RED Portal (Real Estate Data)

I invite you to visit this property website,

www.easysearch.sg (Real Estate Data)

It contains useful information for buyers,seller and tenants of condominium properties.

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Please give your feedback on this website in this survey.

Misleading ad for single premium policy

COMMENT POSTED IN MY BLOG (Edited by me)

I just picked up a brochure with big words Single Premium Policy, from a certain company in Ang Mo Kio Hub. I was shocked.

This company has taken advantage of the generally positive sentiment about simple single insurance products. It emphasized in its brochure, an unguaranteed payout of "4.1% p.a." - but if you read the fine print, you "may" get the 4.1% only if you put the money for a total of 30 years.

The brochure cites an example: if you put 65,700 when you are 35 years old (duh.. which 35 year old has so much spare cash), then after 10 years you get a guaranteed return of $76,900. I calculated that this is a miserable return of 1.5% p.a. (the company didnt do this calculation for you. They prefer to mislead and emphasize heavily the non guaranteed figure of 4.1%). I think that 1.5% guarantee is a bit too low for a 10 year simple SPP.

The brochure explained that "up to 4.1% return" can be obtained! But to get the 4.1%, the first 10 year end non guaranteed bonus must firstly be realised (which may not happen), AND secondly, you must let the policy roll on another 20 years, and you get the money back in drips and draps over 20 years. Do note: a lump sum payback is prohibited. You have to put most of the Single premium in that company for 30 years to get 4.1% pa. Who in his right mind would part with $65,700 for 30 years in any company.

I think that companies should not use non-guaranteed figures as a carrot to hook the customers. This is not fair to the consumer! When drawing up illustration, they should use realistic figures.

I have bought SPPs many times before, but the issuers don't normally advertise the non-guaranteed return. In my view, a simple 5 year SPP is acceptable, not the complicated products that give a bad name to the industry.

REX

Free market (4) Access to information

For a market to work fairly, the buyers and sellers must have access to relevant and reliable information. If one party has more information than another party, the first party will have an advantage. In some cases, this advantage is acceptable, but in other cases, it would be considered as unfair.

In the stock market, it would be unfair for the people with insider information to be allowed to trade with other people without the same information. Regulations are made to prevent insider trading. Those who break the regulations could be prosecuted as a criminal offence.

In property transactions, the price agreed between the buyer and seller depends on the access to information about the property. Usually, the seller has more information about the property, such as the condition of the property and the existence of any legal liability. It is the duty of the seller to disclose the information to the buyer.

Both parties should also have access to information about the price of recent transactions of similar properties. This allows them to make the reliable assessment of the current market price, so that the agreed price is fair to both parties. If one party has more information, that party will be able to trade at an advantage over the other party.

Sometimes, the party with the information can withhold or mis-represent the information to the other party to get a better price. That is unfair and is taking advantage of the other party.

Where information is not available, the customer may have to rely on the advice of the property agents, who are expected to be more familiar with the market. Unethical agents may take advantage of their customers and give unreliable or dishonest advice. Some may have a conflict of interest, and fail in their duty of giving the best advice to their client.

To prevent unfair trading and unethical conduct of agents, it is best that information should be made easily available to all. For example, for property transactions, it is best for the prices of recent transactions involving similar properties should be made accessible to all parties in a convenient and clear way.

For trading in stocks, the buy and sell prices and recent transactions should be available to all parties to make their price decision.

When a client relies on the advice of a professional, such as a doctor or lawyer, there has to be a code of ethics for the professional to look after the interest of the client, rather than to apply their expert knowledge to take advantage of the client and over-charge for the professional service or to make a hidden profit on a transaction.

It is important for consumers to have access to independent advice, where there is the possibility that the professional may have a conflict of interest.

Tan Kin Lian

Hong Kong investor gets help from the Consumer Council

This investor sues Citibank with help from the Legal Action Fund of the Consumer Council of Hong Kong. I hope that Singapore can offer the same service to our people.

25 Sep 2009

Citibank has become the first financial institution to be taken to court by the Consumer Council over the Lehman minibonds saga.

And the case of nurse Chan Mei-ying may open the way for an avalanche: the council is readying more than 100 other cases with potential for court action.

