I wish to research the various legislations in Singapore that were aimed at protecting consumers. Some of them that I could remembers are:
- Fair treatment of consumers by financial institutions
- Unfair contract terms
- Competition Act
- Consumer Protection and Fair Trading Act
- Public Transport Council
With these legislation, consumers are supposed to be well protected in Singapore. However, in reality, consumers are given a poor deal. Examples are:
- Sold toxic products by financial institutions
- Exorbitant charges by businesses for services charged under long term contracts by telephone companies and for late payment by banks and credit cards
- Poor deal on long term life insurance policies
The problem is the lack of effective enforcements.
I like to get your help to identify the specific legislation, the agency that is responsible to enforce the legislation and, if possible, examples of their failure to act on infringement of the letter or spirit of the law. You can post your comments here or send them to kinlian@gmail.com.
Tan Kin Lian
15 comments:
I've always felt that insurance agents should not be called financial planner or financial advisor. Most of them knows nothing about managing finances or investment.
Such a job title is highly misleading to the public, and gives a false sense of expertise in areas they are not trained at. Members of public are often under the impression that a financial advisor is doing the planning for them, when all the agents does is just selling them expensive products which may not meet their needs.
I wanted to raise this issue, but am not aware of the channel i can go to.
I feel that insurance agents on 100% commission based salary, has a clear conflict of interest with consumers.
1) Their income relies on how much their clients commits to insurance. This often results in mis-selling of products that boost the agents' income more than it serves the clients' needs. Whats worse is that it places a strain on the clients' savings for their future needs.
2) Young agents often lack savings. By taking on a 100% commission based job, they are under pressure to aggressively sell products to consumers to generate a good base income, whether it meet their needs or not.
3) People joined this industry for the high commission. Hardly anyone joined because they wish to help others. This is made worse since agents do not really learn financial planning. Such a structure means that agents are poorly placed to offer advice to consumers, and often had conflicting interest.
I hope MAS do something to address the clear conflict of interest. Revamping the 100% commission based salary is a good solution. Giving agents a base salary with a small commission derived from their clients for the duration of their policies. This also ensure that agents have a vested interest to continue serving their clients. Ideally, their base salary should increase with experience, and should be larger than their commission.
My feel is that if there are good alternatives for consumers to go to, and the consumers know about them and vote with their legs, the companies who are providing lousy, unfair products and services will have to buck up or become obsolete. The forced merger of POSB into DBS is a clear case of bad deal for bank customers. The "consolidation" of newspapers took away consumers "eyes and ears". The "fake" opening up of Telecommunication services (look at ownerships of the three Telcos) gave consumers the false sense that they can vote with their legs but in actual fact just cost them lots of shoe-rubber.
The main cause of your complaint of lack of effective enforcements is because the business entities are one way or another related to the Establishment.
The only way to get some semblance of integrity is to overhaul the whole system, in the present system, fish help water, and water help the fish, all inte-related.
Shout all your might till uour voice is hoarse, you end up nowhere.
This July Australia will ban commission of financial products.
UK will ban in 2012 December...
"The FSA’s Retail Distribution Review (RDR), which was launched in March 2006 and will be fully implemented by December 2012, aims, among other things, to address a number of long term issues affecting the way advice is given to and paid for by clients.
One of the key changes will be the eradication of commission being paid to advisers and a move to an upfront fee-based payment structure."
Other jurisdictions like HK, NZ, India , US have in place a plan to ban commission and implement fee.
Singapore????? MAS is giving a lot of excuses...perhaps understandable. One of their excuses is 'let other countries implement first'. Of all of them 'consumers are not ready' is the biggest crap.. The truth is the FIs are resisting and the insurance agents are going to eat grass..When this happens there will be foreclosures and repossession of properties bought with ill gotten gain.
But what about the consumers? You be the judge.
Hope this will change the way the consumers get advice and products. It will be fee based and charges to be agreed between customers and advisers and mode of payment BEFORE ADVICE is given..(don't confuse with product advice which should be free but currently consumers are charged at high commission).
