." -- Albert Einstein

The fallen giants of finance

By Fang Wang, Steven Bernard, Joanna Chung, Saskia Scholtes, Greg Farrell and Francesco Guerrera
Published: December 22 2008 19:21 | Last updated: December 24 2008 18:10

The search for scapegoats in the worst financial crisis since the Great Depression is under way. As one financial group after another has collapsed, wiping out thousands of billions worth of value for investors, a plethora of investigations by prosecutors and regulators has been launched.

Federal officials have opened investigations into at least 25 large companies, including Lehman Brothers, the collapsed investment bank; Fannie Mae and Freddie Mac, the mortgage financiers taken over by the government; and Washington Mutual, the biggest bank to go under in US history.

Investment banking league table 2008 - Dec-22

Subpoenas have been handed down in some cases, including Lehman and Fannie and Freddie. Prosecutors, along with officials at the Securities and Exchange Commission, are trying to determine whether managers misled the public about the financial condition of their companies. Defence attorneys are likely to argue that companies, as well as their individual directors and executives, cannot be blamed for the unprecedented market turmoil. “One thing we know for certain is that stupid choices were made by hundreds of businessmen but that is not a crime. Some executives may have been overly optimistic but so were a lot of people,” said Daniel Richman, a former federal prosecutor in New York’s southern district and now a Columbia University professor.

The subjects of these profiles, or their spokespeople, were contacted for this article but declined to comment. Compensation includes cashed-in share options.

Attention: Pinnacle Note Investors

Chan JC

Thursday, December 25, 2008

Meeting at Speaker's Corner, Sat 27 Dec, 5 pm

A meeting of investors of the credit linked notes will be held as follows:

Date: Saturday 27 December 2008
Time: 5 to 7 pm
Place: Speaker's Corner, Hong Lim Park

1. Update of complaints to financial institution, FIDREC
2. Update on collective legal action
3. Speech by lawyer organising the class action

This will be the last meeting to be held at Speaker's Corner. Subsequent meetings will be organised by the group leaders for the various notes, and will be held at other venues.

Please turn up for this last meeting.

Survey - Do we need a new property portal

Take part in this survey:
Here are the results:

Details of 150 CDOs still not available after 3 months

Dear Mr. Tan

I don't understand why after more than 3 months of Lehman Brothers bankruptcy, the following basic, but important information are still not available to the minibond holders :

1) the identities of the 150 CDOs
2) how many credit events already happened out of the 150 CDOs ?
3) how many of the 150 CDOs are on the danger list (about to fail) ?
4) an estimate of the current values of the minibond notes.

If a group of financial experts (from HSBC & MAS) cannot provide these basic information after more than 3 months of Lehman Brothers bankruptcy, it is hard to believe that the ordinary investors could have invested with their eyes open.


I agree with you, but it is better for you to write to the media or to MAS. MAS should be the party that reply to this type of question.

Hong Kong Arbitration Body Mediates First Lehman-Linked Dispute

December 22, 2008: 04:55 AM ET

HONG KONG -(Dow Jones)- The Hong Kong International Arbitration Centre said Monday it concluded its first mediation of a dispute over the selling of structured products related to Lehman Brothers Holdings Inc.
The independent body said in a statement it mediated a dispute on Dec. 10 in which investors and a bank reached a settlement after five hours of talks. It didn't give details.

The Hong Kong Monetary Authority said in late October it would refer mediation requests to the arbitration center in cases where both sides agreed to it, to try to reach voluntary settlements on the disputes.

The HKMA said earlier the costs of mediation and arbitration would be split, with banks paying half and the HKMA paying the rest on behalf of investors.

Thousands of investors claim they were misled about the risks when they purchased 'mini-bonds' backed by Lehman, only to see the value plunge after the former Wall Street giant declared bankruptcy in September.

The Hong Kong International Arbitration Centre was set up in 1985. It receives funds from the business community and the Hong Kong Government but says it is totally independent of both and financially self-sufficient.

