Interview with Today Paper

1. Why are you doing this? What motivates you?

Reply: For the past 18 months, after I retired from NTUC Income, I have been writing a blog to educate the general public about financial planning and insurance. My blog is www.tankinlian.blogspot.com. I wanted to educate them to make to make the right choice about financial and insurance products, so that they can get a reasonably good return on their savings.

I write several tips on various topics and kept them in my website, www.tankinlian.com/faq. They cover investments, insurance, financial planning and other topics of interest to young people, retirees, parents and other situations.

A year ago, many people asked me about structured products. The products sold a few years ago were the capital guaranteed products. I found that these products guaranteed the safety of the principal, but also guaranteed an extremely low return. I advised people against investing in these products. They can get a better return and more security by investing in government bonds. I was proven right - the investors got a poor return on these capital guaranteed products after waiting patiently for five years.

When the credit-linked securities (such as the minibonds and pinnacle notes) were launched two years ago, I studiend these products with the help of another expert in financial analysis. We concluded that the product is highly risky and give a poor return to the investor (which is not commensurate with the risk). It seemed that the financial institution took away the bulk of the return and leave the high risk to the investor. I advised investors to avoid these products in my blog.

At that time, I was not aware about the extent of the risk, as it was not easy to understand the complex structure, and the prospectus did not give the relevant information.

I do not know how the authority could have approved a prospectus that was supposed to describe the product, when financial experts who spent many hours to read the propectus could not figure out what the structure was. How can you expect the general public who were sold these products to understand the risk that they were taking?

When several of these credit linked securities (which were linked to Lehman Brothers as issuer or as a reference party) were at risk due to the failure of Lehman Brothers, I became horrified to learn the true nature of the structure and the extent of the high risk. I was horrified to learn that so many people were misled into investing their hard earned savings or lifetime savings in these products, often on misrepresentations of the financial institution representatives, or the relationship managers.

It is very clear that most of these investors are risk adverse. They were only trying to earn a higher interest rate to make up for the high inflation of 7%. It is unfair to label them as "being greedy" to get a higher return. If there were properly advised, they should be putting their money on government bonds to earn 3% per annum over 5 years.

I decided to organise a Petition to ask the Singapore Government, in particular the Monetary Authority of Singapore and/or the Commercial Affairs Department to investigate if any law has been broken, particularly section 27 of the Financial Advisers Act, section 199 of the Securities and Futures Act or the Trustees Act. I received 983 signatories who signed the Petition. I lodged the Petition with a report that shows the possible areas that the law has been breached, and presented my arguments to these points.

I was also disappointed at the approach taken by the MAS in handing the complaints. The poor investors were left to lodge their complaints with the financial institutions who sold the products to them. When they lodge their complaints, they were challenged or ridiculed (in some cases) by the officers employed by these financial institutions. It was quite discouraging to hear their stories.

The Hong Kong Monetary Authority adopted a better approach. They set up a hotline and service center and employed 100 people to record the complaints and investigate the cases where there were evidence of mis-selling. They received more than 7,000 complaints (which is 10 times of the number of complaints lodged with the financial institutions in Singapore). This is more satisfactory to the victims.

What is my motivation? Nearly ten thousand people have lost their hard earned savings or their life time savings by being misled into investing in these structured products. The sums involved are huge, $100,000, $200,000, $300,000 or more. Most of them come from modest backgrounds. The invested sums represent 10, 20 or 30 years of hard work and frugality. Should I just stand back and say "Bad luck. If you take risk you have to bear with the consequences. Let's move on? " These people are victims of mis-selling and are helpless in how to seek redress.

These investors were told that these products are safer than bank deposits. If you talk to these investors, you will know that they are clearly careful and risk adverse. It is not just a few people with the others trying to join in the ride. The stories told by most of them are similar.

My motivation is to help these victims who have suffered losses to seek appropriate compensation. I like to see justice - which is a core value in the five stars of Singapore.

2. In bringing up the concerns of the man-in-the-street to the authorities, what is your strategy?

The Petition asked the Singapore Government to make a full and independent investigations into the creation and the marketing of these products and identify the law that could have been breached. It is signed by 983 petitioners. Many investors wanted to join in the Petition after it was closed. It is accompanied by my report giving areas where the law could have been breached.

I hope that the relevant authority could pursue these areas and gather the evidence of the victims of these structured products that have now wiped out their lifetime savings. If the evidence found that there were misrepresentation, dishonesty or fraud, the authority should charge the parties involved in court for wrong doing. It is their duty to investigage and enforce the law.

However, if the misrepresentation was an honest mistake by the distributor or their sales representative, it would be better to give a chance for the distributor to offer an appropriate compensation to the investor. In my view, an appropriate compensation is to share half of the loss sufffered by the investor.

