NS for adult new citizens not practical

Published in Straits Times Forum Page

I REFER to last Friday's letter by Mr Michael Ang, 'Make English and modified NS a must'.

National service (NS) is not merely a rite of passage for young male Singaporeans. It was conceived with a specific objective to build up a citizens' army to defend Singapore militarily. This objective remains true today.

It is tempting to argue that foreigners should do NS as a price to pay for Singapore citizenship because many view NS as a liability borne by Singaporeans. However, NS functions as part of a wider framework of the war-fighting doctrine of the Singapore Armed Forces (SAF), as well as Singapore's national development. Manpower requirements, including those for conscription, must be meticulously identified and implemented.

Many foreigners coming to Singapore are in their late 20s or older. They are already economically productive and can immediately contribute to Singapore's economy. It makes little sense to disrupt their activities for two years. Whatever social networks they have developed would also need to be rebuilt.

Having modified NS is feasible only if it fits in with the overall requirements of the SAF and complements its capability. It is a waste of resources if it exists only to make some people 'serve their duty'.

Furthermore, the largest army corps is the infantry and this is where the SAF needs the most people. However, studies in other countries have shown that the specific kind of fitness needed for infantry soldiers, involving a combination of agility, stamina and tolerance of sleep deprivation, starts to degrade from the late 20s onwards. This is why armies across the world have a lower maximum age to join the infantry.

Xiao Fuchun

MY VIEWS

The Singapore Government has not resolved. I brought this issue up 25 years ago to point out the serious disadvantage faced by our male Singaporeans in having serving National Service, and having to compete for jobs with girls and foreigners. Over the years, this problem has became more serious.

Cunfusing cab fare structure

Should taxi fares be standardised? Read a practical suggestion here.

NYTimes.com: Shut Out at Home, Americans Go to China

Read this article about job opportunities in China.

Sense of belonging lacking among youth

44 years of nation building may be futile. Read this article.

I've got mail

Read this article.

Van for Aug 22

I need a volunteer to provide a van for transport on 22 August. Please contact me at kinlian@gmail.com.

My life insurance policies

Dear Kin Lian
I am insured with NTUC. Seriously. I am naive and ignorant, how I should address my concerns (of the poor return) to the management board? Do you still have NTUC policies?

REPLY
I had about 15 life insurance policies during my time with NTUC Income, including policies taken for my children. Many of them have matured. Some were transferred to my children.

I cancelled four whole life policies (on my life) during the past two years, due to the reduction in bonus rate and the increase in management expenses. As I am past 60, I do not need the insurance protection.

I have only a few investment linked policies left. I shall cancel them at the right time.

Insufficient savings? No wonder with poor insurance returns

Published in Forum Page, Straits Times on Aug 10, 2009

I AGREE with the views expressed by Mr Larry Haverkamp in his letter last Thursday, 'Policyholders underpaid?'.

Many life insurance policies taken today require more than 15 years to 'break even'. This is the point where the cash value of the policy is more than the premiums that were paid over the years.

During this period, the insurance company must have earned more than 40 per cent on the premiums that have been invested. As an actuary, I know that the real cost of providing life insurance cover is about one-quarter of the gain. The remaining three-quarters are used to pay the agent's commission and expenses, or retained as orphaned money, as pointed out by Mr Haverkamp.

If the orphaned money is distributed to the policyholder, as suggested by Mr Haverkamp, the return would at least have been slightly better.

In recent years, consumers have been given a poor deal on their long-term savings in life insurance policies. A careful study of the Benefit Illustration will probably bring out this point. But the Benefit Illustration is difficult for consumers to understand and needs to be explained by an insurance adviser, who tends to skim over the negative points.

This is similar to the situation with the prospectuses issued for Minibonds and other credit-linked notes.

If consumers are given a poor return on their long-term savings in life insurance policies and other financial products, and in many cases they actually get a negative return, is it a wonder why many Singaporeans do not have sufficient savings for retirement after many years of hard work, thrift and savings?

I call on life insurance companies and financial institutions to reconsider their roles and responsibilities to provide a fair deal to consumers, as they strive to make profits for their shareholders. I hope the Government will also review this unsatisfactory situation in Singapore.

Tan Kin Lian

Singaporeans are so predictable

Singaporeans are so predictable. Click here to learn why.

Happy 44th birthday, Singapore!

Harrassing the wrong people

On my return from Batam, I had to go through security check at Harbour Front. My bag had to be screened. The mobile phone has to be placed in a separate tray.

