Editor
Forum Page
Straits Times
I use internet banking to transfer money to the other people through their bank account. I find this service to be convenient, compared to sending a cheque to them.
However, I find that the actual implementation of this service by my bank to be a hassle in the following aspects:
1. The bank requires the customer to create a record for each new payee and to authenticate it through a PIN sent through the mobile phone.
2. The bank requires the customer to enter the IB Secure PIN for every payment
These layers of security measures are duplicative, as the customer already has to enter user ID, PIN and an IB secure PIN to gain access to the internet banking facility.
The real risk to the customer is by entering the wrong account code of the payee or the wrong amount. The bank is not helping the customer to mitigate this risk.
By giving hassle and distracting the customer, these duplicative tasks actually increases the risk to the customer of making mistakes in entering the wrong bank account or amount. The inconveniences are aggravated when the computer system or internet is slow.
I believe that these security features may have been mandated by the regulator. I hope that the banks and the regulator should re-look at these requirements and simplify the process for the customer, while maintaining an adequate level of security. This will allow the customer to focus on ensuring that the entries are correct.
Tan Kin Lian
Monday, July 6, 2009
Prevent Mis-selling of Financial Products
I wrote an article to suggest the following measures to prevent mis-selling of financial products in the future, namely:
a. Enforce the law
b. Allow contingenncy fee system
c. Set up a consumer protection agency.
Read this article.
Funds Transfer
Service Quality Manager
DBS Bank
I find the funds transfer facility provided by DBS Bank through internet banking and ATM to be very useful. I wish to pass this suggestion for your bank to improve this service.
1. Type of account
When I make a funds transfer by internet banking or ATM to a DBS or POSB account, I am asked to specify the type of account, e.g. current, saving, or other type. Usually, the payee does not tell me the type of account. They only indicate DBS or POSB
Can you change the system to avoid specifying the type of account. I believe that the account number should be sufficient for DBS to identify the actual account.
2. Reference Number
When another person transfers money to me through ATM, the transferor is not able to enter a Reference in your ATM machine. I do not have any idea about the identity of the person making the payment to me through ATM.
Can you change your ATM system to allow a Reference Number to be entered. I am aware that this has to be restricted to a Numeric number, but this is better than no reference at all.
Thank you.
Tan Kin Lian
DBS Bank
I find the funds transfer facility provided by DBS Bank through internet banking and ATM to be very useful. I wish to pass this suggestion for your bank to improve this service.
1. Type of account
When I make a funds transfer by internet banking or ATM to a DBS or POSB account, I am asked to specify the type of account, e.g. current, saving, or other type. Usually, the payee does not tell me the type of account. They only indicate DBS or POSB
Can you change the system to avoid specifying the type of account. I believe that the account number should be sufficient for DBS to identify the actual account.
2. Reference Number
When another person transfers money to me through ATM, the transferor is not able to enter a Reference in your ATM machine. I do not have any idea about the identity of the person making the payment to me through ATM.
Can you change your ATM system to allow a Reference Number to be entered. I am aware that this has to be restricted to a Numeric number, but this is better than no reference at all.
Thank you.
Tan Kin Lian
Diverse Views
I wish to post this reply to the Note of Enouragement by Cashew Nut.
1. I state my views and give my reasons.
Some people who disagree with me, use this approach:
I hope that more people can come forward to express their views honestly and positively. If one has to be anonmymous or use a pen name, it is more important that one should show respect and fairness to other people.
Tan Kin Lian
I welcome diverse views. I hold different views from other people. I observe the following principles in expressing my views:
1. I state my views and give my reasons.
2. I do not pass judgement on other people's views (i.e who am I to judge?)
3. I do not attack another person.
Some people who disagree with me, use this approach:
1. They pass judgement on my views
2. They give an extreme interpretation of my views (i.e. put words in my mouth) and attack it
3. They attack me personally on other matters
4. They carry out these actions, while remaining anonymous.
I hope that more people can come forward to express their views honestly and positively. If one has to be anonmymous or use a pen name, it is more important that one should show respect and fairness to other people.
Tan Kin Lian
A poor return on savings in life insurance
When you pay premium for a whole life or endowment policy, a portion (say $X) goes to provide the insurance cover and another portion (say $y) goes towards savings to pay your the maturity benefit or cash value in the future.
The insurance company aims to earn a return of say 5% per annum on the savings portion. However, they take away more than half of the gain to pay commission to the agent, overhead expenses and profit for shareholders, giving a net return of less than 2.5% to the policyholder.
This net return is not guaranteed, as it takes the form of a bonus that can be adjusted by the insurance company.
When the investment return is bad (as has happened every few years), the insurance company cuts the bonus and gives you a lower return. If the investment return is good, the insurance company may not increase the bonus, as it prefers to keep the excess gain as "orphan money" in the insurance fund. The policyholder is likely to lose out in the long run and get a return lower than projected.
After deducting the cost of insurance (i.e. $X) the net return may be less than 1% per annum. This is a poor return for a long term savings plan.
This very low return is possible only if the policy is maintained for more than 15 years. If it is terminated earlier, the cash value is likely to be less than the total premiums paid, giving a negative return to the policyholder. Many policyholders lose more than half of their savings on early termination.
To give a fair return to the policyholder, an insurance company should follow this approach:
a) reduce its expenses, especially commission to agents
b) distribute most of its investment gain to policyholders
Unfortunately, to my knowledge, none of the life insurance company in Singapore follow this approach.
