Choose your financial product carefully

Dear Mr Tan,
I have been curious about the development of banking industry and insurance industry for the past decade. Since the two industries evolve and expand their line of business, I can see the overlapping of the products offered by the two industries. I can choose an insurance company or a bank if I want to buy investment fund, securities bond or even insurance.

What are the main differences between these two industries? Maybe in terms of operational aspect, insurance companies tend to stick with agent-based customer management. However, I don't see much different in terms of investment product offering.

What do you think the competitive edge for both banks and insurance companies, in terms of service diversity, service level, financial power, reliability?

REPLY
It is more important for you to know if the product is designed to give good value to the customers. Unfortunately, many financial institutions design products to have big profit margin for their institutions, often at the expense of the customer. They pay high commission to their agents and distributors. The customer gets a poor deal, after deducing the expenses and profit margins.

It is better for the customer to invest directly in stocks and bonds, especially in low cost, diversified funds. Read my views in www.tankinlian.com/faq

Singapore Budget 2009 - The Alternative Policies

I am speaking at this public forum organised by The Reform Party at 2 pm today at the Allson Hotel. Please attend for an interesting discussion.

Some views on General Election 2009 (2)

1. I hope can have more than 10 candidates from alternative parties are voted into Parliament

2. The government has long since neglected its role of building a nation. It now only knows to cling on to power and put economic growth above all considerations. Not that it is managing the country or economy well. The longer it stays in complete power, the greater the damage to our country and nation. Like global warming, we may already be reaching a point of no return.

3. Mr Tan should step forward, form a new party and lead a team in the GRC. I am sure many Singaporeans will lend you their support.

4. The change will come when the old man gamble away all our reserves, or the old man die!

5. Singaporeans have a spirit of greatness that have built our country into world class. Tap on this to continue to build. Success is possible. Talent is in us, tap it. The only loss is to think and act we can't.

6. I wish for a truly free & dynamic press instead of the compliant ST/Today and MediaCorp that we have now. Singapore's downhill has been greatly contributed by these people.

7. Many of your questions are crafted in such a way as to discredit the Government.

8. If there are credible opposition candidates ie quality of those PAP introduces I would consider them. However the sad thing is that the candidates from opposition did not meet such expectation. So until that day whereby the opposition becomes more credible and able to offer more constructive ideas I would still go with PAP.

Some views on General Election, 2009

1. With the overall openness of Singapore's economy, it is not surprising then, that its society will soon follow suit. It is not a matter of "whether" but "when", will we enjoy a constitutional democracy where a government is not only brought to power by the people, but also kept in check by the restricting powers of just laws. It may take time, but one thing for certain is that it will come.

2. It is not that I don't want more than 10 alternative parties in parliament, but would prefer the real voice or quality people.

3. I prefer continuity

4. Economy should get worse; PAP will lose greater ground than rally stronger ground support to see the people through this crisis; Credible alternatives to PAP may not emerge just yet.

5. I doubt most if not all of the current elite PAP MPs, had ever gone through any life's difficulties. They have lost touch with the ground.

6. Be strong and don't be naive. We need the change for a better life.

7. Nobody and no party is indispensable. For too long, Singaporeans are fed with the fear that Singapore will go down the drain if the PAP is not the governing party. This is a fallacy.

8. Many other countries like Hong Kong have done well, in fact better than Singapore, in many areas like transport, welfare, tourism, taking care of their elderly, etc. What we are experiencing in Singapore is not exactly booming, what with so many elderly in such dire straits and with a heartless government. Enough is enough.

9. The civil servants are the ones doing the work, NOT the ministers or MPs. If we can manage the civil servants well, any party can be the government.

Is it safe to stay with AIA?

Dear Mr. Tan,
I have purchased some investments from AIA including a single premium 10-year plan with guaranteed 3.5% p.a. return.

As you are aware, AIG is seeking to sell some of its assets including AIA. If AIA is finally taken over by another financial instititution, what would you think will be the impact on the investors here like myself and many other policy holders?

Shall we terminate our policies/investments and cash out before the take over materializes?

Does the government's guarantee to cover financial institutions' obligations in Singapore also cover the obligations of insurance companies like AIA?

Many AIA customers are anxiously watching the development in the market concerning the deteriorating financial conditions of AIG and wish to have some advice from people like you as to how to react to such major changes which could affect our investments in AIA. Please share your view with us in your blog (no commitment).

REPLY
I believe that the interest of the policyholders of AIA will be protected in the event that AIA is sold to new owners. You should avoid terminating a life policy, as you are likely to suffer a big penalty.

Investing your CPF savings

Dear Mr. Tan,
Like many young Singapore couple, my wife and I plan to retrieve an amount of 20K from my CPF account for other investment before all our money in the CPF is wiped out by HDB for our HDB flat. Basically, the reason for doing this is to save our money for rainy day in case anything happen (i.e. retrenchment).

As we are not a high risk taker, we decided to just invest our money into unit trust. We met up with our insurance agent from AIA and he introduced us to these few AIA funds.

1) AIA Greater China Equity Fund 30%
2) AIA Regional Equity Fund 20%
3) AIA Regional Fixed Income Fund 50%

As such, we will appreciate your expert advice on the following:

1) Is this the right time for us to invest our money into unit trust?
2) Is unit trust the best option for us?
3) Is it advisable for us to invest onto AIA Company in view that they may be took over by other company soon.
4) Please advise if the three funds that our agent introduced to us is suitable for us?

REPLY
I normally advise people to invest in the STI ETF due to low charges. You can get most of the returns. Read the FAQ in my website.

If you buy an investment linked product from an insurance company, you should ask about the charges that are taken away from your investments. This is also explained in the FAQ.

Civic Advocator

I invite readers of my blog to visit the Civic Advocator. It is managed by my friend and is aimed at educating the public about social affairs.

High birth rate in France

France has a high birth rate, compared to other European countries. I asked a French friend for the reason. He identified two key factors:

1. The income tax system favours large families. The larger the family, the lower the effective tax rate. Some high income earners does not have to pay any income tax, if they have a few children.

2. There are adequate child care facilities in the community and the workplace.  This is supplemented by a system of nannies who take care of children in their homes. The cost of the nany is largely borne by the state.

City watchdog promises 'banking revolution'

Financial regulators may in the future ban financial products if they are too risky or too complex, Lord Turner, chairman of the Financial Services Authority, said today.

Read this article.

TKL Blog passes 1 million visitors

My blog passes 1 million visitors on 26 February 2009, just slightly more than 2 years since the count started in February 2007.

Miami banker gives $60 million of his own to employees

A generous banker.

Palm Jumeriah, Dubai

The Palm Jumeriah is built on reclaimed land. It is a very large development shaped like a palm tree. It comprises of the trunk, crescent and many fronds. 

There are several large apartment blocks built on the trunk. Atlantis Hotel and its supporting developments is built on the crescent. The expensive villas are built on the fronds. Almost all developments have a waterfront.