On passing through the metal detector, there was a beep. So, I had to be screened. I had to empty the wallet, keys, pen from my pockets. Many questions were asked. I only had two hands, so it was quite difficult to be holding the passport, wallet, keys and other items.

After being passed as "not carrying weapons", I collected my luggage and left. Ten minutes later, I realised that my mobile phone was missing. I had to go back to recover it.

I hope that our security officers realise that a traveller has only two hands, and that they had to take care of many things. It is not necessary to give so much hassle to the travellers, who are returning home.

The security officers are only carrying out their duty, as written by the top leaders. The top leaders (i.e. government minters and civil servants) are given VIP treatment, so they do not have to go through the hassle that lesser mortals had to endure.

I know that it is important to have security measures to ensure that terrorist do not smuggle weapons into Singapore. Are we harrassing the wrong people in the process?

In most other countries, the security officers exercise their discretion and do not follow the rules by the book. If someone (like me) does not look like a terrorist, they do not subject this person to the same detailed check.

But, in Singapore, everything goes by the book and is implemented blindly. It requires our top leaders to experience the inconvenience personally, before they change the rules. And the top leaders are trapped in their ivory towers, surrounded by security guards, and receive ground reports from underlings who only convey what they wish to hear. (Sigh). This is Singapore!

Tan Kin Lian

Investor to share experience on BBC

BBC is doing a series of global reports on the anniversary of the Lehman collapse. They are to do an "authored report", ie someone affected by the collapse in some way, talking about their experiences.

If you are interested to be interviewed by BBC, please send an email to kinlian@gmail.com. You can request the BBC not to use your real name, but to write about your experience.

Apart from talking about how you were misled into the investment, you can also talk about the months of agony earlier with the financial institution, FIDREC and MAS.

Sale of my books

An unemployed person posted a question - can he sell my books and earn a commission. If you are interested, send an email to kinlian@gmail.com.

It is quite easy to sell my books. I sold 10 copies during my trip to Batam, just by showing people how to solve the shapes in the Shape Quiz book.

Prudential Yield 15/20 (2)

Someone posted a comment that the Prudential 15/20 is similar to the Great Link Choice. Can policyholders of this product give feedback on:

a) The structure of the product
b) Does it guarantee against the failure of a certain number of CDOs
c) What is the current value of the various tranches of this product?

FACTBOX: Jobless benefits vary around the world

With increasing numbers of people put out of work in the recession, here is a look at the unemployment benefits offered in the United States, Britain, France, Germany and Japan. Read this article.

Nominations for the SBW Award

Here are the nominations for the SBW (Sit Back & Watch) Awards:

1st choice (46 replies)
MAS - 27
President Nathan - 5
CASE - 5
PM Lee - 2

1 vote received for Public Transport Council, Goh Chok Tong, Law Society, M of Education, Investors, MD of MAS

2nd choice (26 replies)
PM Lee - 4
MAS - 4
Member of Parliament - 3
Lim Hng Kiang - 3
M of Finance - 2
Goh Chok Tong - 2

1 vote received for NTUC, M of Manpower, Singapore public, Prime Minster Office, CASE, Home Team, Land Transport Authority, People's Action Party

DBS Bank: 'definitely' no note buyback

By George Ng (HK Edition)

HONG KONG: DBS Bank (Hong Kong) Ltd will "definitely" not buy back the Constellation Notes from its clients despite the fact that other banks have agreed to buy back another structured product they sold to investors, the bank's top executive said Friday.

"We have explained very clearly the risks involved when we sold the product to investors ... we have reviewed all complaints (regarding the sales of the product) and have made proper compensation in cases that involved mis-selling," said Chief Executive Officer Amy Yip, fielding media questions at a press briefing for the group's quarterly results.

"There will be no further settlement," she said. "We definitely won't buy back the notes." Yip emphasized that the structure of the Constellation notes is very different from the so-called Lehman Brothers minibonds.

Last month, 16 banks offered to pay at least 60 cents on the dollar to investors for the minibonds guaranteed by Lehman Brothers that lost their value after the US investment bank collapsed.

Linked to the credit of a basket of companies including Lehman, the value of the Constellation notes will be reduced whenever any of the reference institutions suffers from credit events such as bankruptcy or default.

DBS said in a statement in October last year that the possibility of the 4,700 investors losing their entire investment of $241-million in the Constellation notes "is likely to materialize".

Meanwhile, Koh Boon Hui, chairman of DBS Group Holdings Ltd, parent of DBS Bank (Hong Kong) Ltd, told the same press briefing that the group will "definitely" not reduce its headcounts further.

Rather, the bank will do "necessary" recruiting in Hong Kong as business improves with the economy, Yip added.

