Dear Mr Tan,
I had attended the interview. It's feels like asking a criminal to conduct the trial and pass his own verdict. It may be a bit exaggerating but it's definitely not a fair trial. I will be surprise if anyone can get a fair hearing and compensaiton from this.
One of the most ridiculous question I was asked is, "If no one from X tell you it's a Fixed Deposit, what is your complaint then?". I never know a broking house is allowed to sell FD. I started to recall and found out that this person actually heads the department that was selling all these toxic products.....Head of Business Developement Department. So is it fair?
The other one is he claimed that X is only distributing and not selling. So there is no mis-selling. X not selling but did received a commission from the issuer, sound ridiculous again. I went alone; I will only challenge him when there is a fair trial.
I insisted on bringing the form home to fill in. He tried to pressured me to submit on the spot claiming that my hearing will be delay if I don't submit on the spot, etc. Clearly this is another one of those pressure tactic used. I told him off. I do not want to say much, because the other 2 persons just keep writing the moment I open my mouth. It was quite a hostile interview because of the stupid questions asked and the pressure tactic used.
It's a waste of time to attend. Think about it, it really a ridiculous approach from MAS. Like asking us to go commit sucide.
I'm sorry to bother you, but I think only you can help us and provide leadership to us since MAS is washing hand. I'm very disappointed with the government.
I wish to remain anonymous
REPLY
This is an interview. Is should not be described as a trial or interrogation. You can write a complaint to the "well regarded person" who is supposed to review the complaint handling process for the distributor, i.e. Mr. Ee, Mr. Low or Mr. Hwang.
Sunday, October 26, 2008
Deposit Guarantee scheme in New Zealand
Hi Mr. Tan,
I thought you might be interested to know how the deposit guarantee scheme is being implemented in NZ.
A few points to note:
1) It is a facility where the Crown guarantees people who have deposits with institutions in the scheme. It covers all retail deposits of participating New Zealand-registered banks, and retail deposits by locals in non-bank deposit-taking entities. This would include building societies, credit unions and deposit-taking finance companies.
It only covers deposits and other debt securities.
2) Financial instutions are charged and the charges might be passed on to consumer at the banks' discretion.
For institutions with total retail deposits above $5 billion, a fee of 10 basis points per annum will be charged. This means that a bank with $20 billion in retail deposits would pay $15 million in fees per annum.
Following changes announced on 22 October 2008, there are also now fees for the new business component of registered banks and non-bank deposit-takers that are not already subject to a fee charge. These institutions whose covered liabilities are under $5 billion will be charged the following fees on the cumulative growth in their book since 12 October 2008 (with an allowance of plus 10 per cent per year on this amount):
- 10 basis points per annum to institutions rated AA minus and above
- 20 basis points per annum to institutions rated A+, A and A minus
- 50 basis points per annum to institutions rated BBB+, BBB and BBB minus
- 100 basis points per annum to institutions rated BB+ and BB
- 300 basis points per annum to institutions rated below BB or are unrated
Growth would be measured, and charged for, monthly.
3) There is a deposit coverage cap of $1 million per depositor per covered institution
4) For non-residents:
The guarantee will cover resident and non-resident holders of debt securities issued by approved New Zealand registered banks.
However, for approved local branches of overseas banks existing on 12 October 2008, the guarantee for non-resident depositors in these branches will be capped at the total amount owed to such depositors at 12 October 2008, allowing for growth of 10 percent per year.
For approved non-bank deposit takers, only debt securities held by New Zealand tax residents or New Zealand citizens will be covered by the guarantee.
In all of the above situations, the deposit coverage cap of $1 million per depositor per covered institution also applies
5) Full set of Q&A at: http://www.treasury.govt.nz/economy/guarantee/qanda
In fact, this scheme is till being fine tuned. So the details are changed from time to time.
HL
REPLY
Thank you. I hope that the Singapore Government has similar charges and safeguards.
I thought you might be interested to know how the deposit guarantee scheme is being implemented in NZ.
A few points to note:
1) It is a facility where the Crown guarantees people who have deposits with institutions in the scheme. It covers all retail deposits of participating New Zealand-registered banks, and retail deposits by locals in non-bank deposit-taking entities. This would include building societies, credit unions and deposit-taking finance companies.
It only covers deposits and other debt securities.
2) Financial instutions are charged and the charges might be passed on to consumer at the banks' discretion.
For institutions with total retail deposits above $5 billion, a fee of 10 basis points per annum will be charged. This means that a bank with $20 billion in retail deposits would pay $15 million in fees per annum.
