A few months ago, the media reports gave the impression that a high proportion of credit linked note investors in Singapore received full or partial compensation. The investors in Hong Kong used this reports to pressure their Government to set similar compensation for them. The general public believed that the regulators had intervened to get satisfactory compensation for the Singapore investors.
As the months went by, many Singapore investors, especially those who invested a large sum, were disappointed that their requests for compensation were rejected by the financial institutions or the compensation offers were unacceptably low.
Many investors rejected the offers and brought their cases to be heard in FIDREC. A few cases had their cases adjudicated with disappointing results to the investors.
Some investors did received satisfactory compensation, which they accepted gratefully. But, the proportion appears to be small.
The Legislative Assemby in Hong Kong had summoned the regulatory authority to testify in their chambers. These hearings were well reported in the media. The legislators were unhappy with the measures taken by the regulators before and after the crisis had erupted. In response, the regulators were compelled to take stronger action now to remedy the situation.
Recent media reports suggested that some financial institutions in Hong Kong are now willing to compensate the investors at more than 50%, which is more generous that the settlements offered in Singapore.
In my view, a compensation of 50% of the amount of loss would be fair, as the loss should be shared equally between the distributor (due to their negligence in mis-advising the investors about the nature of the product) and the investors (who wanted to earn a higher yield).
I hope that all investors in Singapore will receive this level of compensation, regardless of their age or educational level.
Tan Kin Lian
Tuesday, June 23, 2009
Full refund of premium under ILP
A policyholder was shocked to learn that the surrender penalty under his ILP policy at the end of 2 years was so high that it took away 90% of his savings. He was not properly advised of this matter by the distributor who sold the policy to him.
He pursued this matter vigorously against the distributor who sold the policy and the insurance company who created the product. He met with the senior officials of both organisations and also complained to MAS.
He was given various types of excuses and disclaimers. He was not discouraged but continued to fight on.
He was finally offered a full refund of the premiums paid for the 2 years and was asked to sign a non-disclosure agreement.
Lesson: If you are willing to fight for your right, the financial institutions may surrender, instead of the consumer.
Tan Kin Lian
He pursued this matter vigorously against the distributor who sold the policy and the insurance company who created the product. He met with the senior officials of both organisations and also complained to MAS.
He was given various types of excuses and disclaimers. He was not discouraged but continued to fight on.
He was finally offered a full refund of the premiums paid for the 2 years and was asked to sign a non-disclosure agreement.
Lesson: If you are willing to fight for your right, the financial institutions may surrender, instead of the consumer.
Tan Kin Lian
Monday, June 22, 2009
The Standard:BOCHK, regulator reach minibond impasse
23 June 2009
Talks between Bank of China (Hong Kong) (2388) and the Securities and Futures Commission have stalled over how much Lehman minibond investors should be compensated despite nearly two months of discussions.
BOCHK will not accede to the regulator's demands that it pay back 100 percent of the purchase value of the toxic investments and is suggesting a maximum offer of 70 percent, sources said.
Peter Chan Kwong-yue, chairman of the Allied Victims of Lehman Products, said he is disappointed by the development and demanded BOCHK take responsibility.
``They did not even show they felt sorry for the situation and it is not acceptable to just pay back 60 percent,'' he said.
Investors aged 65 or older would get up to 70 percent of their capital back. Everyone else would be offered 60 percent. Both offers are on the condition that BOCHK does not accept liability for misselling of the toxic products.
The government has no intention of intervening, The Standard has learned.
A government spokeswoman said: ``We hope the matter can be resolved as quickly as possible.''
BOCHK, the city's largest distributor of Lehman minibonds products in Hong Kong, has submitted a proposal to the SFC and is awaiting its response, sources said.
BOCHK's proposal was based on the government's buyout plan submitted last year with an ``additional premium,'' a source said.
The administration last November suggested banks refund 55 percent of the principal on all minibond products but this proposal was scrapped for legal reasons.
The SFC has insisted on pursuing the same 100 percent rebate for investors that it has already negotiated with Sun Hung Kai Investment and KGI Securities.
BOCHK led minibond sales in Hong Kong with 40 percent of the market. Dah Sing Financial was the second-biggest seller of the structured products, according to research.
BOCHK's settlement will set a precedent for other banks' negotiations with the SFC.
Its 60 percent proposal will cost it HK$2.52 billion, according to Citigroup Global Markets, while paying back 100 percent would cost HK$4.2 billion.
It has so far set aside HK$769 million in provisions.
Dah Sing Financial sold about HK$1.1 billion in Lehman minibonds. So far it has put aside HK$300 million in provisions, according to Citi.
