China Daily:More deals reached in Lehman debacle

11 Nov 2009

HONG KONG: Some 16 banks have agreed to settle all complaints arising from the sale of Lehman Brothers non-minibond products by March next year, a Legislative Council's subcommittee heard yesterday.

Choi Yiu-kwan, the Monetary Authority's deputy chief executive, unveiled the latest agreement with the banks at a hearing of the subcommittee on the debacle arising from the sale of Lehman Brothers financial products.

In a payout plan proposed in July by the Securities and Futures Commission, the authority and the 16 banks, minibond holders can redeem at least 60 percent of the value of their initial investments.

The deal also required the banks to immediately put improved complaint-handling procedures in place to resolve complaints on the sale of structured financial products other than minibonds.

Choi said before the proposal of the payout deal on July 22, the authority completed an average of 130 complaints about the sale of non-minibond products a month.

Since the introduction of the deal, it has finished some 550 investigations into complaints about the sale of non-minbond products every month on average, he said.

But he added that some 4,450 complaints about the sale of non-minbond products and about 1,000 about the sale of minibonds are still under the authority's investigation.

He expected the regulator can complete a monthly average of at least 1,000 investigations into the sale of non-minibond products in the near future.

Choi said it is now difficult to tell whether a payment deal can be bargained for Lehman Brothers non-minibond holders, but he has the idea in mind.

Lawmaker Starry Lee Wai-king urged the financial regulator to hold regular talks with complainants to update them concerning progress on the investigation.

But Choi said holding regular meetings with individual investors will place a huge demand on manpower. He said such a commitment may slow down the progress of investigations.

To help monitor the business of local banks, Choi said the authority holds meetings with each local bank's board of directors once a year to analyze how well the firms perform compared with other institutions of similar levels and advise them on their management, especially in the area of risk management.

Be aware of your rights

Many Singaporeans are ignorant of their rights as individuals or as a human being. This is due to many decades of trust in a government that will take care of the people, i.e. the "nanny state".

In recent years, the people are expected to take care of themselves, in line with the trend towards a "free market" environment. Unfortunately, they are ill-prepared for this responsibility. Many people are not aware about their individual or contractual rights.

It is easy for certain unscrupulous parties to take advantage of the ignorant people using unfair contract terms, unfair trading, investment scams or outright cheating, and get away under the guise of "caveat emptor".

The people who are cheated do not even know how to seek redress. They can engage a lawyer, but they find the fees to be too high, and they are wary about trusting the lawyer.

Here is my advice to Singaporeans:

a) Spend time to learn about your rights as human beings
b) Learn about the law of contracts and agency
c) Learn about the law on consumer protection, fair trading, fair contractual terms
d) Talk to lawyers who are your friends.

Tan Kin Lian

Bus arriving soon

I have been looking for a solution to show the arriving buses at an electronic display at bus stops. This is to help the older people with weak eyesight. A polytechnic lecturer told me that some countries have adopted a low cost system using wire mesh technology. How does it work?

Increase in motor insurance premiums

Many motorists have seen a large increase in motor insurance premiums in recent years. Some have their renewals rejected, due to bad luck or bad driving that have resulted in two or more claims. In some cases, the large claims were due to fraudulent claims lodged by third parties.

I have received e-mails of this nature from motorists over the past years, "Mr. Tan, I have been driving without any claims for more than 15 years. Last year, I had an accident. The other party lodged a large claim. The insurance company paid the claim, but did not check with me. This year, they want to increase my premium by 30%. What should I do?"

I usually advised them to find another insurance company and provided them this list of hotline numbers. However, they were unsuccessful in most cases, and most insurance companies would not want to take a motorist with a claim.

Some motorists have their renewals rejected due to two or more claims. They were not able to get another company to take over the insurance.

This may happen to a small percentage of motorists each year. For these people, getting renewals is a stressful exercise. Accidents can happen to anyone, even if you are careful most of the time. You may be careless just once, to get into trouble.

Some people who are caught in this difficult situation come to me for help. Other people who are not involved tend to say, "These drivers are reckless. They should not expect to get their insurance renewed. It is better that they keep off the roads".

This tends to be the attitude of Singaporeans, until they become the party that is personally involved. I hope that Singaporeans can be more empathic to people who are caught in a bad situation due to bad luck or circumstances beyond their control.

Tan Kin Lian

Express your views

I write this blog to express my views. Visitors to my blog can also express their views and give their reasons. I do not intend to engage in a debate with people having different views from me. This is not a platform for debating. I do not have the time to engage in one to one debates.

If you wish your views to be posted, you should show respect. Do not attack my views or any other views or make personal comments. If you are abusive, your views will not be posted. I do not block different views, but only those that are abusive or disrespectful.

Some visitors use this blog as a platform to promote their own views. Please create your own blog for your purpose.

Some visitors do not like my views, or see their views blocked. They are not required to visit this blog. There are 1 million other blogs that they can visit.

Invest your savings

Here is a chapter on "Invest Your Savings" from my book - TKL Financial Planning.