DBS, Singapore's largest bank and one of Southeast Asia's largest banks, cut 900 jobs late last year after the global financial crisis hit the world, with half of the headcount reductions coming from its Hong Kong unit.

The DBS group yesterday reported a net profit of 552 million Singapore dollars (S$) in the second quarter, up 21 percent from the first quarter as revenue growth boosted earnings before bad-debt allowances to a record S$1.6 billion.

On a year-on-year basis, net profit fell 17 percent from S$668 million as improved operating performance was offset by higher bad-debt allowances, the group said.
DBS set aside S$466 million for bad debts, almost eight times more than a year earlier, with non-performing loan ratio rising to 2.8 percent from 1.4 percent a year ago.

Meanwhile, the bank's Hong Kong unit, DBS Bank (Hong Kong) Ltd, reported a net profit of HK$532 million for the second quarter, down 21 percent from a year ago as non-interest income dropped 20 percent to S$632 million while bad-debt provisions surged 61 percent to S$373 million.

Compared with the first quarter, net profit was up 12 percent as net interest income improved by 5 percent to $1.19 billion while bad-debt provisions declined by 17 percent.

The non-performing loan ratio of the Hong Kong unit rose sharply from 1.7 percent in December to 2.6 percent in March and then retreated to 2.4 percent in June.

http://www.chinadaily.com.cn/hkedition/2009-08/08/content_8544177.htm

The embodiment of democracy in our National flag and its reality

Read this article in the Kent Ridge Common blog.

Happ 44th birthday, Singapore.

HK investors protest DBS

HONG KONG - ABOUT 100 Hong Kong investors burned by complex financial products linked to failed US investment bank Lehman Brothers protested on Sunday, demanding securities regulators help them negotiate a settlement.

Tens of thousands of retail investors in this Chinese-ruled financial hub were hit by Lehman's collapse in September.

Hong Kong securities regulators announced a settlement deal last month for one group of investors who purchased certain Lehman-linked products through local banks, but the agreement did not cover products sold by Singaporean bank DBS Group Holdings.

Sunday's protesters were demanding securities regulators step in to strike a deal for DBS clients. The demonstrators bought so-called 'Constellation' notes from DBS - financial products that are linked to the credit ratings of a group of financial institutions, including Lehman.

About 6,900 Hong Kongers bought HK$2.3 billion (S$427 million) worth of the failed investments, according to K.C. Lok, an organiser of the disgruntled investors.

'DBS lacks a conscience', 'DBS is a swindler', the protesters chanted at a park in Hong Kong's downtown Central financial district.

Lok, who bought just over HK$100,000 in the Constellation notes, accused DBS of misleading its customers into believing the financial products were conservative investments.

'Many of the investors shifted their money from timed deposits,' Mr Lok said.

DBS Hong Kong spokeswoman Glendy Chu said on Sunday that the bank had explained the risks of the products and offered compensation to investors in cases where there was evidence of questionable sales practices.

The deal announced last month would see 16 local banks returning 60 or 70 per cent of the principal to thousands of investors in a payout that amounts to HK$6.3 billion. -- AP
http://www.straitstimes.com/Breaking%2BNews/Singapore/Story/STIStory_414677.html

Nongsa, Batam is now a safe place

I visited Nongsa, the most populated town of Batam, over the weekend. I was there more than 15 years ago. That time, I felt uneasy moving around the place.

I was surprised to find the town to be quite well developed now. I felt rather safe moving visiting various places in the town. There was no feeling that bad characters were hanging around.

I asked my guide, a Singaporean who visits his family in Batam every weekend, if Nongsa is now a safe place. He said that Nongsa is now safe, and the crime rate is now low. Pickpocketing is now rare. If any pickpocket is caught, the local people would punish the culprits as they gave a bad name to Batam and scare Singaporeans from visiting the island. The crime gangs has now move to Johore Bahru to operate there - which explains its current bad reputation.

It is enjoyable to visit Nongsa, Batam.

Survey: Sit Back and Watch (SBW) Award

I wish to give the SBW Award to the organisation or person in Singapore who sits back and watch, when it is their duty to step forward and uphold justice. Who do you nominate? Survey.

Off-loading the risky credit default swaps

I share this hypothesis. Does it look close to reality?

During the years prior to 2005, investment banks were making huge profits by issuing credit default swaps to guarantee the bonds issued by borrowers. They sold these swaps to other investors and made a good margin.

In the later years, as the economic situation becomes difficult and defaults on mortgages rises, the investment banks were saddled with swaps that they were not able to off-load to ther investors.