The development is served by a monorail system that is connected to the Dubai Metro. It is opening in April 2009.

Atlantis is a popular attraction for the locals and tourists.  You can watch this video to get an idea of the Palm. There is a tunnel that goes under the water connecting the mainland to the Palm and from the trunk to the crescent of the Palm.

Respect Other People's Views

Minister for Health Khaw Boon Wan suggested that some people can consider sending their elderly parents to a nursing home in Johor Bahru, where the cost is less than half of the cost in Singapore.

This created a big uproar. It attracted more than 300 comments in postings in The Online Citizen. Over 80% of the comments were strongly against the suggestion. Many of the comments were rude and abusive. They called the minister inappropriate names. I was shocked at this behaviour.

First, it was not necessary for people to give their views in a rude manner. They should show respect to the views of other people. I am not suggesting that a minister deserves more respect than any ordinary people. But he should not be given any less respect either.

Second, there is a strong perception that any suggestion by a minister will be implemented as government policy. If the reaction is likely to be irrational and negative, the government may decide that it is better not to engage the public. Surely, as citizens, we like to have the chance of giving our views before any decision is taken by the government leaders? Can we give our views in an objective manner, rather than behave badly?

Third, there seems to be a strong dislike and distrust of the government.  This is unhealthy.

The Online Citizen

Recipe for Disaster: The Formula That Killed Wall Street

Read this article.

Actually, the top people in Wall Street don't care. This formula allows them to show billions of profit, on which their bonuses are calculated. When the global financial system collapsed, they disappear with their big bonuses. They don't have to pay back or suffer the loss, which is borne by the rest of the world.

What greed!

Reuters: In Asia, suicides rise due to financial crisis

Read this article.

A truly inspiring speech from a great leader

Video

In his speech, President Obama said that Americans do not like to see the tax payers give money to the banks. The President said that it is necessary to allow the banks to continue to give credit for businesses and consumers.

There is another way to achive it, without giving money to the banks. This is to give the credit directly to the borrowers through another agency (other than the banks). It ensures that the money is properly used and does not give the profit to the banks.

I shall be talking more about this idea in another article.

SCMP:Risk-assessment tests are investment traps

24 Feb 2009
Enoch Yiu

'How much do you earn every month?" "How many overseas trips do you take with your family every year?" "Are you living in your own apartment?"

These are the typical questions asked by your banker or broker before you open an investment account. While the stated purpose is to ascertain risk levels, White Collar believes they can be a tool to sell high-risk products to those who can least afford them.

The experience shared by our readers is that these tests are not in any way standardised, with different questions and rankings set by the banks or brokers themselves.

With the Lehman Brothers minibonds scandal still fresh in our minds, these tests need to be more tightly regulated by the Securities and Futures Commission and the Hong Kong Monetary Authority to avoid mis-selling of risky products. Three readers with different backgrounds relate their experience with these tests.

A fund manager with more than 20 years of experience was asked to do a test as the banker wanted him to invest in risky equity-linked notes - an investment product linked to the performance of some stocks.

A judge who only put his money in time deposits was also asked by his banker to do the test and buy into these notes.

And a retiree, aged almost 80, was asked by his banker to do the test and buy these products.

The fund manager left without finishing the test, as he thought the questions were only intended to find out how much money he had.

"This was an infringement of my privacy. No matter what answers I gave, I believed the results would be the same - I would be sold the products the banker needed to meet the quota for that month," he said.

The judge was ruled capable of buying the high-risk product. But he insisted on putting his money in time deposits as he did not believe in complicated investment products.

"The time deposit does not offer a high interest rate but it is better than losing your money," he said.

The retiree did the test and was judged as someone who could afford low-risk investments. Even so, he was able to buy those notes and believed the products would be "safe". The result: his investment lost 85 per cent of its value.

"Why should an investor adjudged as being only able to afford low-risk investments be sold something that loses 85 per cent of its value?" the retiree said.

This is obviously a case of mis-selling. It is not rocket science and it really does not need any test to confirm an 80-year-old is not suitable for any risky products.

It appears that no matter how these tests are formulated, the result is the same. The bankers are selling products to meet their quotas. Our regulator friends at the SFC and HKMA should immediately curb this type of test to stop people from falling into investment traps.

At the very least, regulators should have a single, standard test for banks and brokers to gauge investors' risk appetite, or we are going to see mis-selling similar to the Lehman minibonds again.

The Standard:Minibonds saga hurts Yam

24 Feb 2009

Hong Kong Monetary Authority chief executive Joseph Yam Chi-kwong said he is sad that the reputation of Hong Kong banks has been tarnished by the Lehman Brothers minibond fiasco, which remains unsettled.

``What banks are doing in their banking business has been acceptable and the banking system is rather robust,'' Yam told legislators yesterday. ``Only this issue has left them with a black mark, and I feel very distressed.''

However, he revealed that in early 2008 some banks did not follow the HKMA's guidance to adjust the ratings of investment products when they turned more risky.

Abraham Shek Lai-him, who sits on Legco's financial affairs panel, accused the banking regulator of failing to warn Lehman minibond investors.

``If you already knew there were problems, why didn't you remind the more than 30,000 investors about redeeming the products when they became high risk from low risk in 2008?''

Yam responded: ``As a regulator ...we can never warn that a specific product or a specific financial organization is not doing well and [ask investors to] sell their products right away. How can we do that? It's not possible.''

He said the HKMA told banks they must inform clients when the rating of a certain product has changed.

Civic Party legislator Ronny Tong Ka-wah lashed out at regulators. ``It's unbelievable that you still can't tell if any bank broke the rules after investigating for five months.''

Secretary for Financial Services and the Treasury Ceajer Chan Ka-keung replied: ``It may harm the investigation results if we release the report before the Securities and Futures Commission completes its investigations.'' Yam added that some Lehman investors could not provide enough information for investigation.

He also said banks have generally agreed with the proposal to physically segregate ordinary banking and securities business.

Chan said the government is studying whether to boost the SFC powers to punish financial institutions engaging in improper marketing practices.

Economic slowdown in Dubai

Dubai is hit by the low oil price and the global economic slowdown.

Many construction projects have stopped and the workers are sent back. Price of real estate has dropped by 40% to 60%. Many investors have lost money. The projects under development have been shelved.

Hotel occupancy is down to 50% on most days (except where there is a major exhibition organised in Dubai. Although this is the peak season, the hotel rates reflect the off-peak season (about half of the peak season rate).

On my way to Dubai, I observed that Changi Airport is rather quiet and the SIA plane is half full. The stewardess said, "economy slow".

Atlantis Hotel, Dubai

I visited the newly opened Atlantis Hotel in Dubai. It is located in Palm Jumeriah, which is a large real estate created through land reclaimation (in the shape of a palm tree) on the Arabian Gulf. The first metro line in Dubai will be opened in April and will serve Palm Jumeriah.