Avoid retrenchment

Straits Times did not publish this letter.
22 December 2008

Forum Page
Straits Times

There are discussions about the best way for companies to cope with decreased demand in a recession. The following options were considered:

> retrench foreign workers
> retrench local workers
> reduce pay across the board, to avoid retrenchments

I prefer the method used by the Governor of California State. He asked the state employees to take 2 days of no-pay leave, to reduce the state budget deficit.

Here is my reason. If there is reduced demand, there is reduced work. The company can ask all employees to take a few days of no-pay leave to reduce the wage cost and avoid retrenchment. In return, the employees extra days of leave (in proportion to the reduction in wages). They can spend the time with their family and friends or attend classes to upgrade their knowledge and skills.

To cope with the reduced wages, the employees can draw down on past savings or cut down on the discretionary expenses. For employee with fixed commitments that cannot be reduced, I suggest that they be provided with a low-interest rate loan for the reduction in their wages. This loan can be provided by the employer or the state at an interest rate of 2.5% p.a. (same as CPF interest rate).

I hope that this suggestion can be considered.

Tan Kin Lian

Be careful about free service for a trial period

Some banks offer credit cards to you free of subscription for one or two years. They will impose a hefty annual fee automatically at the end of the free period, without telling you. If you are not aware about it, you have to pay this fee.

Some card holders call the bank and threaten to cancel the card. The bank may waive the fee out of goodwill. They may not.

The same technique is adopted by mobile phone operators and cable television services. They give you a free period of use for some services, and will quietly levy the charge at the end of the period. They hope that the customers will pay for the services out of ignorance.

Here are some tips to avoid paying for these additional charges, if you do not use the services:

1. Decline the service, if you do not need. it. Do not accept it just because it is free.

2. If you want to try the service, put a reminder in your calendar (on the mobilephone or PC). It will remind you to reivew the service at the end of the free period. If you do not need it, you should call and cancel it.

I hope that the Consumer Association (CASE) will make it compulsory for the business to get the customers to agree on paying for the service at the end of the free period. It should not be on an "assumed opt-in" basis. We need to have stronger business ethics.

Online Citizen blog

The Online Citizen blog went down due to heavy traffic. They are running on a hosted site which sets a limit on the number of traffic. In recent months, the traffic went up five times. Yesterday, on Christmas Eve, the traffic must have been exceptionally heavy.

I spoke to the managing editor of The Online Citizen yesterday, after the site came down. He has contacted his volunteer webmaster, who would try to resolve the problem in the evening, after he had completed his full time work.

Regular visitors to The Online Citizen should know that the work is done by volunteers, who have to spend a lot of their personal time and incur travelling and other out of pocket expenses. The expenses to maintain the website are kept to the minimal, due to lack of funds.

Wednesday, December 24, 2008

SMS booking of taxis

Under the system for SMS booking of taxis, the taxi driver can wait on a side road after sending the SMS that the taxi is available. When a SMS is received, the taxi driver can call and talk to the customer while the taxi is still stationary.

If the taxi was moving when the SMS was received, the taxi driver can stop at a side road to make the call to the customer. The taxi driver does not need to make the call when the taxi is moving.

Strong interest in the Property Indicators (AMP, AQI)

17 people responded to the survey on the new property portal.

100% said that they are interested in the AMP (adjusted market price) which is calculated based on the latest 10 transactions for the project, adjusted to reflect the the current market price (i.e. taking into account the change in market since the date of transaction). 94% said that this is a useful indication of the market price for the property.

81% are interested in the AQI (amenities quality index) that shows the amenities within 0.5 km (i.e. walking distance) of the property.

100% said that a comparision of the AQI and AMP for similar properties in the same location is useful. 81% said that they are willing to pay $20 for a property report that shows, among others, the details of the recent transactions and the nearby amenities.