Some clever but dishonest banker conceived the idea of designing a structured product to hide these swaps and sell them to retail investors. They looked for countries that are wishes to be a financial hub and have a history of being pro-business and weak in consumer protection. Singapore and Hong Kong were selected.

This was the beginning of the crisis of the credit-linked notes.

Tan Kin Lian

Lehman Brothers Victim alliance in Hong Kong

The Lehman Brothers Victim alliance in Hong Kong web site has a news section that shows related Chinese and English news http://www.lbv.org.hk/content/pages/newsclip.php.

Happy National Day

To the citizens, permanent residents and friends of Singapore, Happy National Day - in advance for 9 August 2009.

Suing the Wrong Party

The situation in Singapore is very sad. The investors have to take an expensive and uncertain class action to sue the distributors of the credit-linked notes. Although the distributors were, in my opinion, negligent in selling the notes to the investors, they earned only a modest commission (maybe 3%) from the transaction.

A better solution is for the distributors to collaborate with the investors to sue the issuers of the credit linked notes. The issuers were the party that benefited most through the creation of these notes. They were also responsible for writing the prospectus in a manner to hide the true nature of the structured product, hence misleading not only the investors but the distributors as well.

The distributors had a fiduciary duty to their customers. It is only right that they should do all they can to help their customers. In this regard, the action of Great Eastern Life should be applauded. The other financial institutions should emulate this good example to do what is fair and right for their customers.

If the distributors, being financial institutions, buy over the credit linked notes for 50% of the invested sum (plus 50% of the ultimate proceeds), they will have the financial and legal means to sue the issuers to recover any damages that were caused by their action. The distributors can also decide on the best action to recover and protect the value of the underlying assets. In contrast, there is no way that the individual investors can take any of these actions.

Another possible action is for the government authority to take the appropriate action on behalf of the consumers. This was done in many countries, most notably in New York State and other parts of USA. Hong Kong is also adopting a similar approach, although done at a somewhat late stage.

I hope that the financial institutions and the government authority can take this action now. Better late than never.

Tan Kin Lian

Platform number in MRT stations

Do you have trouble identifying the right platform at our MRT stations? Read here for some suggestions to improve the sign. Share your own suggestions.

TRANSPARENCY IN INSURANCE: Policyholders underpaid?

Aug 6, 2009
TRANSPARENCY IN INSURANCE
Policyholders underpaid?

THE report last Friday, 'Insurance funds need more transparency', is a good start. But there is more.

We have invested more than $60,000 per household in whole life and endowment policies.

The money goes into a huge policyholders' fund at each life insurance company. We know little about the fund or how the money is invested.

It is very different from buying a unit trust, where you get a certain number of units in proportion to your ownership in the fund. These units amount to the fund's net asset value or NAV. It is updated and published daily.

Policyholder funds have the same concept but use the term 'asset share' instead of NAV.

Another difference is insurance companies do not disclose the asset share. This makes it easy for insurers to underpay policyholders without them knowing it. Insurers acknowledge this happens with early surrender policies, but do not say if it also happens with policies held to maturity.

As the rightful owners are policyholders who have left the fund - and supposedly cannot be found - it is called 'orphaned money' or money without a home.

Underpayments to policyholders accumulate over the years, and are now huge. Aviva in Britain made a distribution of $2.7 billion last year. In that case, policyholders got 70 per cent of the money and Aviva kept 30 per cent. The company claimed that legally, it could have kept it all.

That is one way insurers benefit from orphaned money. Another is earning a risk-free 10 per cent on the income it generates.

A third way is to provide a buffer to absorb losses in case of a market downturn. It means the fund avoids dipping into tier 1 capital, which is largely stockholders' money.

Officially, the rationale for holding orphaned money is different: It provides a buffer for policyholders to avoid bonus cuts in downturns. Not correct. Insurers typically cut bonuses in downturns - like now - while the orphaned money keeps growing.

Singapore insurers disclose nothing about orphaned money. We do not know how much there is or where insurers keep it. Does it remain in the policyholders' fund or has it been transferred to stockholders?

Larry Haverkamp

Two Canadians' views about Singapore

Mr. Eric Brooks letter, asking Singaporeans to be grateful for the quality of life, was published in the Straits Times.

Mr. Wing Lee Cheong. a Singaporean who became a Canadian citizen, wrote a reply to the Straits Times, asking Mr. Brooke to be grateful to Canada. His letter is not likely to be published in the Straits Times. It can be read here.

Call to investors

I have written a few blog postings in RED, calling on the financial institutions to offer the Hong Kong settlement.
If you agree with them, you can send the blog posting to the financial institution that sold the credit linked note to you. You can also send it to your Member of Parliament or other channels, asking them to take up your matter.
If more investors do this, it may create an impact.