Several restaurants and rooms in the hotel are built below sea level. The guests can see the fishes swimming under the sea. However, I was not able to visit this part of the hotel.

There is a large shopping mall with several restaurants showing fishes swimming in large acquariums. They give the impression of being in the lost city of Atlantis.

How derivatives traders hoodwink their bosses

The Sunday Times:How derivatives traders hoodwink their bosses; A former banker lifts the lid on how greed eclipses prudence

Read this article.

How can a small business survive the credit crunch

Read this article.

Special report on Financial Advisers

Read this report in Business Week.

China Daily: Regulator unaware Lehman minibonds existed

21 Feb 2009

HONG KONG: Financial services chief Chan Ka-keung told the first Legislative Council hearing on the minibonds saga Friday that he was unaware of Lehman Brothers ill-starred minibonds before the collapse of the investment bank in September.

Chan's testimony, offering the first official account of the investment debacle, drew criticism that the government is concerned only with helping financial institutions weather the financial storm, while ignoring the interests of small investors.


The Secretary for Financial Services and the Treasury said he is concerned about the turbulence in the financial market and that he's been concerned about structural investment instruments such as Accumulator, since early 2008.

Legislators at the hearing referred to a speech made by Chan last May in New York. He told his New York listeners that the roots of the sub-prime crisis arose from credit rating agencies and the system of risk control. The Lehman minibonds somehow escaped his radar. Minibonds and other Lehman-related instruments chewed up HK$20 billion involving more than 48,000 accounts.

"The earliest I knew about minibonds was after the collapse of Lehman Brothers," he testified, in response to questions from legislator James To.

Chan did not elaborate.

The regulatory bodies, the Hong Kong Monetary Authority and the Securities and Futures Commission, raised no alarm to government as financial derivatives and structural investment instruments entered a period of severe turbulence in early 2008, he said.

Chan paused before responding to a question from wholesale and retail sector legislator Vincent Fang. Chan was asked the reasons for his lack of awareness of minibonds before Lehman Brothers collapsed.

"It is impossible to have a regulatory system that ensures no single incident of irregularity can happen," he said. "The close of Lehman Brothers was all of a sudden. It was a major incident. We are determined to improve our system."

Chan, admitting that some investors were misled, said the government has "no role" in deciding whether investment products should be banned from the market.

Regulatory bodies are responsible for determining whether financial institutions have made accurate disclosures concerning financial instruments. Agents for these products have responsibility to assure the products are suitable for the market, especially for investors in positions of vulnerability.

"The role of the government is to give statutory power and resources to regulatory bodies to perform their jobs," he said.

The government is not involved in day-to-day operations of the regulatory bodies, he added.

Labour sector legislator Ip Wai-ming criticized the government for not even being aware of the minibonds until they surfaced as a huge problem.

Legislator Regina Ip said the government should ban the sale of high risk products to individuals. She pointed out banks were still selling the disaster-bound instruments as late as August.

Real estate and construction sector legislator Abraham Shek criticized Chan for giving unsatisfactory answers before the hearing.

Hearing chairman Ho Chung-tai said he is satisfied with progress of the enquiry, though he noted that Chan "was not used to giving evidence under oath".

Chan will return to give further testimony before the hearing on Tuesday.

When consumers cut back, a lesson from Japan

Read this article.

SCMP: Treasury chief becomes first to face Legco panel over minibonds

20 Feb 2009

Paggie Leung

 

Secretary for Financial Services and the Treasury Chan Ka-keung is expected to face tough questions over policies and regulation of financial products today when he makes his first appearance at the Legco subcommittee investigating the Lehman Brothers minibonds fiasco.

Professor Chan, who will be the first to face the 22-member subcommittee set up to study issues arising from Lehman Brothers-related products, will attend a three-hour open hearing from 10am.

The chairman of the subcommittee, Raymond Ho Chung-tai, said yesterday that questions would focus mainly on the government's regulatory framework for structured financial products and dealings in securities, the sale of minibonds, and its policies on investor protection.

"The minister will be accompanied by a legal adviser - Department of Justice deputy law officer Cathy Wong Pui-ming - and Cheng Yan-chee, deputy secretary for financial services and the treasury," Dr Ho said. A written statement that had already been submitted by Professor Chan would be made public after the secretary confirmed it as evidence.

Peter Chan Kwong-yue, chairman of Allied Victims of Lehman Products, hoped the investigation would force the government to take responsibility for its role in the debacle. "Until now, the government has not shown accountability," he said. "Why were all these high-risk derivatives allowed to be marketed and sold as low-risk financial products?"

Hong Kong investors lost billions of dollars on minibonds guaranteed by Lehman Brothers when the US investment bank went bankrupt in September 2008. Minibonds are not corporate bonds, but consist of high-risk, credit-linked derivatives. They are marketed as a proxy investment in well-known companies.

Mr Chan said the chief executive and the financial secretary, who urged banks to buy back all the minibonds, should also be summoned.

Professor Chan's deputy, Julia Leung Fung-yee, and the heads of the Monetary Authority and the Securities and Futures Commission will also testify. Witnesses will testify under oath.

Primary education is deficient

BBC report.

Strong turnout shows money matters

Read this BBC report

More news about FISCA will be announced soon.

Selling a property - some views

 1. The report is good for those who do not have the time to do some research. The content of the report can be obtained from various property websites.  

   2. This is an isolated case. I guess it's bad luck for the owner to get only 1 buyer who pressed down the price. The buyer has insider news.  

 3. There are situations where desperate sellers who wants to get rid of the property fastest at a discount in order to tie over a crisis. Perhaps the price this agent brought in was the ONLY offer for the period they market. The sale took place at a time of transition when property market was about to take off. 

  4. Flipping a property for a fast gain is common practice, but hiding information/providing misleading information/not giving a seller a "best" deal is sinful of a property agent.  

  5. in all industries, there will be black sheeps. there should be some systems of control to weed them out. the housing agents industry is one desperately in need now.  

  6. Willing buyers vs willing sellers. Do ur homework. DON'T BLAME ANYONE. BE SMART!  

 7. Middle men are dangerous.

  8. All property agents should be regulated. There are simply too many fly-by-night agents in Singapore. 

  9. Better engage an agent (pay him a fee and transfer the accountability risk to him) to do it.  

  10. Invite prospective buyers (not agents) to send in their quotations with a description of the properties listed in the newspaper. 

Survey: Selling or renting a property

The newspaper carried the story about a property agent being sued by the seller for giving bad advice to sell a property at below the market value. The property was sold to the buyer (who was a friend of the agent) who then re-sold the property at a big profit.

The court decided in favour of the plaintiff and required the property agent to compensate the original owner for the loss.

What is your view on this matter? Survey.

Here are the survey results.

Before you buy, sell or rent a property, invest $25 in a property report. Here is a sample report. 

