http://comment.straitstimes.com/showthread.php?s=8cabb3fc60153845a88443ed33137635&t=13637&page=10 his email is firstname.lastname@example.org
UPDATE 20 Sept 2008 : Tan Kin Lian has urged MAS to hold financial institutions responsible for "mis-selling" activities for such products : Link
Here is a discussion in Tan Kin Lian's blog about DBS High Notes : Link.
'If customers feel that our relationship managers or staff have misrepresented the product, they can come to our branches, call or e-mail us to raise those issues. I assure customers that we already have an independent system in place to investigate such complaints,' - Mr Rajan Raju, head of DBS' consumer banking group
"I think customers have a better chance if they held a protest a Hong Lim Park and bring attention to their plight and get the authorities to act....." - Lucky Tan.
My mom is not very well educated but she is a cautious person. All her life she keeps her money in fixed deposit accounts. Sometimes she would do some homework and move her money to the bank that offers the highest interest rate. My mom leads a simple thrifty life so she does not need to take any risk to grow her money. One day while queuing up to deposit her money in a bank, she was "redirected" to a bank officer who tried to market a structured product to her. It was sold to her as something very safe and has higher returns than fixed deposit. My mom remembering my warnings about these products decided to turn it down but she brought the brochure home for me to take a look. I took one whole day to go through it and couldn't figure out the product - it was financially engineered to the point that only the people who crafted it have the data to understand it. It goes something like this : you get 6(?)% of your money after 6 months as return, but your funds are locked up for 5 years and subsequent returns depends on the worst performing of a basket of 20 global blue chip stocks.....principle guaranteed but if you take the money out early, you're at the mercy of the bank's calculations...there are 2 pages of fine print written the kind of legal language that only lawyers can understand. ...and they are trying to sell this to my mom who has only primary school education.
MAS should ban the marketing of these products at the bank branches for the following reasons:
1. The products are impossible to understand in terms of financial outcomes. Only the banks knows what is going on putting the customers at a great disadvantage. Since banks are required to explain the risks to the customers, something that is impossible to do, these products don't meet the basic requirement under the Banking Act that requires "that the banks must disclose and explain clearly on the recommended products".
2. Many of the products have disproportionately high risks relative to the return. For only 5% return, purchasers of the DBS High Note were subjected to the risk of losing all or most of their principal if a "credit event" occurs in one of 8 entities - one of which was Lehman Bros. Who pockets the large risk free profits and passed all the risk to the customers? This product should be banned for the same reason drugs are banned & loan sharking is banned.....it is harmful to the customers.
How many old ladies have to lose their life savings before the PAP govt does something?
The main reason for banks to market these products is profits. If anything is learnt from the subprime crisis is when bad financial products with high profit margins is marketed to people who cannot possibly understand it - the result is disastrous.
The PAP takes care of the interests of the citizens especially the old folks who have contributed so much to this country. Although the PAP govt has stakes in numerous banks including DBS, it have never allowed the greedy pursuit of profits to influence regulation that is needed to protect ordinary Singaporeans. We trust that we have a govt that proactively takes care of the interests of ordinary Singaporeans. We can expect this trust to be demonstrated in the coming days as the govt stand on the side of the people who have lost so much in products marketed by banks. Going through the responses in the internet, at a minimum the citizens are asking for MAS and the govt to investigate whether the banks have complied with existing regulation and whether there is any possibility of misrepresentation to customers. Of course, for a govt with a "socialistic heart", it will twist the arm of the bank to compensate part of the losses out of goodwill. DBS afterall took over POSB once known as the "people's bank".....and the PAP is the People's Action Party which acts on behalf of the ordinary people. I'm sure right now the PAP govt is outraged that ordinary people are hurt and demanding answers from DBS. We will hear from the PAP govt soon on this.