Volunteers for 22 August Gathering

I need volunteers to help with the following duties for the Gathering on 22 August:
a) Hold up the placards
b) Collect signatures for the Petition - you will be provided with a hard backing board and signature forms
c) Distribute flyers
d) Sell my books - 50% of proceeds will go towards the expenses
If you are able to help, please send an email to kinlian@gmail.com.

Great Eastern Life is maganimous

When Great Eastern Life sold the Great Link Choice, the product was explained quite transparently. I recalled reading some description of the product in the newspapers. It was clear that on reaching a certain number of credit events, the value of the investment would drop sharply and after passing a threshold, it would be worthless.

The mistake was in allowing this type of "gambling" product to be sold to the general public. There is no way that any investor will be able to assess the risk of losing all their money. They had to rely on the advise of the financial adviser (i.e. insurance agent) and the credit rating agency. The Monetary Authority of Singapore should not have allowed the general public to gamble away all of their money for a small increase in interest rate.

Great Eastern Life made the mistake of selling this product, but several other insurance companies also sold similar products. NTUC Income, which was managed by me during this period, avoided this type of product, resulting in a decline in our market share.

Most policyholders who bought the product were probably told that there is a risk, but were probably assured (wrongly) that the risk is very small. It would be fair for the policyholders to take partial responsibility and bear a portion of the loss. Some policyholders might not have been told of the risk, or might have been misrepresented about the risk, but this is a separate matter.

It is magnanimous (highly generous) of Great Eastern Life to offer a full buyback of this investment product. I congratulate them for this goodwill gesture, which is costly to their shareholders. I hope that all policyholders who got back their money understand that they have been generously treated.

Great Eastern Life has to write off a loss of $250 million. It could be more, if the credit market continue to deteriorate. It could be less, if the credit market improves in the future. No one knows what the future will hold.

I like to wish all the best to Great Eastern Life and hope that they will be rewarded for their generosity, through an improvement in the credit market. In the best possible case, they may fully recover the $250 million that was set aside. At that time, I hope that the policyholders will not ask for the interest to be paid to them (as it would be an unfair expectation).

Whatever the outcome, Great Eastern Life would probably be rewarded by the goodwill gained from the compensated policyholders, their families and friends and the general public in Singapore.

I call on the other insurance companies who have sold similar products to offer a buyback arrangement. It does not have to be as generous as Great Eastern Life, but it should share the loss (or gain) equally between the policyholders and the insurance companies. This would be a fair settlement.

Tan Kin Lian

Conduct in this blog

Someone asked if I accept criticism of my views in this blog. The answer is "yes", but I expect the following conduct:

a) The person must state his/her real name and connection to this issue

b) The remark must be fair and respectful.

I do not accept criticism from any anonymous person. It is cowardly and unfair. They often denegrate into personal attacks.

I have also blocked attacks against other people or groups. I allow some to go through, especially if they express grievance of people who felt that they have suffered injustice (such as the episode on the credit linked notes).

I observe the following conduct in posting my views:

a) I do not criticise any person or pass judgement on them

b) I use my real name; people know my background

c) I write on issues that I agree with (being positive) and disagree with (giving an alternative view)

d) I show repect to the views of other people

I hope that other commenters in this blog will observe a similar conduct.

Tan Kin Lian

TODAY:Don't bet on FIs To follow GE's lead

5 August 2009

THE decision by Great Eastern Life to return the entire premium paid, less annual payouts, to those who bought its GreatLink Choice policies was nothing short of a public relations coup. The “goodwill gesture” has brought relief to some 18,000 people who bought these investment-linked insurance products. This virtually no-strings-attached gesture could cost GE Life in the ball park of $250 million. Money well spent, I say.

I’m sure that many among the nearly 10,000 investors here, who bought $665 million worth of toxic structured products including the Lehman Brothers Minibonds and the DBS High Notes 5, are hoping the 10 financial institutions (FIs) here involved in selling — or should I say, mis-selling — these products, might take a leaf out of the GE Life public relations manual and do the same — compensate all of them fully.

Don’t bet on it. I would be glad to be proven wrong, but the writing on the wall warns of more disappointment — for three reasons.

Let me remind you what the Trade and Industry Minister Lim Hng Kiang told Parliament a fortnight ago about the investigation by the Monetary Authority of Singapore (MAS). He said the “investigation findings do not support an across-the-board general settlement for all investors, irrespective of their individual circumstances”. For those familiar with Monopoly, that is virtually a “get-out-of-jail card” for the FIs.