If you are interested in this introductory offer, complete this form.

Bestinsurancequotes4u.com

Creative E Marketing

Was incorporated in September 2000 to enable local and regional agents to leverage online marketing power and gain access to consumers shopping for their insurance needs on the Internet. Since its inception, A has quickly risen to become one of tho top source for online insurance marketing.

Lead Program was designed with the local agent mind. It gives the agent control over the lead price, the territory they want to target, and their daily volume of leads. We help agents grow their business by providing them with high quality, real-time auto insurance leads, homeowners insurance leads, and term life insurance leads .

we continues to expand services to help agents market themselves on the Internet. In January of 2006, Creative E Marketing launched bestinsurancequotes4u.com, an online directory of auto insurance agents. Agent Directory helps agents increase their online marketing reach by targeting consumers looking for a local insurance agent. we continues to create innovative ways to help insurance agents use the Internet to grow their business.

About Creative E Marketing

we Corporation has been in the online insurance business since 2000 and is one of the largest producers of personal lines insurance in the U.S. Each year, millions of insurance consumers visit us to gain insurance knowledge as well as comparison shop for insurance policies.

In 2007, over 5 million insurance consumers visited us. When ready to get an insurance quote, consumers fill out one of our online insurance questionnaires, and become the insurance leads that are available through us.

Term Life Insurance - Money Saving Tips

Term life insurance is a very affordable way to provide life insurance coverage for your loved ones. Even though it is affordable, there are still ways to save on a policy while making sure you maintain the proper coverage level you need.

1. Buy Term Life Insurance When You're Young

Many people may feel they don't need life insurance when they are young. While your financial needs may be lower at a younger age, the rates are also substantially cheaper when you're young. Remember, the goal is to cover your primary assets (like your salary and house) so that if something were to happen to you, your beneficiaries would be able to persevere financially. The best advice is to lock in as much protection at a young age while your health and prices are still good.

2. Your "Half" Birthday Could be Costly to Your Life Insurance Premiums

While some companies raise their prices based on your actual age, most companies increase the price of their policies six months before your birthday. It's a term called "Age Nearest" in the industry, and that half-year price increase could really add up over a 20-year term life policy. As above, the quicker you purchase your policy the better.

3. Select the Right Length of Term Life Insurance Coverage

Everyone has different needs, and not one size fits all when it comes to term life insurance. While it may make sense for people in their 30s and 40s to secure a 20-year term length, a 10-year term might be more appropriate for someone nearing retirement. People who are trying to quit smoking, for example, might be best suited purchasing a shorter term (and then replacing it with a longer term policy when they qualify for non-tobacco prices). Lastly, individuals who have 30-year mortgages might want to consider a 30-year term to ensure that the house is protected throughout the period of the loan.

4. Check for Term Life Insurance Policy Price Breaks

Companies often offer "price breaks" at certain coverage amounts (e.g., $250,000 vs. $225,000). The truth is that many people can actually pay less money for more coverage. Check how little your prices increase when you increase coverage to $250,000, $500,000, or $1,000,000.

5. Buy the Right Amount of Term Life Insurance Coverage

Many agents may try to sell you more coverage than you need. The purpose of life insurance is to "indemnify" (replace financial loss), and what most people should be looking for is income replacement for their beneficiaries. Independent financial planners recommend the following rule of thumb: purchase an amount of coverage equal to 6-10 times your annual gross income.

6. The Right Hobby With the Wrong Insurance Company Could Cost You on Life Insurance

People who participate in high-risk sports or activities (such as hang-gliding, skydiving, mountain climbing, scuba diving, and racing), or even those who like to have an occasional cigar could very well pay more money if they don't pick the right company. Every company looks at risk factors differently and some are more liberal in certain areas than others. Speak with a licensed insurance expert and make sure they have all the underwriting criteria at their disposal and match you with the right company.

7. Work Life Insurance Policies Aren't Always the Best Deal

While purchasing a life insurance policy through your employer is convenient, it may not be the best deal available to you. Work policies are often based on a composite profile of the employees you work with, many of whom may be less healthy than you, or have other underwriting factors that might drive up rates. These type of policies also expire if/when you leave the company. Inexpensive term life insurance polices that cover your dependents until they can live comfortably on their own are often a better alternative.

8. Check Out Your Payment/Billing Options with Term Life Insurance

Many life insurance companies offer discounts to consumers who pay their premiums annually, or who pay monthly by electronic funds transfer (EFT).

9. Review Your Term Life Insurance Policy Often

Do a review of your life insurance policy a minimum of every three years, if not more often. Rates may be lower, and your circumstances may have changed, necessitating more or less protection. If you are replacing a policy, make sure you allow enough time to get your new policy in place so coverages won't overlap or lapse.

10. Don't Overspend on Term Life Insurance Protection

Term life insurance is the most affordable and cost-effective pure protection available, and it is typically much less expensive than a comparable whole life policy. The old axiom still rings true: "Buy Term and invest the difference."

www.bestinsurancequotes4u.com

Service to lodge a complaint

Some investors of the credit linked notes received their rejection letter. They telephoned me for assistance. They have not read my blog or been in touch with the group leaders. 

I am not able to provide individual assistance to these investors. If you need assistance to lodge a complaint with FIDREC, you can contact Adrian Tan (email: atans1@hotmail.com)

Adrian will charge you a small fee for the time that he has to spend to help you. You can discuss the fee with Adrian and decide if you wish to pay for his services.

You can also read my blog to get in touch with the group leaders for the credit linked notes that you have bought. If you wish to join a class action, you can read my blog for announcement of the meetings.

 

Rejection letters from financial institutions

Many note holders (of mini bonds, high notes, pinnacle notes, jubilee notes) are getting rejection letters from the financial institutions.  They are disappointed. They wish to take legal action. 

I am getting e-mails from these investors. It is quite discouraging to see so many people who are disappointed with the decision of the financial institutions.

Here is a comment:

The most insulting part is that we all got form letters, and not even one word of explanation was given. That is why the XXX brand stand for, cruelty and arrogance. No one in my family and no one that came after me will even bank with this brand.

Pro-Trader: learning trading in a simulated environment

Pro-Trader was designed to give a simulated experience of trading in financial assets, especially of how prices respond to  news that occur at any time. A person has to practice many times on this game to get an insight and understanding of the trading environment in the real world. 

Article.

Discuss respectfully

Read this article

Give your views here.

The Online Citizen

Taking care of the old parents

Wonderful short story posted in www.theonlinecitizen.com

A frail old man went to live with his son, daughter-in-law, and a four-year old grandson. The old man’s hands trembled, his eyesight was blurred, and his step faltered. The family ate together nightly at the dinner table. But the elderly grandfather’s shaky hands and failing sight made eating rather difficult. Peas rolled off his spoon onto the floor. When he grasped the glass often milk spilled on the tablecloth. The son and daughter-in-law became irritated with the mess. So the husband and wife set a small table in the corner. There, grandfather ate alone while the rest of the family enjoyed dinner at the dinner table. Since grandfather had broken a dish or two, his food was served in a wooden bowl. Sometimes when the family glanced in grandfather’s direction, he had a tear in his eye as he ate alone. Still, the only words the couple had for him were sharp admonitions when he dropped a fork or spilled food. The four-year-old son watched it all in silence.