I wish to explain that the AMP is an average for the property. It needs to be adjusted to reflect the height, facing and size of a particular property. I hope that buyers and sellers will find this indicator to be useful, with the limitations as disclosed. As this is just an indicator, it should not replace the judgement of a professional valuer in deciding on the value of the property.

Why MAS should handle complaints

Letter in Straits Times Forum

I REFER to the article last Thursday, 'Lehman-linked investors to get news in Jan', which reported that almost 5,000 formal complaints had been filed and that the Monetary Authority of Singapore (MAS) was satisfied that all 10 institutions involved were reviewing complaints based on principles of fairness.

I appeal to MAS to consider taking over the handling of complaints. There are already a large number of formal complaints as the report stated. Furthermore, the final number may be higher because non-Lehman-linked complaints were not part of the 5,000 stated and many other complaints may be expected. Hence, MAS may want to take a more cautious approach when a large number of ordinary citizens are affected.

Secondly, the complaint handling process should be undertaken not only to determine fairness but also the integrity of the financial institution.

Thirdly, the process should be handled directly by an independent party. Having such a party to oversee the complaint-handling process may not be sufficient.

It should be handled by an independent party from the start. This may involve a significant investment in resources by MAS.

It is also true that MAS is not in a position to guarantee the profitability of financial products.
But, it is MAS which Singaporeans trust most to uphold the integrity of a financial institution.

Leong Kok Ho

Tuesday, December 23, 2008

Quote - President Elect Obama

Two years from now, I want the American people to be able to say,

"Government's not perfect; there are some things Obama does that get on my nerves.
But you know what?

I feel like the government's working for me.
I feel like it's accountable.
I feel like it's transparent.
I feel that I am well informed about what government actions are being taken.

I feel that this is a President and an Administration that admits when it makes mistakes and adapts itself to new information, that believes in making decisions based on facts and on science as opposed to what is politically expedient."

Those are some of the intangibles that I hope people two years from now can claim," -
Barack Obama, president-elect.,8599,1865069,00.html

I find this approach by President Elect Obama to be quite refreshing. He is willing to admit mistakes and to make decisions based on new facts, and not on political expediency. This is quite different from the approach adopted by most governments.

I find the flexible approach preferred by Obama to be more suitable to cope with uncertainty. I hope that he will succeed in his approach.

Survey - choosing a place to live, closeness to facilities

If you have to choose a place to live, which facilities and amenities are most important to you, to be within walking distance or a short drive?

Take part in this survey:

Survey - complaint to FIDREC

If you have made a complaint to FIDREC and have received their reply, please participate in this survey:

Survey - Complaint to Financial Institution

If you have made a complaint and received a decision from the financial institution, please participate in this survey:

Monday, December 22, 2008

70% willing to join FISCA

140 people participated in the poll. 70% are willing to join FISCA and pay an annual subscription of $36. The remaining 30% do not wish to join FISCA. I consider that there is good support for FISCA.

Thought for the Day - Democracy

Contributed by Ho Cheow Seng

My notion of democracy is that under it the weakest shall have the same opportunities as the country in the world today shows any but patronizing regard for the weak... Western democracy, as it functions today, is diluted fascism...true democracy cannot be worked by twenty men sitting at the center. It has to be worked from below, by the people of every village." : Gandhi

FISCA - the steps ahead

The protem committee has to finalise the work plan for the association and to submit the constitution for registration as a society. This will take one or two months to be completed.

A website will be set up during the next few weeks. You can get more information from the website when it is ready.

Join FISCA for $36

82 people replied to the poll. 65% are willing to join FISCA for an annual subscription of $36. Some people think that this rate is too low and are willing to contribute up to $60 or $120 to get better services.

35% do not wish to join FISCA. Among them are the insurance agents and relationship managers who feel that FISCA may affect the way that they do business now. The other respondents prefer to have the services for free, if possible.