Following changes announced on 22 October 2008, there are also now fees for the new business component of registered banks and non-bank deposit-takers that are not already subject to a fee charge. These institutions whose covered liabilities are under $5 billion will be charged the following fees on the cumulative growth in their book since 12 October 2008 (with an allowance of plus 10 per cent per year on this amount):
- 10 basis points per annum to institutions rated AA minus and above
- 20 basis points per annum to institutions rated A+, A and A minus
- 50 basis points per annum to institutions rated BBB+, BBB and BBB minus
- 100 basis points per annum to institutions rated BB+ and BB
- 300 basis points per annum to institutions rated below BB or are unrated
Growth would be measured, and charged for, monthly.
3) There is a deposit coverage cap of $1 million per depositor per covered institution
4) For non-residents:
The guarantee will cover resident and non-resident holders of debt securities issued by approved New Zealand registered banks.
However, for approved local branches of overseas banks existing on 12 October 2008, the guarantee for non-resident depositors in these branches will be capped at the total amount owed to such depositors at 12 October 2008, allowing for growth of 10 percent per year.
For approved non-bank deposit takers, only debt securities held by New Zealand tax residents or New Zealand citizens will be covered by the guarantee.
In all of the above situations, the deposit coverage cap of $1 million per depositor per covered institution also applies
5) Full set of Q&A at: http://www.treasury.govt.nz/economy/guarantee/qanda
In fact, this scheme is till being fine tuned. So the details are changed from time to time.
HL
REPLY
Thank you. I hope that the Singapore Government has similar charges and safeguards.
Singapore Government guarantees bank deposits
The Singapore Government has guaranteed all bank deposits in Singapore. I think that this is a bad idea. It is putting taxpayers at risk, without any appropriate return.
Here is a possible risk. A foreign bank receives $1 billion of deposits in Singapore. The bank engages in risky trading and lost $1 billion. After deducting its capital, the remaining loss has to be borne by the Singapore Government, actually the taxpayers of Singapore.
The Monetary Authority of Singapore may have ways of monitoring this risk and preventing it. But, can MAS look after the detailed operations of all the banks in Singapore? Do they have the resources and expertise?
Suppose the Singapore Government does not give this guarantee. Some of the money in Singapore will flow to Hong Kong or Malaysia. To keep the money in Singapore, the banks have to offer higher interest rate, maybe 3%, 4% or 5%. This will allow the deposit rate to increase to the market rate, and give the public a better interest rate on their savings. This is a good idea.
If there is a real need to guarantee the deposits, perhaps it should be up to 50% instead of the total sum. Maybe, the bank should pay some guarantee fee to the Singapore Government.
I hope to raise this point to the Singapore Government at an appropriate time, if my views are confirmed to be sensible. I look forward to receive the views of knowledgeable people on this matter.
Here is a possible risk. A foreign bank receives $1 billion of deposits in Singapore. The bank engages in risky trading and lost $1 billion. After deducting its capital, the remaining loss has to be borne by the Singapore Government, actually the taxpayers of Singapore.
The Monetary Authority of Singapore may have ways of monitoring this risk and preventing it. But, can MAS look after the detailed operations of all the banks in Singapore? Do they have the resources and expertise?
Suppose the Singapore Government does not give this guarantee. Some of the money in Singapore will flow to Hong Kong or Malaysia. To keep the money in Singapore, the banks have to offer higher interest rate, maybe 3%, 4% or 5%. This will allow the deposit rate to increase to the market rate, and give the public a better interest rate on their savings. This is a good idea.
If there is a real need to guarantee the deposits, perhaps it should be up to 50% instead of the total sum. Maybe, the bank should pay some guarantee fee to the Singapore Government.
I hope to raise this point to the Singapore Government at an appropriate time, if my views are confirmed to be sensible. I look forward to receive the views of knowledgeable people on this matter.
Saturday, October 25, 2008
Leveraged Dual Currency Investments
I have been advising people to avoid Dual Currency Investment for the past year. My views are stated in this FAQ: http://www.tankinlian.com/faq/duali.html
This type of investment allows you to bet on currency movements. You stand the chance of a big loss when the currency moves against you. You only get a small return (in the form of a higher interest rate) when currency moves in your favour.
Recently, the AUD dropped by 30%. Those who were "long" in AUD lost 30%. But those who were "short" in AUD did not gain 30%. They only gain 1% or 2% in higher interest. The bank keeps the remainder of the profit.
I learned to my horror that unsophisticated investors were asked to invest in "leveraged" dual currency investments. The bank lends them 4 times of their investment, so that they can take 5 times of the risk. If the currency drops by 20%, their total investment is wiped out (i.e. 20% X 5 times).
The relationship manager of the bank who sold the leveraged DCI earned 5 times of the commission on this product. But, it wiped out the total savings of the investors.
