Tan Kin Lian's Blog: Survey - Sale and marketing of unlisted investment products

Friday, April 17, 2009

Survey - Sale and marketing of unlisted investment products

The protem committee of FISCA (Financial Services Consumer Association) intends to submit the following paper to MAS giving our views on its proposals regarding the sale and marketing of unlisted investment products (including life insurance and structured products).

Give your views to FISCA's proposals in this survey.

3 comments:

david santos said...: Excellent work and excellent space!!! Congratulations!!!; April 17, 2009 7:28 AM
zhummmeng said...: To tighten up and avoid another fiasco this time arising from the insurance industry MAS must address the advisory process and the remuneration which both have caused untold damages to unwary customers.
First to clarify that the guidelines and whatever amendments made to the FAA also include the activities of the insurance agents and insurance companies and their products which have been presumed 'safe' all this while but not necessary beneficial to consumers in term of protection and return. It is the wrong assumption and perception. Products from insurance companies are percieved to be 'safe' , this myth must be addressed.I consider the products from insurance companies are getting worse and border on scam if not fraud. If not checked , the trusting consumers through the greedy and conscienceless insurance agents can be saddled with financial burden and loss. This economic downturn has seen so many consumers terminating their par policies. Why? They have no reason to keep and these products were bought for no reason at all, perhaps through the high pressure and trickery from the agents.Many experts have advised consumers to keep the policies for protection needed especailly in a time like this. Yes, it is true but the agents screwed it up in the first place overloading the consumers with par products like wholelife without any justification.
MAS must see that all these don't happen again and these changes can definitely tighten up the ethics and reduce and eliminate the unscruples of the insurance agents.

1.make need based approach to customers' needs compulsory for all groups. All groups are vulnerable, some may be more vulnerable especailly the people above 60
2.make the advisers or insurance agents responsible and liable for the advice and recommendations and not caveat emptor. Recommendations which do not meet the reasonable basis criteria of the section 27 of the FAA should be answered by the CEO and the senior management .
3.Very rarely but if product advice becomes genuinely opted by savvy consumers, the consumers must be warned that their action or their choice of the option forfeits and waives their rights of recourse to redress in the event that the product bought is not appropriate. This is caveat emptor.
However the insurance agents MUST verbally caution and in writing on the fact find form or KYC disclose this forfeiture of rights to the buyers.This is to safeguard the consumers, especailly the unwary and ignorant consumers' interest. Also , this is to prevent the insurance agents from dodging the fact find and need analysis and blame the consumers for choosing the option .The consumers have no idea of the advantage of fact find and always discouraged by the insurance agents that it is inconvenient.The insurance agents avoid the fact find so that they can justify selling and pushing the par products which can earn them high commission. This is often the cause of mis-selling and misrepresentation.
4.Commission has been perennially the cause of conflict of interest, mis-selling, unethical selling and all the malpractices. A new model of remuneration , equitable, transparent and justifiable to both the buyers and the sellers to bring about a win-win situation.
Negotiable Fees, salaries or any models to effect a fair outcome should be considered.The insurance companies should be given notice of this change and to implement it by certain time like the FSA of UK which expects commission to be removed by 2011.
5.A portal for simple products or products for savvy consumers who don't need advice or who need only product advice for them to buy directly at much lower cost. Example; at least one and half years of current premium should be discounted. The reason is why should savvy or knowledgeable consumers who don't need advice or product advice pay commission or fee to the insurance agents who only execute and fill the forms.
This is unfair .
6. MAS must enforce them and not pay lip service like the CEDLI introduced in 2001.Don't let the insurance players make a mockery of the FAA. The law must be firmly enforced lest they are seen as toothless and good for gathering dust in the storeroom.
I look forward to a new landscape where every consumer has confidence and without fear that they will get a rotten deal but only fair dealing.; April 17, 2009 10:44 AM
zhummmeng said...: Mr. Tan, also include the protection of the whistle blowers in your recommendation .
Whistle blowing is a form of check on the management and the insurance agents and for it to work MAS must ensure the safety of the whistle blowers and their identity.
Kudos to MAS for suggesting it.; April 18, 2009 1:13 AM