Mr Lim noted “the nature and extent of failings identified and their potential impact on the sales process and customers differed for each institution and for each customer”. And while not all would accept the case-by-case approach, he said “this way we serve the interests of all parties, and also serve the wider public interest of growing Singapore’s reputation as a credible and reliable international financial centre”.

There is little pressure on FIs to settle in full. After all, an investigation by their regulator does not support an across-the-board settlement. As of May 31, the FIs have paid out $107.7 million in full or partial settlements to some 3,900 of the nearly 10,000 structured product investors.

The second reason offered: It’s an “apples and oranges” type of comparison. Well, that’s what the FIs will tell you. The product sold by GE Life was an “investment-linked insurance product”, whereas the now toxic structured product was an “investment product”. The GreatLink Choice policies were investment-linked products with underlying investments in CDO (collateralised debt obligations) instruments. The products were designed with built-in loss protection levels and wide diversification across various industries and geographical regions.

For the general investing public, and particularly for those who have lost money, the “apples and oranges” comparison is not so much about the type of products they were sold but about how the institutions that sold them the products have responded. Both products were adversely hit by the financial meltdown. GE Life has opted to bite the bullet and pay up. The FIs appear to be doing their best to ante up as little as they can.

The third reason that has been suggested: The FIs and GE Life are “very different entities” and their governance is different.

Being an insurer, actuaries at GE Life must have done a cost-benefit analysis and decided that in the long run the benefits of the repayment exercise would extend well beyond their policyholders, to the average man in the street, and also go a long way in restoring trust and confidence in the company, one of the largest local insurers. And I must agree. It is not easy to put a dollar value to public trust and confidence.

So what sort of cost-benefit analysis did the FIs do? With claims lodged, and lawsuits looming, they are going to see management time wasted, legal dollars spent and reputational cost incurred. I guess this must all add up to less than the $500 million the 10 FIs have not refunded.

Timing the stockmarket

Dear Mr. Tan,
I have invested in blue chips, including (names deleted). These stocks are high dividend yield stocks. I bought them during the Sep 2008; just before the crash of Lehman Bro's.

With the recent recovery in the stock market, my portfolio has finally break-even in value. I am wondering should I sell all my positions now to "play safe" or should I stay put and do nothing; collect the dividend.

I don't think the current recovery in the stock market is sustainable. Please advise...

REPLY
I am not able to advice on timing decisions. If you sell the stocks, remember that the money earns you less than 1% p.a. in the bank. In my case, I am holding on to my equity investments, although they are still lower than my cost.

US Health debate: cost and benefits

Read this article. Some of the issues apply to Singapore.

Moderation of my blog

I adopt the following approach towards moderating my blog:

a) I allow people to express honest views, even if they disagree with my views
b) I allow more than 95% of comments to be published
c) I block comments that are malicious, defamatory or personal attacks

Those who wish to make personal attacks can do it in other blogs. You will not be granted the "freedom" to do it here. If they disagree with my moderation policy, they do not have to visit my blog.

New ez-Link card

A new ez-Link card is being introduced. What is the purpose of changing to this new card? Read about my experience here.

Higher motor premiums

Are you paying higher motor premiums? Here are some tips on how to reduce your cost of transport. Read here.

Pricetag to raise a child - US$ 221,190

The heavy price tag to raise a child is a major factor in the declining birth rate in developed countries, including Singapore. It is also the result of the "free market" policies adopted by these governments, that has allowed the cost to be exorbitant. Read this article:

http://www.reuters.com/article/newsOne/idUSTRE57367220090804

If governments wish to see a higher birth rate, it has to recognise that the cost of raising a child (up to three in a family) should be borne by society, and not by the individual parents. Policies have to be adopted to reduce the cost burden, such as subsidised medical care for pregnancy and childbirth and access to free or subsidised education up to tertiary level.

If parents are relieved of this heavy cost, they are more inclined to take the other burden of parenting. This requires higher taxation, but it is fair. Those who choose to remain single can help to pay the parents to raise the children for the future of the nation. We have to think beyond self interest to the interest of the nation.

Tan Kin Lian

Early redemption of mortgage loan

Dear Mr. Tan,
I recently sold my property after holding it for 5 years. The mortgage loan was 85% of the property value. It took 10 weeks from the exercise of the option (by the buyer) and the completion of the sale.