Talks between Bank of China (Hong Kong) (2388) and the Securities and Futures Commission have stalled over how much Lehman minibond investors should be compensated despite nearly two months of discussions.
BOCHK will not accede to the regulator's demands that it pay back 100 percent of the purchase value of the toxic investments and is suggesting a maximum offer of 70 percent, sources said.
Peter Chan Kwong-yue, chairman of the Allied Victims of Lehman Products, said he is disappointed by the development and demanded BOCHK take responsibility.
``They did not even show they felt sorry for the situation and it is not acceptable to just pay back 60 percent,'' he said.
Investors aged 65 or older would get up to 70 percent of their capital back. Everyone else would be offered 60 percent. Both offers are on the condition that BOCHK does not accept liability for misselling of the toxic products.
The government has no intention of intervening, The Standard has learned.
A government spokeswoman said: ``We hope the matter can be resolved as quickly as possible.''
BOCHK, the city's largest distributor of Lehman minibonds products in Hong Kong, has submitted a proposal to the SFC and is awaiting its response, sources said.
BOCHK's proposal was based on the government's buyout plan submitted last year with an ``additional premium,'' a source said.
The administration last November suggested banks refund 55 percent of the principal on all minibond products but this proposal was scrapped for legal reasons.
The SFC has insisted on pursuing the same 100 percent rebate for investors that it has already negotiated with Sun Hung Kai Investment and KGI Securities.
BOCHK led minibond sales in Hong Kong with 40 percent of the market. Dah Sing Financial was the second-biggest seller of the structured products, according to research.
BOCHK's settlement will set a precedent for other banks' negotiations with the SFC.
Its 60 percent proposal will cost it HK$2.52 billion, according to Citigroup Global Markets, while paying back 100 percent would cost HK$4.2 billion.
It has so far set aside HK$769 million in provisions.
Dah Sing Financial sold about HK$1.1 billion in Lehman minibonds. So far it has put aside HK$300 million in provisions, according to Citi.
Brain Workout (aka Intelligence Quiz)
I have got 5 orders through the website for my books now. Payment for 3 orders were made through ATM and 2 by internet banking transfer. The process is working smoothly. I will be offering more products through the website later.
Click on these links:
Play online
Order books
A customer called me today as she wanted the book urgently for her children. They love the puzzles which appeared in The New Paper on Sunday.
Click on these links:
Play online
Order books
A customer called me today as she wanted the book urgently for her children. They love the puzzles which appeared in The New Paper on Sunday.
Correct approach to select an insurance policy
Many people think that a good insurance policy provides the widest cover. This is not the correct approach.
A good insurance policy meets the following criteria:
a) Provides cover that is relevant to the needs
b) The cover is clearly defined (i.e. not ambigious)
c) The premium is computed fairly.
The consumer should avoid a policy that provides wide cover that is irrelevant to the needs, have a negligible chance of occurence, and are ambigiously defined. Many of the coverages provided under a critical illness policy fall into this category.
To ensure that the premium is computed fairly, the ratio of claims to premium should be at least 60% in the case of a policy that covers the risk and does not accummulate any savings. If the ratio is less than 60%, the premium is overcharged, and gives poor value to the consumer.
Many travel insurance policies have a claim ratio of less than 30%. A large part of the premium goes to commission, expenses and profit to the insurance company. Many Shield plans also have claims ratio of less than 50%.
Motor insurance has a claim ratio of more than 70%, due to intensive competition. It gives good value to the consumer, except that the claims are inflated due to incompetency in claims control.
When you buy an insurance policy, make sure that the coverage is clearly defined and that the claim ratio is more than 60% of the premiums.
Tan Kin Lian
A good insurance policy meets the following criteria:
a) Provides cover that is relevant to the needs
b) The cover is clearly defined (i.e. not ambigious)
c) The premium is computed fairly.
The consumer should avoid a policy that provides wide cover that is irrelevant to the needs, have a negligible chance of occurence, and are ambigiously defined. Many of the coverages provided under a critical illness policy fall into this category.
To ensure that the premium is computed fairly, the ratio of claims to premium should be at least 60% in the case of a policy that covers the risk and does not accummulate any savings. If the ratio is less than 60%, the premium is overcharged, and gives poor value to the consumer.
Many travel insurance policies have a claim ratio of less than 30%. A large part of the premium goes to commission, expenses and profit to the insurance company. Many Shield plans also have claims ratio of less than 50%.
Motor insurance has a claim ratio of more than 70%, due to intensive competition. It gives good value to the consumer, except that the claims are inflated due to incompetency in claims control.