Fee based should be cheaper but not necessary because it depends on the nature and scope of advice.But here consumers really get advice for the fee paid. Currently consumers get no advice from insurance agents but get shit which ruin the financial well being of the customers. They are sold and conned into buying products that they have no idea of them.
With fee based everything is spelled out before the advisory process. Of course 'rotten kaki' customers trying to get free advice
will not be able to.
On the whole..consumers will get proper, responsible and competent advice for the fee paid and the advisers will be held responsible and liable for advice if they don't meet the reasonable basis of the FAA.
This is consumer protection.
The general insurance, unit trusts and stocks, I think the commission rates have settled to reasonable levels that nobody is complaining. The problem of excessively high commission lies with life and investment-linked insurance.
Tied agents cannot be financial advisers or planners, that I agree with Zhummmeng. It's oxymoron. They have to recommend their own companies' products and would tend to recommend the highest commissioned products. Commonsense since they represent only one company solely and their income relies on commission solely.
The first step is to outlaw tied agencies. Life companies should hire qualified executives and managers as salaried staff with clear representation as company staff, no pretense to be financial advisers or planners for clients.
They don't represent their companies to direct clients anymore; they represent their companies to the distribution channels, e.g. IFA firms, brokerages, bancassurance etc.
Only then, can financial advice and planning be truly independent and from the view and situation of the client. A client can buy through any of the channels for a small service charge if no advice is required, or pay more according to the advice or planning required.
How should i raise the commission based salary as a huge conflict of interest to the relevant authorities? I've personally visited the MAS website, but did not submit a feedback as my company name is required. I'll try visiting the agencies mentioned in the original post.
Mr Tan,
We not only need the laws to protect consumers. We also need the laws to prosecute suppliers and makers of goods and services. In addition, the laws are only as good as the policemen/enforcer. We have two potential heavyweights for consumers' protection - CASE and the AAS (Automobile Assoc of Singapore) - who could together help consumers flex their rights muscles, but look who have been entranched in their leadership - govt ka ki nang in the case of CASE and mild office bearers in the case of the AAS.
What Singapore needs is sincere and real consumer advocacy, not puppets and impotent figure heads
Turning left or right, everywhere we meet businesses trying to make a quick buck out of us.
Why is consumer protection important in Singapore?
I believe every citizen must feel they have a valued place in Singapore.
If consumers are not protected in Singapore, then the common man on the street may feel this place is too tough to live in.
Even fighters can become quitters with this kind unwelcoming environment for the native born good natured Singaporean.
I think it must be a gradual process.. We should start by first pushing for the prohibition of professional titles like "financial consultants" and "financial planners". This should be the easiest step for the regulators to introduce.
I hope someone will write a letter about this to the press, drawing parallels to the "specialist" title being misused by some TCM practitioners.
CONSUMER PROTECTION (FAIR TRADING) ACT
(CHAPTER 52A)
Section 4. It is an unfair practice for a supplier, in relation to a consumer transaction —
(a) to do or say anything, or omit to do or say anything, if as a result a consumer might reasonably be deceived or misled;
(b) to make a false claim;
(c) to take advantage of a consumer if the supplier knows or ought reasonably to know that the consumer —
(i) is not in a position to protect his own interests; or
(ii) is not reasonably able to understand the character, nature, language or effect of the transaction or any matter related to the transaction; or
(d) without limiting the generality of paragraphs (a), (b) and (c), to do anything specified in the Second Schedule.
SECOND SCHEDULE
Section 4(d)
SPECIFIC UNFAIR PRACTICES
1. Representing that goods or services have sponsorship, approval, performance characteristics, accessories, ingredients, components, qualities, uses or benefits that they do not have.
2. Representing that goods or services are of a particular standard, quality, grade, style, model, origin or method of manufacture if they are not.
3. Representing that goods are new or unused if they are not or if they have deteriorated or been altered, reconditioned or reclaimed.
4. Representing that goods have been used to an extent different from the fact or that they have a particular history or use if the supplier knows it is not so.