According to my lawyer, the bank wanted to charge the following:

a) Early redemption penalty of 1.5% (which I am aware of and will accept)
b) Interest in lieu of short notice, as I have to give 3 months notice (which I am disputing)

I dispute the payment of the additional two weeks of interest on the following grounds:

a) This clause was not highlighted to me during contract signing
b) The 10 weeks to compete the sale of property is a typical time frame in the industry. Why should I extend my closing date in favour of the banks?
c) Why does a bank need 3 months to basically tabulate outstanding loan amount and receive money?
d) Why should I be charged interests on a Loan that doesn’t exist.

The bank has obviously insisted that the 3 months notice was scripted in the TC of the loan agreement. The principle behind this charge is seriously flawed. If this is a common bank practice across Singapore. I would like to question the validity and need for such a clause in a mortgage agreement.

REPLY
Here are the steps that you can take:
1. Write a letter of complaint to the media, e.g. Straits Times.
2. Write a complaint to FIDREC, www.fidrec.com.sg
3. Write a complaint to MAS, so that they are aware about how the banks are behaving.

I encourage consumers to fight against unfair terms, even though they have been placed into the complicated legal documents that they were asked to sign. I wish you all the best.

SCMP:Watchdog accused over Lehman probe decision

4 August 2009

Lawmakers criticised the financial regulator for suspending an investigation over the selling of non-minibond products after banks agreed a HK$6.3 billion deal to repay Lehman Brothers minibonds buyers.

Securities and Futures Commission chief executive Martin Wheatley said the commission had not only ended its top-down inquiry into minibonds, but also suspended investigation of other products from the 16 banks under the agreement.

He was speaking at a hearing of the subcommittee on the debacle surrounding the sale of Lehman Brothers financial products.

Democrat James To Kun-sun told the five-hour meeting: "It's about the minibonds agreement with the banks, but you {hellip} voluntarily suspended your statutory duty to investigate the systematic failure [over the selling] of non-minibonds products."

Another democrat, Kam Nai-wai, asked Mr Wheatley if he thought the interests of other buyers who bought Constellation Notes, a derivative similar to minibonds also issued by Lehman Brothers, or equity-linked notes had been sacrificed.

Lehman Brothers minibonds holders will receive letters before Monday from the banks who will repay them at least 60 per cent of the value of their initial investment.

Mr Wheatley said the investigation into non-minibonds products, involving about 500 cases, had been suspended because the latest deal required the banks to immediately implement improved complaints-handling procedures to resolve all complaints they received.

He said the investigation of three other banks, which were not included in the payout deal because they sold Lehman-related products apart from minibonds, continued. Investors should first turn to banks if they had complaints, and then the Hong Kong Monetary Authority.

Subcommittee chairman Raymond Ho Chung-tai said it would ask the commission to submit an original copy of the agreement, investigation findings of the 16 minibond-selling banks, as well as e-mail exchanges the commission had with the Monetary Authority and financial officials before it reached the deal.

Minibonds are not corporate bonds, but consist of high-risk credit-linked derivatives, and are marketed as a proxy investment in well-known companies. Hong Kong investors lost billions of dollars on minibonds guaranteed by Lehman Brothers when the US investment bank went bankrupt last September.

he Standard:SFC to tackle equity-linked notes fiasco after settling minibonds saga\

4 August 2009

The Securities and Futures Commission has vowed to speed up its investigation into sales of Lehman Brothers equity-linked notes after settling the minibond controversy.

But the watchdog's chief executive could not provide a timetable because it is negotiating with banks that sold the notes.

Martin Wheatley told lawmakers yesterday he could not say if the ELN issue would follow the minibond model, but ``a settlement is always the best outcome.''

The SFC and 16 distributing banks agreed on July 23 on a settlement proposal to pay back 60 to 70 percent of the original investments of thousands of minibond holders. But ELN investors _ and those labeled as ``professional investors'' and ``experienced investors'' _ were excluded. Banks have agreed to repay minibond investors up to HK$6.3 billion with the SFC ending its ``top-to-bottom'' investigation.

Wheatley said the SFC would let minibond holders decide if they will accept the offer, and would not resume its efforts even if half of the investors reject the deal.

``Investors could complain to the Hong Kong Monetary Authority or even go to court,'' he said.

``If there have been multiple purchases of complex financial products, then it's more difficult for them to argue that they could not have understood the complex nature of a structured product.''

SCMP:Flawed system

A few days ago I was in a hospital in Tsuen Wan waiting to have some X-rays taken when I read a notice, the gist of which was, that if someone claiming CSSA benefits was found to be doing so without being entitled to them that they could be liable to serve 10 years in prison. I was astounded, as only a day or so earlier I had read that all the bankers involved in the selling of the worthless minibonds had been let off scot free.

