Friday, May 14, 2010

Withdrawal of Foreign Currency Deposit

Dear Mr. Tan,

I had a foreign currency account in NZ dollars with X Bank. On 16/04/10, I went to the X Bank to withdraw the foreign currency time deposit account. I was attended to by a Relationship Manager Ms Y. I had specifically asked her to quote how much would I get back in Sing dollars should I wish to withdraw the foreign currency account. She did some calculations and said the amount was $31,326.07. She did not at any time informed me that the amount she quoted was in NZ dollars. I assumed that the amount quoted was in Sing dollars. I did a quick mental calculation and I would gain $1,326.07 over my original investment of S$30,000. I then agreed to the withdrawal.


I was then asked to sign a foreign currency withdrawal form. Upon signing, I noticed that amount of $31,326.07 was not written on the form. She said the amount quoted was only an indicative price and therefore cannot be written down. I trusted her and X Bank wholeheartedly. That was my biggest mistake.


True enough, I was shocked to receive only $30,257.85 when I went back to X Bank to collect the cashier order on 22/04/10. I approached Ms Y for the shortfall of $1,068.22. She said that the amount she quoted on 16/04/10 was in NZ dollars and after conversion to Sing dollars, would be $30,257.85. I remembered vividly that she did not at any time on 16/04/10 informed me that the amount quoted was in NZ dollars. She insisted that she did. It was her words against my words. She then showed me a document with the word NZD written in blue beside the amount of $31,326.07. I told her that the word NZD was not written in my presence on 16/04/10. If it was written in my presence, I would have realised that the amount she quoted to me was in NZ dollars. My natural instinct would ask what would that amount be in Sing dollars.


I was naturally not happy and requested to see her Manager. The Manager listened to my explanation attentively. However, he insisted that Ms Y was absolutely correct to give the quote in NZ dollars. He further explained that it was the Bank's practice to quote their clients in the currency they invested in and not in Sing dollars. I re-emphasised to him that I specially told Ms Y that I wanted the money back in Sing dollars. I would have assumed that the amount she quoted was in Sing dollars. Moreover, she wrote the amount on a piece of paper as $31,326.07 without the NZD in front of the quoted amount. I therefore assumed that the amount quoted was in Sing dollars. On hind sight, I should have asked to make 100% sure. He could not help or advise me further. I left the bank with a heavy heart having lost $1,068.22.


I was inexperienced and had learnt a lesson, albeit any expensive one for a retired person . It would be my first and last time that I would do foreign currency investment. It was a case of poor communication or rather miscommunication. I requested the Bank Manager to advise all their Relationship Managers to inform their clients clearly on which currency the amount was quoted, especially to elderly clients who are not so financial savvy. The exchange rate would make a big difference.


I just want to share this unpleasant experience with your readers. Please remember to ask the Relationship Manager clearly on which currency the amount was quoted.

FL

28 comments:

Anonymous said...

I also have a NZD Dollar Time Deposit.

I keep track of my NZD. So I will know how much of NZD dollar I have.

A better way would have been to ask the bank to write down clearly
1. what is the amount in NZD,
2. what is the exchange rate
3. and then what is the amount in SGD

in a piece of rough paper.

That way, you would not make a mistake.

HF said...

Hi, i've got questions.

1. If you were to withdraw from foreign currency account, is it based on the bank buying TT or buying OD?

2. What's the difference between these TT and OD anyway?

3. Recently opened an account in POEMS and was auto opt-in for the excess fund management facility. Have read on the web but I still don't understand. Can anyone advise?

Anonymous said...

A bitter medicine for the original poster, but at least one that he can walk away from and recover from it.

Just be thankful the bank did not BS you into scam dual-currency accounts where the bank's own forex brokers will trade against you and the "advice" by the RMs, leaving you lucky if you can even recover 20% of your original deposit.

You gained $257 on top of original principle of $30K. That's 0.86% if over 1 year, or 0.43%pa if over 2 years. Not great but at least similar to 1yr SGD FDs.
yeah, ok, I know you took much bigger risk to earn just the same miserable amount as safe FDs.

Anonymous said...

Hi FL,

From my experience with an oversea bank on foreign currency term deposit recently, I was issued with a duplicate copy of the withdrawal forms. I submitted 2 withdrawal forms. The 1st for a term deposit which matured in 2 days' time and the 2nd for a deposit which matured in 1 week time.