Someone told me that her mother lost $500,000 on this type of investment. Another retiree told me that he lost $150,000 in 2 months, out of the invested sum of S200,000.
Do not invest in any of these products. Be careful about the advice of the relationship managers.
This type of investment allows you to bet on currency movements. You stand the chance of a big loss when the currency moves against you. You only get a small return (in the form of a higher interest rate) when currency moves in your favour.
Recently, the AUD dropped by 30%. Those who were "long" in AUD lost 30%. But those who were "short" in AUD did not gain 30%. They only gain 1% or 2% in higher interest. The bank keeps the remainder of the profit.
I learned to my horror that unsophisticated investors were asked to invest in "leveraged" dual currency investments. The bank lends them 4 times of their investment, so that they can take 5 times of the risk. If the currency drops by 20%, their total investment is wiped out (i.e. 20% X 5 times).
The relationship manager of the bank who sold the leveraged DCI earned 5 times of the commission on this product. But, it wiped out the total savings of the investors.
Someone told me that her mother lost $500,000 on this type of investment. Another retiree told me that he lost $150,000 in 2 months, out of the invested sum of S200,000.
Do not invest in any of these products. Be careful about the advice of the relationship managers.
Pinnacle Notes - lodge a complaint now
Dear Mr. Tan,
I met the RM of my bank and asked about the Pinnacle Notes. The RM said that there is no problem with the Pinnacle Notes now, and if the reference entity does not "credit event", I will be able to get back 100% of my invested sum.
I asked about the price of the Pinnacle Notes now, but the RM said that I should sell but wait until maturity to get back 100%. Is this correct?
REPLY
You should ask the relationship manager to put the assurance in writing that 100% of the invested sum will be paid back on the maturity date, if there is no credit event involving any of the reference entities.
It is better for you to lodge a complaint now about mis-selling, as the price of the Pinnacle Notes have dropped significantly and you these notes may default before the maturity date. Even if there is no default, you may get less than 100%.
I met the RM of my bank and asked about the Pinnacle Notes. The RM said that there is no problem with the Pinnacle Notes now, and if the reference entity does not "credit event", I will be able to get back 100% of my invested sum.
I asked about the price of the Pinnacle Notes now, but the RM said that I should sell but wait until maturity to get back 100%. Is this correct?
REPLY
You should ask the relationship manager to put the assurance in writing that 100% of the invested sum will be paid back on the maturity date, if there is no credit event involving any of the reference entities.
It is better for you to lodge a complaint now about mis-selling, as the price of the Pinnacle Notes have dropped significantly and you these notes may default before the maturity date. Even if there is no default, you may get less than 100%.
HK Monetary Authority refers 40 more 'mini-bonds' cases to SFC
Saturday, 25 October 2008
The Hong Kong Monetary Authority said yesterday it had referred to the Securities and Futures Commission 40 more cases of alleged mis-selling of Lehman Brothers-backed financial products by banks.
"The 40 cases, which are the second batch of Lehman-Brothers-related cases referred in this way, involved alleged misconduct by two licensed banks in Hong Kong," the city's de-facto central bank said in a statement.
It said one of the banks in question was also involved in the first batch of 24 cases it referred on October 17.
Up to Thursday, the authority said it had received 16,301 complaints by investors who said their banks had sold them "mini-bonds" backed by the collapsed US giant without having fully explained to them the risks involved.
Apart from the 64 referrals to the SFC, the authority said it had opened investigations on 285 complaints and was seeking further information on 1,942 complaints.
In light of the large number of complaints, the authority said it would have to streamline the investigation process by identifying groups of cases with common features in making referrals to the SFC.
The Hong Kong Association of Banks said in a statement Friday that individual banks had since earlier this week started the process of settling with relevant investors, particularly elderly customers with no investment experience.
The association said its special task force will be in close liaison with the Monetary Authority to explore a mediation mechanism between the banks and their investors.
Thousands of investors have held protests across the territory in the past few weeks claiming the banks mis-sold the mini-bonds as risk-free investments, and lured vulnerable citizens into using up their life-savings.
Although the banks agreed last week to adopt a government proposal for them to buy back the products from customers at their current market value, the move failed to pacify investors who said they would get back a portion of their investment.
The mini-bonds are complex financial products linked to a bundle of derivatives backed by Lehman, and their value plummeted after the investment bank collapsed in September.
http://www.macaudailytimesnews.com/index.php?option=com_content&task=view&id=18068&Itemid=34
The Hong Kong Monetary Authority said yesterday it had referred to the Securities and Futures Commission 40 more cases of alleged mis-selling of Lehman Brothers-backed financial products by banks.