I wish to encourage Singaporeans to be willing to pay a modest fee for service and advice. By spending some money, you can save a lot of money that is taken away through hidden charges (e.g. $2,000 or more on a typical financial contract) or can cause you to lose your entire principle (e.g. high risk credit linked notes).

Be willing to invest time and money to be educated. You can be much better off!

Sunday, December 21, 2008

Simulation Game - trading of stocks, etc



Participate in the surveys shown at the top of the right panel.

Customer feedback on plan V


I wish to share my experience on plan V. I suffered a severe penalty for severing the plan after 24 months. I lost over $30,000 from an investment of close to $50000!

I gave up on the plan principally because of the rigidity i.e. you must pay continuously for over 20 years otherwise you will lose the bonus or incur hefty penalty. For a plan that costs over $2000 per month, this is extremely expensive.

I am also frustrated over the lack of transparency, the financial product is very complex with many inherent fees and charges. I am certainly not aware of the generous commissions that my financial adviser was getting at the time this plan was introduced to me, certainly no disclosure of any sort. The product was sold to me as an exclusive financial investment instrument with extremely good returns (including the so-called bonus). The issue of the hefty fines and penalties was not highlighted, even if they may be in the fine print somewhere.

At the end of the day, it is my fault for not carefully scrutinising these policies and to be taken in by financial advisers that I once trusted. But I fully agree that people should be educated and warned about financial instruments that have many conditions and contractual rules that bind and severely disadvantage a client.

When I cancelled my policy, I was told that the only time I can get the money before the matuity date, without any penalty was when I die. Even critical illness was not accepted! Unfortunately, these penalties, commissions and heft charges, are something that is difficult to glean because they are hidden, obscured by fine print and perhaps, simply not fully understood or appreciated by non financial people like me! I am tertiary educated person and I simply don't have the time and resources to go through these complicated rules!

I hope more people should be aware of this and to be very careful of expensive and complex financial investment plans. Don't be fooled by the sweet promises of unscrupulous advisers!

FISCA - the proposed approach

65% of respondents like FISCA to get most of its funding from its members, to remain independent and act in the interest of consumers. 75% prefer to avoid getting advertisement and sponsorship from financial institutions. 20% welcome funding from Government for general expenses, and 35% for special projects.

90% feel that FISCA should encourage members to spend time to learn about financial matters.
56% like the subscription to be $36 per year; the remainder are willing to pay a higher subscription.

Proposed approach
We will set up FISCA with an annual subscription of $36.

Members are encouraged to log in each week and read the newsletter, educational and research materials. and assessment test.

Additional services will be provided to members at a modest fee:

a) Handle complaint on mis-selling
b) Handle complaints on insurance claims
c) Attend educational talk
d) Simple financial planning advice
e) Buying of recommended financial products

FISCA will encourage members to pay a modest fee for advice and service. This will save them several thousand dollars in paying the hidden charges embedded in financial products, such as life insurance and structured products. More importantly, members can avoid losing their capital in risky products that are not properly disclosed to them.

An important task for FISCA members is to spend time and be educated about financial matters and to make the correct decisions. FISCA will help members to achieve this goal by providing the relevant materials for members. FISCA will use as much volunteers as possible, but some full time staff have to be engaged for the research and administration.

It is important that FISCA should have funds to carry out their work. I hope that more members will come forward and be willing to pay a subscription to make it possible for FISCA to be effective in its work. Do not expect it for free.

FISCA Survey Results (2)

20 people responded to the survey.

> The expressed interest in the following services:
> Educate members on financial products through website 100.0%
> Advice members on mis-selling and unethical products 100.0%
> Recommend suitable financial products 84.2%
> Advice members on insurance claims 73.7%
> Hold educational talks (at a modest charge) 68.4%
> Advice members on service contracts, e.g. telcos 63.2%
> Provide advice through a hotline 57.9%

Barclay CEO apologies

Mr Varley also told the BBC that the banking industry was going through what he called a "public relations crisis" and must apologise for what went wrong. "We have to have a banking industry in which consumers have trust and in some cases that trust has broken down," he said.