Hence, it is best to avoid all types of life insurance policies that have high expenses. Buy term insurance for the life insurance. Invest your savings in government bonds or an exchange traded fund.
Tan Kin Lian
The insurance company aims to earn a return of say 5% per annum on the savings portion. However, they take away more than half of the gain to pay commission to the agent, overhead expenses and profit for shareholders, giving a net return of less than 2.5% to the policyholder.
This net return is not guaranteed, as it takes the form of a bonus that can be adjusted by the insurance company.
When the investment return is bad (as has happened every few years), the insurance company cuts the bonus and gives you a lower return. If the investment return is good, the insurance company may not increase the bonus, as it prefers to keep the excess gain as "orphan money" in the insurance fund. The policyholder is likely to lose out in the long run and get a return lower than projected.
After deducting the cost of insurance (i.e. $X) the net return may be less than 1% per annum. This is a poor return for a long term savings plan.
This very low return is possible only if the policy is maintained for more than 15 years. If it is terminated earlier, the cash value is likely to be less than the total premiums paid, giving a negative return to the policyholder. Many policyholders lose more than half of their savings on early termination.
To give a fair return to the policyholder, an insurance company should follow this approach:
a) reduce its expenses, especially commission to agents
b) distribute most of its investment gain to policyholders
Unfortunately, to my knowledge, none of the life insurance company in Singapore follow this approach.
Hence, it is best to avoid all types of life insurance policies that have high expenses. Buy term insurance for the life insurance. Invest your savings in government bonds or an exchange traded fund.
Tan Kin Lian
A note of encouragement
MR Tan Kin Lian
May I offer a note of encouragement to your good work.
You should not loose heart when the response to your suggestions may not be as good as you expected. People take time to respond. It takes time to manifest from inward to outward. Even "educated" people like me takes a long time to unwind the process from inside to outside.
One of the scary things we see in myself and others is the apathy of the heart and lethargy of the body to talk about half-justice and half-truth. I think to make people able to think is more important than winning the debate. Once the people is able to think, then we shall leave it to the people to decide. For example, I am a father too.
My job to to impact good value and character (to the best of our ability), teach them to think independently and pray that God will lead them in their pilgrimage of life. I cannot impose once they come of age.
I have the interest of looking at the recent China history. The Chinese people during late Qing has gone through much soul searching. Even great men like "Zheng Guo Fan" and "Li Hong Zhang", they are searching and trying very hard to institute change from within the institution. Zheng Guo Fan did not suffered humiliation as a result and was hailed as a great leader and teacher. Li Hong Zhang is being portrait as a "traitor" although he did a fair amount of good things for China. History can be enlighening and cruel. It may not apply directly to Singapore, to respect history is the beginning of humanness and humanity.
Thanks a lot and God bless.
CASHEW NUT
May I offer a note of encouragement to your good work.
You should not loose heart when the response to your suggestions may not be as good as you expected. People take time to respond. It takes time to manifest from inward to outward. Even "educated" people like me takes a long time to unwind the process from inside to outside.
One of the scary things we see in myself and others is the apathy of the heart and lethargy of the body to talk about half-justice and half-truth. I think to make people able to think is more important than winning the debate. Once the people is able to think, then we shall leave it to the people to decide. For example, I am a father too.
My job to to impact good value and character (to the best of our ability), teach them to think independently and pray that God will lead them in their pilgrimage of life. I cannot impose once they come of age.
I have the interest of looking at the recent China history. The Chinese people during late Qing has gone through much soul searching. Even great men like "Zheng Guo Fan" and "Li Hong Zhang", they are searching and trying very hard to institute change from within the institution. Zheng Guo Fan did not suffered humiliation as a result and was hailed as a great leader and teacher. Li Hong Zhang is being portrait as a "traitor" although he did a fair amount of good things for China. History can be enlighening and cruel. It may not apply directly to Singapore, to respect history is the beginning of humanness and humanity.
Thanks a lot and God bless.
CASHEW NUT
No-fault motor insurance
Hi Mr. Tan,
What are you views on the no-fault motor insurance, that is proposed by the Consumer Association?
REPLY
I sent the following views to the Straits Time. The journalist mentioned it in his report.
There are two types of third party claims and they require to be dealt with differently.
a) Injury claims
For injury claims, it is useful to have a "no fault system" to compensate the injured party, similar to worker's compensation. Here is the experience of such a system used in Sweden. It allows for the compensations to be paid more promptly and fairly, and reduces the litigation cost. See this article in my website:
b) Damage claims
For damage claims, a better solution is for the regulation to require a motorist to lodge a third party claim directly with the insurance company, prior to arranging the repair of the vehicle. The past practice was that the third party will arrange the repair the vehicle with his workshop (who can inflate the claim) and then get a lawyer to lodge the third party claim against the insruance company (hence, adding up the litigation cost as well). (Note: I am not sure if the Motor Claim Framework introduced last year has already addressed this matter).
If the third party damage claim can be put on a proper framework, there is no need to change to law to introduce a "no fault" system for damage claims.
Are we over-reacting to Influence A (H1N1)
Read this article by Dr. Ong Hean Teik. It is purported to be publised in Malaysiakini. He advised Malaysians to take a different approach from Singapore, and to follow the approach taken in the USA.
There was a mention of Dr. Ong in my blog late last year.
There was a mention of Dr. Ong in my blog late last year.
The hidden ugly side of Singapore
Does this article give a fair description of the life of the poor in Singapore, or is it an exaggeration? Give your opinion here.
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