　　One evening before supper, the father noticed his son playing with wood scraps on the floor. He asked the child sweetly, “What are you making?” Just as sweetly, the boy responded, “Oh, I am making a little bowl for you and mama to eat your food from when I grow up.” The four-year-old son smiled and went back to work. The words so struck the parents that they were speechless. Then tears started to stream down their cheeks. Though no word was spoken, both knew what must be done. That evening the husband took grandfather’s hand and gently led him back to the family table.

　　For the remainder of his days he ate every meal with the family. And for some reason, neither husband nor wife seemed to care any longer when a fork was dropped, milk spilled, or the tablecloth soiled. Children are remarkably perceptive. Their eyes ever observe, their ears ever listen, and their minds ever process the messages they absorb. If they see us patiently provide a happy home atmosphere for family members, they will imitate that attitude for the rest of their lives. The wise parent realizes that every day is being laid for the child’s future.

Avoid dual currency products

Dear Tan
I am from Malaysia. I wish to invest in dual currency investment . Can you advise in this market situation , which foreign currency can invest ? Aussie dollar? any risks ? I am new in this investment. Will I lose all my money or i will make profit from it.

REPLY

My advice is to avoid all dual currency products. Read my views .

www.tankinlian.com/faq

You can also search my blog for postings under the title "dual currency".

Forum for DBS High Notes 5 investors

DBS High Notes Investor Group (HNIG) will be holding a Forum to discuss legal options.

Date: Wednesday, 18 Feb 2009
Time: 6.30pm Registration begins, 7.00pm sharp forum commences
Place: PSB Academy Delta Road Campus, 355 Jalan Bukit Ho Swee

For new comers, you must register with us at dbs.hn5@gmail.com
For more information and to register, please email dbs.hns@gmail.com

CPF Life Annuity - reduced to 4 plans

It is good news that the Government has reduced the CPF Life Annuity to 4 plans, from the original 12 plans.

I wonder why they decided on 12 plans in the first place. I have always felt that it was unnecessarily complicated and have given my views on this matter. Anyway, the earlier structure was recommended by a committee of distinguished people that met and received the feedback of a large number of people over several months. It seems that there must be something wrong with the way that decisions are taken in Singapore.

When I gave my feedback to the REACH forum, I suggested that the CPF Life Annuity should be made attractive, rather than compulsory. If it is attractive, many people will opt to join the scheme. It can be made attractive by co-funding  by the Government or earn an attractive (higher) rate of interest. The cost to the Government is small and could be easily afforded. (This was before the loss of hundred of billions on the investment of our reserves!)

I do not have the details of the 4 plans. I am not sure if they are placed on the right structure or are still flawed. I shall study it and give my views later.

Surveys

Click on the label "Survey" on the right panel to take part in the various surveys (of interest to you) and to view the results. 

Survey: Central database of medical records

Should we have a central database of medical records? Will it lead to more efficient treatment and low medical cost? Give your views in this survey.

Here are the survey results.

Survey: Jobs Credit Scheme

Give your views on the Job Credit Scheme in this survey.

49 people responded to the survey within 12 hours. Here are the results. Most of the respondents do not like the scheme. They find the name of "job credit" to be misleading, as it is actually a wage subsidy and not a credit (that needs to be repaid). They prefer other ways to use the $4.5 billion.

Survey: Compensation for Credit Linked Notes

This survey is for you to share some information about the compensation offer given to you on the credit linked notes. 

As you are under a "no disclosure agreement", you do not have to provide your particulars. You can avoid giving personal details that can identify your case specifically.

Please provide general information that can be helpful to other customers who were misled into buying these notes in this survey.

Here are the survey results.

Visitors to Tan Kin Lian's blog

I like to ask the regular visitors to my blog to register your e-mail address in the Google Group shown at the top of the right panel. This will allow me to send an e-mail to notify you of matters that may be of interest to you.

Bought credit linked note from stockbroker

X approached me for advice. He bought the Minibond from his broker (i.e. securities firm). The broker telephoned him and advised me to buy the product. The broker gave him the wrong information about the product, but admitted that this was the same information provided by Lehman Brothers in the briefing.

X wanted to join a class action, but there were insufficient number of investors in the same category (i.e. approached by broker through the telephone) to form a class.  X decided that his best option was to file a complaint with FIDREC. He felt strongly that he had been misled, but he was not confident of presenting his case clearly.

It is important that X made his point of mis-selling clearly in the complaint filed with FIDREC. I advised X to approach Adrian Tan (atans1@hotmail.com) and seek his assistance to prepare the complaint. X should pay a fee for the time taken by Adrian to study and write the complaint, but this will be lower than the fee charged by a lawyer. Furthermore, Adrian Tan is more familiar with this matter. X was happy to take my suggestion.

I wish X all the best in lodging his complaint.

Invest in Government Securities

Dear Mr. Tan,

I have written a series of posts this time on Singapore Government Securities i.e. SGS T-Bills and Bonds. Some of the topics I covered includes on an introduction to SGS, how to buy SGS and the advantages of SGS over fixed deposits. If you think it's useful for your readers, I would be glad if you can post on it on your blog. The link is http://www.moneytalk.sg/search/label/SGS. Thanks.

See the contact person; read my blog

Dear Mr. Tan,

I have just received a rejection letter from the financial institution. What do I do? Who should I approach?

REPLY

Please read my blog. I do not have the time to give individual advice. I cannot also find the time to search for information for you. You should contact the contact person for the product that you have bought (listed in my blog) and ask for his or her advice on the actions that they are planning.

Register for class action now

Dear Mr. Tan,

I have registered my complaint with FIDREC. Can I wait for their reply, before deciding on the class action? When is the closing date?

REPLY

You must register for the class action now. The lawyer will accept your registration on a tentative basis, and allow you to withdraw if you accept an offer of settlement through FIDREC.  You should also learn about the advantages and risk of the class action now. 

If you wait for FIDREC's reply, it may be too late for you to join the class action. It is all too late for the lawyer to accept you at that time.

To register for the class action, you must see the contact person for the product that you have invested. This is shown in my blog. Search for it there. Please do not expect me to handle your individual request or to give individual advice, as I do not have the time to handle so many people.

Minibond Seminar - February 2009

The Minibond Victims Group will be organizing a seminar before the end of February under the theme "Rejected Or Partial Compensation: What Do You Do Next?"

We are expecting a Senior Counsel to be present during the seminar. Further details of the date, venue etc will be posted in Mr. Tan's blog as soon as possible. We will also be sending email updates to all those who have registered with us .