The bank will use the exchange rate 2 days before the maturity date for withdrawal. Hence, on my 1st withdrawal form the NZD amount and the actual exchange rate were stated. As for the 2nd withdrawal form only the NZD was written as the bank will only know what exchange rate to use 2 days before the maturity date of my 2nd term deposit.

I am just curious whether did you have a copy of your withdrawal form and was the NZD amount written on it. If the NZD amount was written, I believe your unpleasant experience could have been avoided because you would then ask Ms Y what will be the SGD amount.

Merlion

Anonymous said...

Was it a difference in expectation? Meaning told you will get 31k instead of 30k?

Or was there cheating involved? Meaining you are SUPPOSED to get 31k but got only 30k?

Would you have acted differently if you were told you will get 30k? Meaning that you would have kept the FD? If that is the case, maybe you can ask the bank to reverse the transaction?

Parka said...

I believe it's the duty of faith to be explicitly clear.

What's standard protocol for them isn't to the consumer.

Anonymous said...

Singapore's population is ageing rapidly.

Looks like the banks have already started training their staff on how to market profitably to the elderly.

Ah! The opportunities of silver marketing.

Anonymous said...

Rex comments as follows,

I think it is common practice that when you buy foreign currency the "unit of discussion" is foreign currency.

I can give the benefit of the doubt to the relationship manager in this case. I think she may be dealing with hundreds of cases so for her it is routine. The only possibility of malicious intent is the description where the RM showed the writer a slip of paper with NZ$ written but the writer claimed he didnt see it at that time. Well it is either the writer forgotten, or the RM cheated and added "NZ$" after the case was over. It is not possible to judge and jump straight to the conclusion that banks are trying to con customers with such primitive methods.

I don't think so. The banks con customers with much more sophisticated means, and big time too, like CDOs....

rex

Roger Cheng said...

I think it is just a case of 2 parties not being totally clear.


Don't see how the bank profits from this though.

Retired at `52 said...

Do not invest in things that are not clear to you.
If you had opened a foreign currency deposit account, you must be fully aware what exchanges rates will be used, i.e Telegraphic Transfer rates (TT) or overdraft rates. It will be most likely be TT.

All banks will not use rates quoted on the boards. All transactions are completed only at the end of the day if it was commenced before 2pm.

Invest in what you know and only with spare cash that you can live without for at least 6 years. No investment is guaranteed.. the closest is CPF.. but I have doubts..

Anonymous said...

Old folks are easier to cheat. They are financial dummies and they have lots of money saved from hard work.
The banks and insurance companies have no qualms to cheat them with dubious products. The agents or RMs are too eager and greedy to get them for commission.
What has happened?

JSLEE said...

Never had a great impression with RMs, it seems like this job has been negatively stereotyped in s'pore. These stories just show that their practice is just one way of transfering wealth from baby boomers to Gen x,y less the effort,less the morality.

Anonymous said...

Am new here but like reading this blog and the comments. Can someone explain what are TT and OD rates? Thank you...

Anonymous said...

Talking about foreign currency converted to Sing dollars, the point in time is critical.

Even if they said in Sing dollars, that's indicative only at that point for the day.

But the cashier order in Sing dollars was issued a week later in the above case. Hence the Xchange rate might have fluctuated against the depositor. Also bear in mind other "non-transparent" bank factors.

That's the risk of dealing in Foreign currency deposits, notwithstanding how clearly one ask. Because cashier order was not or maybe due to bank "process" cannot be issued immediately at the point of asking.

Anonymous said...

TT is the rate quoted by the Bank when we transfer or receive money from abroad through telegrahic transfer. OD rate is the overdraft rate charged by the Bank to borrowers, and whose rate charged is higher compared to TT.
If I am wrong, please correct me.

Anonymous said...

reply to anon @ 6:56pm

Telegraphic Transfer rates (TT) or overdraft rates (OD)

Parka said...

This isn't a case of conning, cheating or being greedy.

It's just the case of the RM not doing her job properly. Something that happens very so often and commercial entities can very easily hide behind their terms and condition. Doing the right thing doesn't seem to the very popular nowadays.

Anonymous said...

Dear FL

When I read your post, something really puzzles me.

Since you placed FD in NZD, I suppose you should know the amount of NZD placed, the tenor and the interest rate. Hence upon maturity, you should know what will be the P+I amount in terms of NZD. When the RM told you that the amount that you are going to receive is at $X, certainly this $X should ring a bell since that should equal to the P+I amount in NZD upon maturity. As you know, NZD/SGD exhange rate has seldom been on par, you shoul at least double confirm with the RM about the SGD equivalent amount.