"If I ask myself, 'Do I feel the industry should be self-confident about recreating that trust through time?' I do feel that, but it starts by saying sorry. "It starts by admitting things went wrong."

He said he hoped his own bank was one of those in which customers still had trust. But he went on: "If you look at the industry as a whole, if I speak as a member of the industry rather than as chief executive of Barclays, I absolutely have to say we should share our portion of responsibility."

Our correspondent said Mr Varley was not the first senior banker to admit failings. In November, Royal Bank of Scotland chairman Sir Tom McKillop said he was "profoundly sorry" for his company's financial difficulties.

The Disadvantages of an Elite Education

Contributed by Ho Cheow Seng

Our best universities have forgotten that the reason they exist is to make minds, not careers.
By William Deresiewicz

Survey: DBS Schroder LiveSure 2025 fund

If you wish to join Colin Ho in opposing the change to the fund and to reject the three options, take part in this survey:

Survey: Vista Plan from Zurich

If you have bought the Vista plan from Zurich and have not been properly advised about this investment plan, please take part in this survey:

An adviser's view about the V plan

Dear Mr. Tan,

Our company allows commission to be paid annualised upfront. For instance, if the client pays a cheque for the first month's premium of $3,200, our company will receive around $40,000 in commission. It's then split between company and advisor. That's why many advisors are selling this plan.

They sell it as investment. But the clients never realise that they for a contract of say 25 years, they are not able to surrender it in 3, 5 or 7 years. They will be penalised heavily.

But I believe the biggest con job of this is that they prey on the greed of people. The reason why advisors can sell big premiums and long tenure is because of the so-called 'bonus' allocation. The longer the term, the higher the 'bonus'. Last time the 'bonus' was 62.5%, now they even up it to 87.5%.

The clients got carried away by their greed. No doubt the 'bonus' is 87.5%, but it's only nominal. The clients thought they could immediately cash out 87.5% of gain from their first year of investment. But they forgot that this is an insurance contract, and they need to 'finish' the whole term to avoid heavy penalty. But sadly, once they got into this plan, they are already in for a huge loss and a bleak future.

Many people who bought this won't be able to 'finish' the plan, The insurer understands this. This is a win-win for the insurer and the advisors, but a BIG lose-lose for the clients and their families.

As this plan is only being distributed in Singapore for 3 years or so, I can expect more news of people surrendering, especially in this tough economic environment.

The insurer even allows premium to be paid using credit card. I heard of quite a number of people surrendering, but chose to keep quite.

Unilateral changes to DBS Schroder LiveSure 2025 fund

Dear Mr. Tan,

I have recently received a notice from DBS on behalf of Schroder Investment Management (Singapore) Ltd that they plan to alter the product characteristics of the DBS Schroder LiveSure 2025 fund to the disadvantage of the consumers. The changes contravene the purpose and the way the fund was marketed to us, as ordinary small investors.

We are given 3 choices moving ahead and I feel none of them are reasonable to any sane human. I want to share this news and urge those who are facing similar situation not concede to any of their 3 proposed options, which might not be in your interest.

If you feel this is of worthy mention, please help post this on your blog.

Colin Ho


This fund is marketed in their brochures as “a unique retirement solution that aims to achieve superior long term risk-adjusted returns through an actively-managed multi-asset portfolio of mutual funds.”.

The brochure clearly states these key benefits:
1. Principal protection upon maturity
2. Exposure to a well-balanced portfolio managed by Schroders Multi-Asset Team
3. Profit lock-in mechanism.
This is designed to raise your level of principal protection at maturity. Any gains achieved by the Fund will be locked in each week, ensuring that the fund’s highest NAV will be locked in as target min NAV level for your investment upon maturity in year 2025.
4. Automatic re-balancing mechanism.
The portfolio will automatically become more conservative with lower expected volatility and risk as the target date draws near.