When you buy an insurance policy, make sure that the coverage is clearly defined and that the claim ratio is more than 60% of the premiums.
Tan Kin Lian
Sunday, June 21, 2009
Politics of Fear - Reader's Views
There were 7 replies from readers. All of them mostly agreed with the views contained in this article. Here are their reasons:
1. 40-50 years ago in Singapore, I always heard 2 news among my friends and elderlies : a) Ghost stories b)Secret police terrorised the oppositions. But since 1990 onwards I hardly hear such news. I believe, as our society progresses, most of the ghosts and secret police have gone for reincarnation. It is a more civilised society now.
2. Many years ago, someone found an intrusion into their home computer from the internet. The intrusion was later found out to be authorised from MOHA. Strangely this was reported in the press. WKS defend the move stating they are doing Singaporean a favour by checking for virus on the computers of singaporean. I think I was in my teens then and did not understand much about politics. The fact is that the gov is snooping on us and collecting intelligence. They can add any law they want and they have the power of ISA. They even have the control of the press and media. If Singaporean can see this control being broken or a change, they may become less fearful.
3. Take me as an example, I will criticize government poor policy with similar minded friends only. And will not go beyond that or go public. Largely, the mass follow local press and accept what is reported in the newspaper even it is sometime biased reporting. They do not challenge it. Hence, it is tough to enlighten them, as they will ask me to shhh... This is also fear on my part, sadly.
Any points to add?
1. Singaporeans should have more moral courage to speak up. This is our country.
2. Singapoeran males are not only afraid to vote. Some of them(20-39yrs old) that are civil servants even express their fears of deferment of their reservists even when they have valid reasons on fear that their promotion chances will be compromised.
3. There are some very prominent politicians who if they are willing to make a anti PAP stand, become the opposition party, it will definitely sway singaporean into changing their mindset. But that is if they are willing to open their eyes and see the trouble ahead for singaporean under PAP continued rule - example Tan Soo Khoon. If in this election we have PAP turn anti PAP, the tides will finally changed.
4. Besides the point you raised on the secrecy in election, the slogan "compulsory in voting" is a malpractice. Nobody should be force to vote against his/her wish. I believe Singapore has the highest turn out rate for voting in election. Coupled with the fear of the vote can be traced (serial number), most (fearful) vote will go to the party-you-know-which.
5. Even Francis Seow, a prominent public figure from a respectable background, can be so easily dealt with. Dear Mr Tan, please be careful. But I will definitely vote for opposition in this election.
1. 40-50 years ago in Singapore, I always heard 2 news among my friends and elderlies : a) Ghost stories b)Secret police terrorised the oppositions. But since 1990 onwards I hardly hear such news. I believe, as our society progresses, most of the ghosts and secret police have gone for reincarnation. It is a more civilised society now.
2. Many years ago, someone found an intrusion into their home computer from the internet. The intrusion was later found out to be authorised from MOHA. Strangely this was reported in the press. WKS defend the move stating they are doing Singaporean a favour by checking for virus on the computers of singaporean. I think I was in my teens then and did not understand much about politics. The fact is that the gov is snooping on us and collecting intelligence. They can add any law they want and they have the power of ISA. They even have the control of the press and media. If Singaporean can see this control being broken or a change, they may become less fearful.
3. Take me as an example, I will criticize government poor policy with similar minded friends only. And will not go beyond that or go public. Largely, the mass follow local press and accept what is reported in the newspaper even it is sometime biased reporting. They do not challenge it. Hence, it is tough to enlighten them, as they will ask me to shhh... This is also fear on my part, sadly.
Any points to add?
1. Singaporeans should have more moral courage to speak up. This is our country.
2. Singapoeran males are not only afraid to vote. Some of them(20-39yrs old) that are civil servants even express their fears of deferment of their reservists even when they have valid reasons on fear that their promotion chances will be compromised.
3. There are some very prominent politicians who if they are willing to make a anti PAP stand, become the opposition party, it will definitely sway singaporean into changing their mindset. But that is if they are willing to open their eyes and see the trouble ahead for singaporean under PAP continued rule - example Tan Soo Khoon. If in this election we have PAP turn anti PAP, the tides will finally changed.
4. Besides the point you raised on the secrecy in election, the slogan "compulsory in voting" is a malpractice. Nobody should be force to vote against his/her wish. I believe Singapore has the highest turn out rate for voting in election. Coupled with the fear of the vote can be traced (serial number), most (fearful) vote will go to the party-you-know-which.
5. Even Francis Seow, a prominent public figure from a respectable background, can be so easily dealt with. Dear Mr Tan, please be careful. But I will definitely vote for opposition in this election.
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