Minibond Victims Group

Standard Life to repay clients

Standard Life is to reimburse 97,000 customers who lost 5% of their money when the value of its Pension Sterling Fund, worth £2.1bn, was cut last month. Story.

Use CPF to repay education loans

Dear Mr. Tan,

Govt have been urging us to upgrade our skill etc. Since the global market is so bad now, why can't we use our CPF funds for our educations fees? Some of us hv to resort to taking loan from bank to service our edcuation. I feel we should be allowed to use CPF to service our education loanm, since the Government has also dipped in the country reserve. Do you think we can bring this up?

REPLY
I suggest that you see your Member of Parliament.

Term insurance - for family protection

Dear Mr. Tan,

You advised a person to have life insurance for 5 to 10 years of earnings. If I earn $50,000 a year, do I need $500,000 of life insurance? How much will it cost? Can I afford it?

REPLY

Assume that you have a young family and you are now 30 years old. If anything happens to you, you your family will need an income for the next 25 years (until the children are grown up). Let us assume that 60% of your income is set aside for the family expenses (i.e. 40% is for taxes, savings, and your personal expenses). Your family needs $30,000 yearly for the next 25 years.

Using a discount rate of 3%, the present value of the 25 year income stream is $538,000. This is 10 years of your income.

If you take a level term insurance for 25 years, you have to pay an annual premium of about $850 (male) or $475 (female). This are my indication of the fair premium rates. It represents less than 2% of your earings. You may be able to find an insurance company to offer a lower premium rate.  

You can set aside 10% to 15% of your earnings as savings. You can invest in a balanced fund comprising of bonds and equities. 

If you wish to pay a lower cost, you can buy a term insurance that reduces the sum assured gradually over the term. (As your children grows older, you will need less coverage to take care of their needs. Also, you savings would have increased each year). The cost of a decreasing term insurance is less than 50% of the level term insurance (indicative $425 for male, $240 for female).

I will be approaching a few insurance companies to offer attractive term insurance rates to members of FISCA (i.e. the financial services consumer association to be launched soon).

Blog will hit 1 million visitors by 28 February 2009

Earlier, I estimated that my blog will hit 1 million visitors by 23 February. I wish to change it to 28 February, as the visitors have slowed down during the past two weeks.

Apologies by the bank bosses

Former bank bosses say sorry.

I's sorry the iceberg was there.

Accountability

Dear Mr. Tan,
You may wish to watch this video clip. I hope that our politicians have the same gumption to grill the MAS about their failure in the sales of structured products in Singapore.

 

Temasek - slightly less Singaporean

Article

Treat Policyholders Fairly

Article.

SIAS COMMENT may be detriment to INVESTOR

Dear Mr. Tan Kin Lian

I have the worry that SIAS statement dated 7 February 2009 and MAS affirmation could actually weaken the investor position, un-wittily. As a result, the FI could corner the investor even if they are in the complete wrong.

Let me give you a HYPOTHETICAL illustration below.

1. FI offers 30% compensation

2. If the investor accepts, the investor will only get 30%. Investor will lose the possibility of full claim (the rest of 70%), reimbursement of costs and compensation for distress. The FI saves 70% of compensation and other related compensation. Most importantly, FI escapes being punished under the Financial Advisor Act.

3. If the investor rejects, the investors will have to fight on his own. That means investor forfeits the original 30% compensation. Investor will have to take out money and time to fight the case, and not to mention the stress and anguish of injustice investor has to go through. While the FI fight the case as an institution with full resource and support eg. full-time staff, corporate lawyer, financial advantage etc. Whilst, the investor has to fight as an individual with bare knuckle and with little knowledge and financial resource. This is another situation of “institution vs individual” and “strong vs weak”.

With the above illustration, FI stands on the upper hand.

If my analysis is correct, and if I were the advisor for the FI, I would be well rewarded by advising the FI to compensate all the investors with investment below $100,000 a compensation of 30%. I think more than 90% of the investors will accept it, as the investors are being cornered. The FI will amass their might to fight the remaining disgruntled 10% investors.

This is an effective strategy. Using the military metaphor, you have effectively segregated and castrated your opponents, thereafter using “an army of Goliaths to fight an infant David”.

If the FI chooses to take advantage of SIAS’s statement, I hope not. The investor will lose out greatly both in terms of unfairness and injustice.

It is unfair because the investor will likely be cornered to accept 30% compensation even if the FI is in the complete wrong. This is especially so when the investor invested less then $100,000 and below. The original words of comfort from MAS that “complaint handling should not be based on legality but guided by principle of fairness” will come to nothing. The investor is misled and suffered loss, he could only recover 30% compensation. Investor is unlikely to spend more than 100,000 legal costs (Note: Structured notes is complicated and legal will not be cheap.) to fight the remaining 70% or $70,000 claim.

It is unjust because investor who is being misled, if investor accepts 30% compensation would have to pay for “70% of the FI who misled”, suffer “anxiety and anguish” and see the FI “escapes punish by law under the Finance Advisor Act”. It is unjust because if investor rejects the 30% compensation, he stands alone fighting a disproportionate battle against the FI. Hopefully, the money invested is not the investor’s coffin money or cash reserved for children tertiary education.

I think FI will take maximum legal leverage. This is because admission to mis-selling is self-incriminating that FI contravenes provision of the Financial Advisor Act.

I really hope that my deepest fear of injustice will not occur to ordinary people.

FROM: CASHEW NUT

REPLY

The position stated by SIAS is correct. If the investor goes to FIDREC or take legal action, the offer by the financial institution is automatically withdrawn. 

I believe that a fair offer is 50% of the amount of the loss, i.e. that the loss should be shared equally between the distributor and the investor. I hope that the financial institution will agree to offer 50%, so that most of the investors will accept it as a fair offer.

Buying a life insurance policy

Dear Mr. Tan,

I read from your blog that the minibonds and other structured products, earning 5% yield, can be very risky.  I do not wish to take this kind of risk. Is it all right for me to buy a life insurnce product? Although the return is low, it is at least capital protected and relatively safe.

REPLY

If you save $5,000 a year in a life insurance policy for 20 years, the total savings is $100,000. 

The benefit illustration shows the return that you can get assuming the gross return over the next 20 years to be 3.75% or 5.25%. The average is 4.5%. In my view, this is a reasonable projection for the next 20 years, assuming a balance mix of investments at moderate risk.

If you get an average return of 4.5%. you should get $164,000 at the end of 20 years. However, the actual return is lower, due to the charges taken away by the insurance company to cover marketing and other expenses and profit. In most cases, the charges is about 50% of the gain, i.e. $32,000. This leaves a maturity return of $132,000 or a net yield of 2.6%.

I consider a net yield of 2.6% to be unsatisfactory, as it may not be sufficient to cover the rate of inflation.