What we understood

From the way DBS and Schroder has marketed it, was that the fund is for retirement purpose with maturity in 2025. The NAV will swing along the way but over the next 20+ years, it’s likely the NAV will go beyond 1.00 and this higher NAV will be locked in and if we hold the fund till maturity in 2025, we’ll enjoy this “locked-in” NAV.

What has happened
Just 8 months after I subscribed to the fund, Schroder, through DBS, sent us a letter saying the fund was monetised stating that: “The last 6 months have seen dramatic falls in asset values caused primarily by the credit crunch. In addition, we have witnessed a fall in long term SGD interest rates from 4.50% to the 2.6% we see today.”....”we reached the point where the assets of the Fund were sufficient only to purchase instruments (safe portfolio) that would be expected to deliver the target protection level on the Maturity Date. We therefore invested the Funds assets into such instruments on Monday 24th November 2008”.

We are now given 3 choices:
1. Stay invested in the Fund. Unit trust investors can choose to stay invested in the Fund which is primarily invested in SGD government bonds. At maturity, investors are expected to receive the NAV of $1.0004, subject to the risks abovementioned in section 7.
2. Switch into another Schroder fund distributed by DBS. Investors can choose to switch their existing units into any other Schroder fund distributed by DBS, The switching fee will be waived. 3. Redeem their units at the prevailing NAV. Please note that the Manage will continue to publish weekly NAVs for the Fund, which may be different from the current NAV of S$0.6932 (as at 19 November 2008).

Investor is subject to option #1 as the default option if they do not decide.

What’s Wrong?
In my opinion, they’re now trying to unilaterally alter the product behaviour and go against what they have sold to consumers. Being a retirement fund with maturity date in 2025, how can they, within just 8 months of launch, say the profit lock-in mechanism can no longer support a NAV beyond $1.0004. As a long term investor, I understand the volatility of the markets and am willing to ride the downs and look forward to the ups in the next 26 years. But these people are telling me sorry, at best they can pay me a NAV of $1.0004 (with no guarantee) in year 2025! Essentially, they are trying to modify key benefits #3 and #4 listed above to their advantage.

With these changes, the product is substantially different from how it was marketed to me.

The options to consumers are equally ridiculous. The 1st option is asking the investor to remain status quo till maturity in 26 years time. And for that, the investor will be rewarded with NAV $0.0004 return but with all their caveats that tells you it’s not guaranteed. The 2nd option is asking the investor to sell it at current NAV (i.e. make loss of close to 50%) and buy another Schroder fund. The 3rd option is the worst: asking investor to sell it at current NAV, make a loss, and we part ways.

I feel DBS and Schroder could have put in greater efforts to protect consumers’ interest. And unlike the case of the mini bonds, the DBS Schroder LiveSure 2025 fund doesn’t involve default. But yet, they are asking consumers to accept unreasonable draconian actions which would mostly inflict financial losses.

I am seeking refund, from the bank, the full amount I’ve invested. I urge other investors to exercise your rights and not opt in to any of their 3 proposed options.

Colin Ho


Madoff Clients - New York Times

Hi Tan,

Appreciate you publish in your blog.


FISCA Survey Results (1)

Here is a preliminary summary of the first 20 responses to the FISCA Survey.

1. FISCA should get most of its fundings from members to remain independent and act in the interest of members: Agree 65%, Disagree 20% Neutral 15%

2. FISCA should avoid advertisements and sponsorships from financial institutions: Agree 75%, Disagree 15%, Neutral 10%

3. Should FISCA get funding from Government? Yes 20%, Special projects only 35%, Avoid 25%, No opinion 20%

4. Should FISCA encourage members to spend time and be educated about financial matters? Yes 90%, No 10%

5. How much should the annual subscription be? $36 56%, $48 22%, $60 or $120 22%

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