5. Representing that goods or services are available or are available for a particular reason, for a particular price, in particular quantities or at a particular time if the supplier knows or can reasonably be expected to know it is not so, unless the representation clearly states any limitation.
6. Representing that a service, part, repair or replacement is needed or desirable if that is not so, or that a service has been provided, a part has been installed, a repair has been made or a replacement has been provided, if that is not so.
7. Representing that a price benefit or advantage exists respecting goods or services where the price benefit or advantage does not exist.
8. Charging a price for goods or services that is substantially higher than an estimate provided to the consumer, except where the consumer has expressly agreed to the higher price in advance.
9. Representing that a transaction involving goods or services involves or does not involve rights, remedies or obligations where that representation is deceptive or misleading.
10. Representing that a person has or does not have the authority to negotiate the final terms of an agreement involving goods or services if the representation is different from the fact.
11. Taking advantage of a consumer by including in an agreement terms or conditions that are harsh, oppressive or excessively one-sided so as to be unconscionable.
12. Taking advantage of a consumer by exerting undue pressure or undue influence on the consumer to enter into a transaction involving goods or services.
13. Representing in relation to a voucher that another supplier will provide goods or services at a discounted or reduced price if the supplier making the representation knows or ought to know that the other supplier will not do so.
14. Making a representation that appears in an objective form such as an editorial, documentary or scientific report when the representation is primarily made to sell goods or services, unless the representation states that it is an advertisement or a promotion.
15. Representing that a particular person has offered or agreed to acquire goods or services whether or not at a stated price if he has not.
16. Representing the availability of facilities for repair of goods or of spare parts for goods if that is not the case.
17. Offering gifts, prizes or other free items in connection with the supply of goods or services if the supplier knows or ought to know that the items will not be provided or provided as offered.
18. Representing that goods or services are available at a discounted price for a stated period of time if the supplier knows or ought to know that the goods or services will continue to be so available for a substantially longer period.
19. Representing that goods or services are available at a discounted price for a particular reason that is different from the fact.
20. Using small print to conceal a material fact from the consumer or to mislead a consumer as to a material fact, in connection with the supply of goods or services.
Vincent,
Thanks for your contribution. Please help to identify the common business practices in Singapore, ie. sale of insurance, spa packages, gold bars and land bank plots, that may be in breach of any of the regulations. Send these potential breaches to kinlian@gmail.com.
Rex comments as follows,
Here is an example.
Recently i filled in a form to change from one bank to another bank, the account from which giro deductions are made to pay my credit card bill (UOB Card). I submitted the form by hand to the UOB bank which issued the credit card.
To my my utmost horror the following month, i received a LATE PAYMENT FEE of $45 and another INTEREST CHARGE of $50, and additionally a computer generated warning from the bank that giro deduction was unsuccessful, and the credit card payment to UOB were overdue.
I could not understand at all why the bank is so "efficient" in its enforcement practices for bill payments!
Firstly, charging late payment charge PLUS interest charges, is a double penalty on the customer!!
Secondly, how can the visa bill be considered overdue when i submitted the form merely to change giro deducting bank accounts, and i also maintain lots of funds in both accounts all the time?
Thirdly, and most importantly, how is it possible that the bank cannot flag in their software all those change-bank-giro cases as works-in-progress and do not generate overdue-charges/late interest charges? Why should the customer be penalised and inconveneinced when the credit card department take 6 weeks to effect the giro change from one bank to other?
Fourthly, can it be possible to take 6 weeks to effectuate a giro change bank transaction, in this modern era?
Fifthly, why is the bank wasting manpower resources on tracking these unreal cases, wasting the customers time to plead with them to remove the charges, and further incoveniencing the customer with having to use manual payment for the interim period of 6 weeks due to their inefficeincy?
Sixthly, what is there to gain for the credit card company to squeeze a little bit of charges from those tiny number of customers who change giro bank account in the normal course of events?
The call-centre was readily able to waive off the 50 + 45 dollar charge, but i am still very unhappy that i am made to look as if i am begging them to do something which in the first place, is originating out of the credit card system's inefficiency to process a simple request (6 weeks! goodness me. Talk about internet age.).
rex
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