Chan, backed by the watchdog's legal action fund, is suing Citibank on the grounds it misrepresented the nature and risk of a financial product. She claims to have lost HK$500,000 on her investment.

In the writ filed with the District Court, Chan claims bank staff told her the product was "very similar to a fixed deposit," with a yearly interest of about 4 percent. She says she was also told any potential loss would be less than HK$100,000 even if the stock market fell by half.

A Citibank manager filled out a risk profile in 2008 on her behalf. She was classified as an "active and experienced investor" with "aggressive" investment objectives and risk tolerance.

A spokesman for the Consumer Council said it is processing 120 other cases involving Lehman products that may end up in court.

Investors in 20 cases have decided not to pursue litigation.

According to the writ issued to the Citibank Taikoo Place branch, Chan became a customer in 1998, and about a year later a Virginia Yee Chung-nga became her relationship manager. Chan became a CitiGold client in 2004, and two or three years later an Elina Lau became her CitiGold relationship manager. Chan claimed she considered Yee and Lau as her investment advisers, and both recommended investments from time to time.

In 2007, Chan said, Lau described her as a "low" to "moderate" investor in a risk assessment. But Chan claimed she was not given a copy of the document. In January last year, Lau told Chan that the term on her fixed deposit of HK$400,000 had expired and invited her to discuss her investment plan.

Chan said she met Lau the same afternoon and was persuaded to subscribe to a Lehman equity-linked note. Chan invested HK$500,000 in the paper.

Chan claimed she was not told of a high risk or the potential interest rate of the product, which could be as much as 31 percent. But she was told she would have "lost a good opportunity" if she did not subscribe before the deadline. On September 15 last year, Chan said she was shocked to discover the huge loss when Lau called to say the note was negative in value owing to the collapse of Lehman Brothers.

Chan accuses the bank of a breach of duty and is claiming damages, interest and costs.

Risk of signing blank forms

Dear Mr. Tan
A few year ago, while working in another country, I bought an investment savings insurance plan on the recommendation of a representative from a Singapore bank. I learned later about the severe misrepresentations and undisclosed terms and conditions. The terms and conditions of the policy were never supplied to me, despite repeated writing to the bank for almost 15 months.

The representative took signatures from me and my wife on blank forms and assured us that he would send copies of the duly completed on his return to Singapore. But it never happened despite several written reminders to them.

The representative also fabricated the facts in the Financial Need Anlaysis form which included Risk analysis done for me. The said form was never discussed with me nor filled in by me. The representative’s office just emailed me the last page of such form and asked me to sign at the indicated place and return by fax the same. I did what was asked.

The receipt of fax was duly acknowledged by the bank. On the fax cover sheet, I mentioned that I was sending the last page of the form signed in blank as advised by them. It was also mentioned that my risk profile was a conservative investor and the purpose was to get a higher return compared to a time deposit.

Recently, after a lot of chasing, the bank has sent a copy of the form filled in by the representative. To my utter surprise, the information on the forms were all fabricated by the representative and he completely ignored my instructions on the fax cover sheet. He has shown me in the form as a Growth investor who can take higher risks with the money.

Based on such fabrication of a material document, the Bank is denying its liability of any kind for my investment loss.

Lesson: Never sign a blank form. Never trust a sales person who may act unethically.

RED Portal (13) - Popular Places

Under Search, you can click on "Popular Places". Enter the name of your place, e.g. Raffles Girls Primary School". You will see all housing projects within 1 km of this place. You will also see a map of these projects. You can visually see the distance of each project to the popular place.

www.easysearch.sg (Real Estate Data)

Control over reckless bankers

QUOTE:
“We cannot tolerate the same old boom-and-bust economy of the past,” Obama said after the talks. “Never again should we let the schemes of a reckless few put the world’s financial system and our people’s well-being at risk.”

Obama at G20, Pittsburg

People in charge really don't care

QUOTE

Most of the commuters would take this type of poor service as part of life in Singapore. There is no point in making a complaint. The people in charge, in SBS Transit or Land Transport Authority would not care. They might give some hollow apology or nice words, but they really don't care.

Read here.