Dishonest financial advisers and culpable insurance companies

I encountered the following two cases recently.

Case One. A consumer was advised by the adviser to invest a single premium of $50,000 as an investment in a life insurance policy, on the promise that it could give a better return than interest rate on CPF. She was not well educated or savvy. She was sold a annual premium policy with an annual premium of $50,000. When the second premium became due, she asked the adviser to explain why she had to pay another $50,000. He told her to ignore the request for the payment. The consumer learned later that there was a large deduction from the accumulated savings, which became clear only after one year. She complained to the insurance company. She had to go for interviews and encountered a lot of delays. I understand that the case has still not been solved.

Case Two. A foreigner, working in Singapore, was sold a life insurance policy on the misrepresentation that it was an investment product. The monthly premium was $3,500. She discovered to her horror, that 5% of the premium was deducted every month from the savings after 18 months. The financial adviser deliberately lied to her that the deduction was only 0.7% (which must be the fund management fee). The other deduction, to pay the distribution cost, was hidden from the consumer, who had asked about it.  The consumer asked for my advice on what she can do now to recover her loss. I asked her to write to the newspapers.

In both cases, I have used "she" to refer to the consumer and "he" to refer to the adviser. This may not be the real genders in the actual cases.

The culpability does not lie with the financial advisers alone. They also extend to the insurance companies that designed the products to levy a high upfront charge and hide the charge from the consumers. This allowed the dishonest agents to mislead the unwary consumers.

Tan Kin Lian