My second approach. I also encourage the investors to take find a lawyer to write a statutory declaration, which is sworn under oath, to describe the circumstance in which they invested in the structured product. The statutory declaration will cover the verbal assurances and explanation given by the distributor's sales representatives or the marketing materials that were provided to the investor, and the state of mind of the investor when they agreed to invest in the recommended structured product.

I hope that this statement is made under oath, which is made under oath, will have a stronger impact when it is lodged to support the complaint lodged with the distributor, or with the Financial Industry Dispute Resolution Center (Fidrec, www;fidrec.com.sg) at the next stage.

If there are many customers who make similar sworn statments regarding the verbal representations given to them (which turned out to be wrong), it is quite likely that any indepenent person, such as a judge, will believe the sworn statements made by these people, even if they do not have any written record to support their statements.

If the matter is not resolved, I will help them to take collective legal action. But it will have to be their decision, as this course of action is expensive and the outcome is uncertain.

A third approach is my appeal to the distributor and the MAS to come forward and do the ight thing. If they have made a mistake in approving or selling the product, they should admit the mistake and find an appropriate way to compensate the investors who have suffered a large financial loss due to the mistake. They should make it easier for the investor to get the compensation and not make them suffer more through a difficult, lenghty and costly process.

3. How would you gauge your success?

My aim is to help the investors to get appropriate compensation for the financial loss that they have suffered, due to the misrepresentation of the product. I suggest that the distributor should compensate the investor for half of the loss, so that the full loss is shared equally between the investor and the distributor.

I also hope that MAS will change their approach in the future. They should appoint independent financial experts to analyse thse structured financial products (including long term life insurance products) to ensure that they are designed to suit a certain category of investors, that they are described properly and clearly and that the product is fair to consumers. The products should not be designed for the main purpose of making profit for the issuer or the marketer at the expense or detriment of the investor or consumer.

I also hope to see a more active enforcement of the law to protect the interest of the retail investors or consumer. If there is breach of the law, the offenders should be charged in court and be made to pay a heavy penalty. This will ensure a higher standard of conduct and responsibility.

4. Your consumer activism is to be lauded. But what you are doing is something unusual in apathetic Singapore. You don't see ex-politicians or ex-CEOs going into this area. Have anybody warned you of the possible pitfalls of your action? If so, what did you tell them?

Reply: A few people have warned me to "be careful". People are so scared to do the right thing in Singapore. They are only willing to do what the Government approves for them to do. It is such a sad state of affairs. I hope that more people can come forward and be courageous.

5. Analysing your actions on this issue, I get the sense that you are pushing this into a high-profile campaign against MAS. You tried an on-line signature campaign, then face-to-face meeting with MAS, litigation and now the Speakers Corner. What kind of results are you looking at, from a good case scenario and a worst case scenario points of view?

Reply: I do not wish to offend the Monetary Authority of Singapore. I see that the MAS is the best party to step forward and help the retail investors. I believe that it is their duty to take care of the investing public, so as to preserve confidence in the financial system in Singapore. I wish to help MAS in this task. If MAS can be pro-active, I do not need to work so hard, day and night.
6. Do you think the authorities are listening to you and the people who are affected?

Reply: So far, they are listening selectively. I hope that more people can shout louder, so that their voices can be heard more clearly. I will help them to convey the message.

7. What would you say to people who feels you have an axe to grind with officialdom?

Reply: This represents maybe 5% of the people. These are the sceptical Singaporeans. The majority, perhaps the remainign 95%, encouraged me to do what is right, to help the people who are victims of the structured products.

8. Can you tell us your experiences with the investors you have met? What kind of people are they, what are some of the stories they have told you? Whose was the most tragic story?

Reply: Most of the investors are ordinary working class people who are careful, risk adverse and save the money for their retirement or their children's education. It is so sad to see their years of hard work and savings being lost due to some flaws in our financial system. These people are the victims. They cannot be expected to shoulder the entire loss. They should not be made to suffer more, by going through a difficult process to lodge their claim. I hope that their grievances can be dealt with in a fairer way.

9. There is a view that people should be responsible for their actions, that those who went into structured deposits are themselves to blame. Do you share this view?

Reply: It is the duty of a trusted party, such as the financial institution or its representative, to give the correct information to the people who rely on their advice. Clearly, the risk of the structured products have not been clearly understood by the financial institution at the point of sale. This has caused a lot of confusion and unclarity. The advertisements and brochures give a misleading picture. The prospectus is not clear. The investors were assured by the sales representatives that these structured products are safe. Can they be asked to shoulder the entire loss,because they trusted the financial institutions to give them proper information and recommendation?

Many of the investors are willing to shoulder their share of the loss, as these structured products offered a higher return. But, it is not fair for them to shoulder the entire loss.

10. There has been suggestions on Internet forums for you to run for President- in light of all your efforts- is this a proposition that you would consider seriously?

Reply: If your newspaper can get 100,000 people to sign a Petition for me to run as President of Singapore, I will consider it seriously.