"The 40 cases, which are the second batch of Lehman-Brothers-related cases referred in this way, involved alleged misconduct by two licensed banks in Hong Kong," the city's de-facto central bank said in a statement.
It said one of the banks in question was also involved in the first batch of 24 cases it referred on October 17.
Up to Thursday, the authority said it had received 16,301 complaints by investors who said their banks had sold them "mini-bonds" backed by the collapsed US giant without having fully explained to them the risks involved.
Apart from the 64 referrals to the SFC, the authority said it had opened investigations on 285 complaints and was seeking further information on 1,942 complaints.
In light of the large number of complaints, the authority said it would have to streamline the investigation process by identifying groups of cases with common features in making referrals to the SFC.
The Hong Kong Association of Banks said in a statement Friday that individual banks had since earlier this week started the process of settling with relevant investors, particularly elderly customers with no investment experience.
The association said its special task force will be in close liaison with the Monetary Authority to explore a mediation mechanism between the banks and their investors.
Thousands of investors have held protests across the territory in the past few weeks claiming the banks mis-sold the mini-bonds as risk-free investments, and lured vulnerable citizens into using up their life-savings.
Although the banks agreed last week to adopt a government proposal for them to buy back the products from customers at their current market value, the move failed to pacify investors who said they would get back a portion of their investment.
The mini-bonds are complex financial products linked to a bundle of derivatives backed by Lehman, and their value plummeted after the investment bank collapsed in September.
http://www.macaudailytimesnews.com/index.php?option=com_content&task=view&id=18068&Itemid=34
Speech at Speaker’s Corner – 25 Oct 2008
http://theonlinecitizen.com/2008/10/investors-to-submit-fourth-petition-to-mas/#respond
1. Lodge your complaint
The first step is to lodge your complaint with the financial institution that sold the product to you.
Be honest. In your report, you should state honestly what you were told and what you were led to believe, when you decided to invest in the product. Many investors were assured that the structured product is “safe” and “low risk” and is a good alternative to “fixed deposit”. If this is the case, you can state it honestly.
Do not worry that you have signed forms given to you by the sales representative (or relationship manager). If you were not told about the content of the form and did not get a clear explanation on what the statements meant, you can state it in your report.
The most important point is to state how you were misled, and what you were told by the sales representative.
I have printed the forms for you to collect the relevant information to complete your complaint. You can get the assistance of the volunteers, if you are not clear about the type of information that is needed.
Read this advice:
http://tankinlian.blogspot.com/2008/10/general-advice-to-investors-of.html
2. “Non-Vulnerable” Investor
Many investors were unsure about how they will be treated, as the fall outside of the “vulnerable” group. So far, MAS and the financial institutions have not stated how these investor will be treated.
Let us take it one step at a time. You should lodge your complaint and attend the interview arranged by the financial institution. You can state honestly what is contained in your statement that you lodged with the financial institution.
If you do not wish to attend alone, you can bring a family member, friend or fellow investor to accompany you.
3. Dispute Resolution Center
If you are not able to get a satisfactory compensation from the financial institution, you can bring you case to Financial Industry Dispute Resolution Center, FiDREC (http://www.fidrec.com.sg/). You pay a fee of $50.
FiDREC will form a panel to consider your complaint. FiDREC has the authority to pass a judgment that is binding on the financial institution. This decision is NOT binding on the consumer. The consumer still has the right to take the case to court.
At present, FiDREC has the authority to decide on claims up to $50,000. It can hear larger cases, subject to agreement of the financial institution.
4. Open Forum with Financial Institution
I suggest that investors should get together, according to the financial institution that sold the product to you, to request the financial institution to hold an open forum with the investors to discuss the following:
a) How the investors were misled by the information given by the sales representatives
b) How the financial institution can compensate the investors for their loss, caused by the bad advice and mis-information.
5. Petition #4
There are a potential of 10,000 cases to be handled. So far, just a handful of cases under the “vulnerable group” have been handled. It will take a long time for these 10,000 cases to be resolved, using the “case by case” approach. Many of those affected have still not lodged their complaint.
I will be organizing another Petition #4 addressed to the chairman of MAS. This is to ask MAS to help find a collective solution to the mis-selling by the financial institutions. A collective approach will reduce the stress on the individual investors in making the complaint and will ensure that fair compensation is given to all the affected investors, according to the category that they fall under.
6. Legal action
Some investors wish to take collective legal action. I like them to be aware that it can be costly and risky to take this action. It should be considered only as a last resort.
Before the investors decide to take this action, they should be aware about the cost and the chance of winning the case. They must also agree on the approach. They may be able to get different estimates of the cost from other lawyers.
Tan Kin Lian
http://www.tankinlian.blogspot.com/
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