A good value policy will take away about 25% of the gain, leaving a return of $146,000 or a net yield of 3.5%. As a rule of thumb, the reduction in yield should not exceed 1%.

If you wish to invest in a life insurance policy, you should ask the following questions.

1. What is the projected return on my policy, based on the assumed yield on the investments?

2. What is the amount deducted in various charges to cover the death benefit and expenses?

3. How much, as a percentage of the assumed gain, is taken away by these charges?

4. What is the effecitve reduction in yield?

If the charges is more than 25% of the projected gain, the life insurance policy is high cost and does not give good value to the customer. It is better to buy term insurance for the life insurance cover and invest the savings in an indexed fund (such as the STI ETF). Alternatively, the reduction in yield should not exceed 1%,

Thought for the day - Justice

Contributed by Ho Cheow Seng

"Where justice is denied, where poverty is enforced, where ignorance prevails, and where any one class is made to feel that society is an organized conspiracy to oppress, rob and degrade them, neither persons nor property will be safe."

 

[Frederick Douglass]

 

Survey: An active Parliament

Is it good for Singapore to have an active Parliament where policies are actively debated? Give your views in this Survey

Here are the survey results.

Challenges faced by alternative parties

Here is my speech given at the Forum organised by the Singapore Democratic Party.

Here is a video recording of my speech. Source:  The Online Citizen.

Class action on credit linked notes

It is important for the investors to contact their group leaders and get ready for the class action. You should register with the group leaders now on a "in-principle" basis. This allows the group leaders to know your contact details. As this is "in-principle", it does not commit you to make any payment now. You can also withdraw later.

After registering for the "in-printiple" basis, you can still wait for the offer from the financial institution or lodge the complaint with FIDREC. In case, FIDREC rejects your complaint or offer an inadequate sum, you can proceed with the class action.

You must register now. If you wait until a later date, you may miss the boat. I will not be able to help you at the last minute.  The contact persons are found here.

Compensation for the Credit Linked Notes

The general public in Singapore had the impression that most of the investors in the credit-linked notes (i.e. minibonds, high notes, pinnacle notes, jubilee notes) had been compensated. The newspapers reported that 25% had full compensation and 32% had partial compensation.

Several people talked to me about this matter. I gave them the following facts and observations:

1. Most investors who received full compensation invested small sums, i.e. $20,000 or less.

2.  Most investors who invested large sums, i.e. $50000 or more, received rejection letters

3.  Most offered partial compensation rejected the offer, as the amount was too small

4.  I estimate that the actual compensation is probably 10% to 15% of the invested sums

Most people that I talked to were shocked! They had been given the wrong impression through reading the newspapers. They now realise that the perception and reality are quite different. Many investors are still very disappointed and angry.

Survey results

SFC may use stick to force banks into minibond setttlements

The Securities and Futures Commission may disqualify banks from selling securities products if they are not willing to follow the example set by Sun Hung Kai Investment Services over the minibonds saga, sources said.

The company agreed late last month to refund up to HK$85 million to investors who bought structured notes linked to collapsed US investment bank Lehman Brothers.

The regulator will first deal with big banks, the sources said.

The SFC is now liaising with banks to try to get them to settle with minibond investors by using the Sun Hung Kai Investment deal as a reference and may resort to disciplinary action, the sources said.

Source

Minibond probe into several lenders expected to end soon

Dennis Eng
Feb 06, 2009

The Securities and Futures Commission is expected to wrap up some of its investigations into the Lehman Brothers minibonds saga soon, sources say. It is understood its investigations involve several big banks.The sources said it was hoped the banks would follow the example set by Sun Hung Kai Investment Services, which last month agreed to refund fully the ...
Home/News/Hong Kong -

Source:

Opinion of Queen's Counsel

For strategic and confidentiality reasons, I will not be reporting on the opinion of the Queens Counsel through this blog. 

I will provide the information to the leaders of the various groups, ie Minibond, High Notes, Pinnacle Notes and Jubilee Notes). We have also approached several Senior Counsels in Singapore and some have agreed to advise these groups.  

If you have invested to take legal action, you have to join the respective groups. The contact persons are shown here.

Suggestion to stimulate the Singapore economy - Money multiplier

Dear Mr Tan,
I wish to submit the following suggestion to stimulate the Singapore economy

1) First, the government to issue cash voucher with mutiple nomination of $100 with expiry of 1 year. This voucher would be sent out to all Singaporean.

2) With this voucher, the catch is that it must be spend with any SG establishment with minimum purchase of $150 in a single receipt.

3) So, it would have the immediate desired money mutiplier effect for demand within the expiry.

4) SG establishment receiving these $100 voucher through customer payment can be creative by paying part of their employee pay package with these $100 voucher based on $80 employee wage (opt in basis by individual employee depending on their need for these voucher). This would be implied improvement of the firm cashflow as the more voucher which the firm collects mean his sales turnover has improved. And, by paying voucher to employee at employee option, it free up some cash particularly the profit make when the voucher has to be spend with additional $50 cash.

5) The next catch is that this $100 voucher has a depreciating effect that by end of the expiry date, the remaining value which could be converted to cash through SG bank is $80. The reasoning for this approach is to further stimulate those SG industries particularly those with high profit margin such as retail store, high end products and capacity measured establishments such as Concert, Cinema and exhibition space which having 20% discount (based on proceed of $80) would not be an issue rather than the actual sales volume.

6)Inevitably, I believe that with these $100 voucher, demand and supply would create a secondary trading market for this voucher during the expiry date which would further spur up comsumption and believe the government through their various agencies could also snap up these vouchers to stimulate further.

Simpl

Measures to stimulate the economy

First posted on 22 Nov 2008

Most countries adopt the following measures to stimulate a slowing economy:
> capital spending, e.g. build infrastructure, roads, bridges, etc
> reduce tax, i.e. consumption, income or profit tax
> give cash cheques to consumers to spend

Which method is better? I believe that a combination of measures are necessary. A lower rate of consumption tax (e.g. GST) will encourage people to spend and will stimulate the economy. Cash cheques for consumers may results in some of the money being saved, and not used for spending. But it can help the cash flow of the lower income people.

So far, no country has adopted the following measure (which is my preference):
> give a credit line to consumers at a low rate of interest - subject to a cap.

This credit line, which is given to someone who has lost a job, can help to pay the mortgages and meet the monthly expenses. It reduces borrowing on credit cards or other sources that can add to the interest burden. This credit line will encourage the people with jobs to continue their normal spending (as they do not need to increase their savings in case of retrenchment). More details in this article.

In many countries, there is no need for this relief loan as the retrenched workers can get unemployment benefit. This scheme is important for many Asian countries that do not have unemployment insurance.

Jobs Credit Scheme

Will the Jobs Credit Scheme save jobs and help the unemployed? Is there a better way to spend the $4.5 billion?  Read my views in this article.

