In today's New Paper, Dr. Money did a preliminary analysis of the the DBS HN5 product using data from the prospectus. This analysis showed that by design the DBS HN5 has about 8% chance of becoming worthless. The article on page 24 is entitled "Hidden risks in prospectus".
A product with such a high risk sold marketed to risk adverse investors as a low risk product must have been wildly profitable for DBS. How much did DBS take in through markups in initial pricing, early surrender charges, market making margins, initial commissions and management fees? These are important questions to ask because it will tell us if DBS passed on a disproportionate amount of risks to customers in exchange for high profit margins. If the risk of imploding like was about 8% as computed by Dr. Money, this is clearly a toxic product - in no way fit for consumption.
There is no need for the customers to prove mis-selling - as long as they were not told that there was an 8% chance of product failing, they deserve compensation. That proof is self-evident, who would ever invest in a product knowing that there is an 8% chance of losing everything for a few miserable extra % over fixed deposit?
Looking at what has already surfaced, there is already enough to justify a direct investigation by MAS. Asking the investors to go one by one to the banks to file their complaints instead of a collective action or a proactive approach by the authorities to uncover the facts puts ordinary citizens at a great disadvantage...not to mention unnecessary stress of getting the run around by the banks. Surely when 10,000 people lost a large part of their life savings, there must be interest on the part of the authorities to find out the truth...the whole truth?....Did we not pay our govt enough to do something so clearly necessary that the HK govt took only 2 days to decide to do?