From your post, I suppose you went to the bank at least 1 week before maturity to do the settlement instruction. As the bank usually only fix the exchange rate at spot rate (2 working days upon maturity), it is understandable why the RM refuse to tell you the exact SGD amount.

I think this is just a case of miscommunication rather than the bank trying to cheat.

Anonymous said...

(I am not impressed by our local banks these days, RM jobs are used by these young kids as
"Bus Stops" )

To be fair, what Parka and 11.36pm said is valid, basically the depositor either did not understand the product and misunderstood the RM.

But the RM could have done better by not taking things for granted.

Anonymous said...

RMs are salespeople and salespeople are conmen and women. They are NOT financial advisers who are finance experts and because of commission they don't put their clients' interest first. They will do anything to 'close' the customers and to meet the sales quota.
Unless MAS stipulates the mandatory steps to take to approach the customers' needs
and commission banned this rogue practice will continue.Not only that the salespeople MUST be made responsible for their sales which must be within reasonable basis otherwise the RMs will not be deterred from taking short cut to make quick commission.
All these are happening in the financial industry, in life insurance and in the banks and if MAS keeps a blind eye to these unethical practices or the commission as the evil behind dirty tricks we will never eliminate them.
The fault lies with the regulator.Other jurisdictions have enough of them and are now taking drastic actions despite opposition from the industry.Buyers and sellers have conflict of interest to some extent but a mid way can be found for a win win outcome. Unfortunately the industry is greedy and wants everything. It is now a zero sum game. The suckers or the dummies are the consumers. This is a fact and 99.99% of consumers are dummies who don't know what they buy most of the times.Therefore , honesty and competence must be mandatory requirement of all advisers or salesmen and both must be present.
To ensure this, MAS must enforce and police the industry.

Anonymous said...

I see that every time a consumer makes an assumption, it is always the RM, the advisor, the agent's fault, but never the consumer.

Assume makes an "Ass" out of "U" and "Me".

Invest in NZ, take back in NZ. The RM assume this is the normal practice because she deals with many people and some other invest is US/Euro/AUD, take back the same.

Invest in NZ, take back in SG. Consumer assume this is normal practice because he is in Singapore.

Makes wrong assumption and complain loudly is typical Singaporean. We are a complain champion king. I complain to your manager! Get you fired because you cheat me! I have money to invest and therefore I must be right! MAS, why are you not protecting these investors?! Shame on you MAS! I want to complain!

Anonymous said...

I guess the above is posted by someone from MAS or banks. He seems to project the impression that businesses are honest in Singapore and consumers are trying to ask for more on their deals. May be he is suggesting CASE (consumer association) is no longer relevant.
Anyway, for those who meddle in foreign currencies, please note all foreign currency deposits are not covered by deposit insurance scheme and accounts under CPF investment are insured up to $20K.
This means you should avoid foreign currencies and keep your funds with CPF. It's a zero sum game my boy. If you gain, who is going to lose?

Anonymous said...

Treat it as a lesson learnt. If you cannot take the risk, please do not invest. This will save all the trouble. A retiree has no income and has to choose his/her investment well. Thank you.

Anonymous said...

I had the same experience with FD in NZD & AUD a year ago. I am very wary nowadays & had lost confidence in our local banks.

Anonymous said...

Dear FL

As much as I sympathise with your predicament, in my humble view and limited experience, no bank officer would have been able to quote in advance how much S$ equivalent you would have received on withdrawal date because the S$ equivalent (on withdrawal date) would usually depend on the exchange rates as of withdrawal date itself (or the day before, depending on which currency and which bank).

The RM may have quoted you the hypothetical S$ equivalent based on the exchange rates as of the date you made the enquiry (which would commonly be the case) but this is of course only a hypothetical response, which is therefore not useful to you.

No reasonable investor in such products should have instructed withdrawal based on the response given by the RM.

And finally, no, I'm not from any bank nor the authorities. I just read the fine prints and the explanatory material on the bank's website over and over again, and make phone enquiries a few times with different banks and different officers to understand the products as much as i can.

Anyway, be grateful that you practically received your principal back, and count your blessings that it wasnt sterling or euros which you had invested in.

bronkitis

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