Relief loans to replace loss of earnings

First posted on 18 Nov 2008

PM Lee said that our finances are sound. The Government will implement measures to stimulate the ecoomy.

The recent methods to stimulate the economy are:
a) Spend on infrastructure works (i.e. Singapore and China approach)
b) Give money to the people to spend (i.e the US stimulus package)

These methods are good. I wish to suggest a third method:
c) Allow each person to apply for a relief loan for the loss or reduction of earnings

Here is how the relief loan works:
1. The borrower can apply for a relief loan to replace the loss or reduction of earnings.
2. This loan will carry interest at 2.5% p.a.
3. The total borrowing can be subject to a cap of say $50,000
4. The loan can be repaid at any time, when the borrower has excess earnings.
5. It will be a first charge on the sale or your property or CPF savings
6. The CPF savings cannot be withdrawn for investments, while there is an outstanding relief loan

The relief loan will help the affected person to pay the mortgage and carry on the daily life with dignity. This facility will provide the assurance for the employed people to carry out their daily life without cutting back on their expenditure drastically, although they are expected to be more careful and frugal. They will follow SM Goh's advice to continue to spend and keep the economy moving.

If mortgages continue to be paid, the property values will be somewhat protected. The fall will be modest. The lower price will encourage other people to buy properties.

How does the Government manage the task of assessing and approving these relief loans? I suggest that they outsource it to the banks and the financial adviser firms, who will carry out the assessment to the expected standard in return for an agreed fee. They have many representatives who can be retrained to process these relief loans. It will create useful jobs for these representatives.

This concept is especially relevant to Singapore, as we do not have any unemployment benefit. A relief loan can be a good alternative to help the affected people.

TOC: Social Justice and Fairness

First posted on 7 Dec 2008 - rally organised by The Online Citizen

The theme for this rally is “Social Justice and Fairness”. I like to talk on two points:

1) Our society should be more egalitarian.
2) The elected leaders should represent the people.

Wages
What is being egalitarian? It is being more equal. It means that the gap between the rich and poor should be narrower. In the past 10 to 20 years, the gap has widened.

We know how much the high income earners earn each year. Salaries of $1 million, $2 million, $5 million or $10 million are quite common in Singapore, in the business sector. Even our government leaders earn more than $1 million in salaries, as they are benchmark against the top earners.

I do not mind people earning higher salaries, if they are able to build the economic pie. But, the economic pie must be fairly shared with the other members of society.

I am worried that the low income earners are not earning enough to make a decent living. Many people have to work hard on two jobs, and they hardly earn enough to survive, to meet their monthly expenses. It is important that the salaries of the low income earners should be raised.

In many countries, there is a minimum wage that is tied to the cost of living. Everybody working a decent day’s work should receive a wage that is sufficient to pay for their living expenses, at a frugal level. They are not well off, but they should not starve.

Apart from an adequate wage, we must also give people some security against unemployment, especially if they fall victim without any fault of their own.

In some countries, there is unemployment insurance to give them some benefit for 12 to 24 months. It allows them to adjust a period to adjust. This type of payment ensures that they can continue to pay their mortgage and meet their living expenses for a period of time. They do not have to borrow on credit cards or from loan sharks and pay a high rate of interest, which adds to their burden.

Even America, which is the champion of the free market system, has a minimum wage for their workers. It also has an unemployment insurance scheme that makes payment for 12 months or slightly longer.

Singapore has schemes such as the workfare and assistance given by the community development council. We need to review the effectiveness of these schemes to make sure that they are able to address the real problems. I suspect that these schemes take a lot of work to administer and do not provide adequate assistance to the people in need.

Represent the people
Our elected leaders can represent the people and be the voice of the people. This requires the leaders to be freely elected at the general and by-elections. We should move back to the old days when most elections are contested and the candidates have to go out to win over the votes of the people.

The trend in recent years, where many elections at the group representation constituencies (or GRCs) are won through walkovers is not satisfactory. Some members of parliament have never been directly elected for several rounds, as they continue to win through walkovers.

We should move towards smaller GRCs and eventually to move back to the single member constituencies, which was the case in the 1970s and early 1980s. A free election will bond the leaders to the people. It will lead to a more united country. It will go back to the old days when the people are proud to be Singaporeans.

In recent months, more than 10,000 people have lost their hard earned savings by being misled into investing in the mini-bonds and other credit linked notes. They have signed a petition for the authority to carry out an independent investigation into the possible wrong doings by the financial institutions that created and/or marketed the products.

I hope that the authority will act on this petition, which has been signed by nearly 1,000 people. The signatories need to know if their appeals have been heard and have been fairly considered. They also like to know the progress and outcome of the investigation. As the goes, “justice has to be done, and seen to be done”.

Let me wish the very best for the future of our people and nation, and for Singapore.

Tan Kin Lian

Bonus restructure badly affected by the global crisis

Dear Mr, Tan Kin Lian,

I have two concerns about NTUC Income's bonus restructure enforced on policy holders effective last year, 2008.

First Concern
I have been paying about 11 years for an Income endowment policy. If I am not mistaken, my payout from NTUC Income at maturity date, 2011, will probably be badly affected by the recession. Had the bonus not been restructured in 2008, I would have a larger amount locked-in last year because the economy was bouyant in 2007 and the bonus for 2007 is distributed in 2008.

Second Concern
I think policyholders like me should have been allowed an opt out option last year when Income decided to restructure the bonus. This is because when I signed for my policy it was based on a different understanding of the bonus distribution. I have only two years more to pay my premiums so if I understood how my policy is affected by the bonus restructure, I should be allowed to opt out with no penalty. I find I cannot opt out now because of the financial penalty incurred, I have to continue my premium payments for this year and the next.

In conclusion, I expect my worst fears will be realised when I receive notification of downward revision on Income endowment policy after the end of Income's financial year.

I would like to hear from you. Thank you very much, your insights into these concerns I'm sure will be absolutely helpful.

REPLY
I agree with your views. I believe that NTUC Income should have allowed policyholders to make a choice to stay with the old bonus structure.

But the management and board was adament about their right to change the bonus structure and not to give this option. The chairman made a promise at last year's Annual General Meeting about the future bonuses. At that time, the promise was quite reasonable.

Subsequently, the global financial crisis came, and made the situation worse for policyholders - especially with the restructured bonus.

I suggest that you write to the chairman of the board of NTUC Income to express your views. You can also write to MAS.

Advice on lodging complaint on FIDREC

Mr Wang Says So http://mrwangsaysso.blogspot.com/is writing a series of articles on possible lines of arguments that investors could use when they use the FIDREC adjudication process. I urge you to read the articles.

 

The first two articles.

 http://mrwangsaysso.blogspot.com/2009/02/saga-of-structured-notes-what-next-for.html

 http://mrwangsaysso.blogspot.com/2009/02/saga-of-structured-notes-what-next-for_03.html

 

He may be writing other articles.