Banks and their agents can knowingly promote and sell worthless bonds to thousands of unwitting investors and receive nothing by way of punishment other than a warning not to do it again. But a family desperate just to survive - not to make money, just survive - could result in a family member going to prison for 10 years.

There must be something terribly wrong with the justice system for this to be so.

Internet shop - selling TKL books

There is a new interface for the Internet Shop, selling TKL books. It explains how to order the books. Try it here.

PROMOTION. I wish to give a promotion discount of 15% on purchase of my books until National Day, 9 August 2009. To qualify for this discount, you have to enter the promotion code BLOG.

The available items are (prices are before discount):

TKL Intelligence Quiz vol 1 and 2 $7.90

TKL Sudoku Vol 1 (challenging puzzles) : $7.90

TKL Shape Quiz: $7.90

Dementia: keep it at bay

Exercise your mind could hold off demeina, as explained in this Article.

Try my quizzes and puzzles, which are designed to exercise your mind. Check out here.

GreatLink Choice insurance products valued between 19.2 and 29.8 cents

By S.Ramesh, Channel NewsAsia Posted: 03 August 2009 2151 hrs

SINGAPORE: Great Eastern Life's customers who have bought its GreatLink Choice investment-linked insurance products have started receiving letters to exercise the redemption offer made by the insurer.

Last Friday, Great Eastern announced that it would buy back S$594 million worth of GreatLink Choice products from 18,000 policyholders.

In the letter, the insurance company's managing director Mr Tan Hak Leh said the financial crisis has had an especially adverse impact on the market value of GreatLink Choice 3, 4 and 5 products.

The prices of these tranches as at June 30 this year were between S$0.192 and S$0.298 and they have a credit rating of CCC- (minus) from Standards and Poor's. Each unit was sold at S$1.

Great Eastern added that in view of the challenging market conditions, it has decided to make a one-time redemption offer to all GreatLink Choice customers who had bought tranches 3, 4 and 5 of the structured product.

Customers have until August 28 to decide if they want to redeem the policy. Great Eastern said customers will receive their money within two weeks after the close of the offer.

The company added that the redemption price is 90.2 cents per unit, compared to the latest GreatLink Choice 3 price of 29.8 cents per unit.
http://www.channelnewsasia.com/stories/singaporebusinessnews/view/446602/1/.html

Great Eastern's managing director, Tan Hak Leh, hopes the one time redemption offer will give customers peace of mind during these challenging times. - CNA/vm

Cheaper taxis

Do you like to take a taxi at half of the current price? This may be possible within the next few years. Find out how.

Survey: Favourite Singaporean expressions

Many Singaporeans use the following expression often, "be careful". It reflect a character trait - caution. This character trait make many Singaporeans scared to decide. They prefer to let other people decide for them. Do you agree?

Take part in this survey.

SCMP:Buy-back package must be extended, investors demand

3 August 2009

The buy-back package for Lehman Brothers minibonds should be extended to cover equity-linked notes (ELNs), 300 investors demanded yesterday when they met lawmakers.

The investors, mostly middle-aged, argued that as with minibonds, banks had used misleading promotional methods to sell ELNs and they were lured into buying the high-risk financial instruments, thinking there were no risks.

ELNs are investment products linked to the performance of some stocks. For most banks, the minimum investment was HK$500,000.

Investors were promised 10 to 30 per cent interest in the first month, and 4 to 20 per cent thereafter, depending on the performance of stocks. They should have been able to redeem the principal by the end of the investment period, which was usually a year.

Lawmaker Regina Ip Lau Suk-yee said the government and banks did not plan to buy back ELNs as most were bought by experienced investors who should have known the risk.

But the investors said they were just regular customers who had bought the products over the counter.

Retiree Ms Wong lost HK$500,000 after Lehman Brothers went bankrupt.

"They said the product was tailor-made for me. I trusted the bank, so I did not check the contract in detail," she said.

She had received about eight interest installments in the past two years, at an average of 12 per cent. But she said the product was now worthless. "If the bank staff had mentioned to me any one of the items in fine print, or that the product was risky, I would not have bought it."

In an earlier announcement, 16 banks promised to pay back at least HK$6.3 billion to 29,000 people who bought Lehman Brothers minibonds.

A government spokesman said the Monetary Authority and the Securities and Futures Commission should now focus on handling complaints about non-minibond structural products, such as ELNs. "The regulators will not tolerate any mis-selling conduct."

Fewer than 40 per cent of local investors are interested in buying Hong Kong government bonds or other bonds, an opinion poll by the Hong Kong Institute of Investors and the Investor Interest Concern Group found.

The findings came from a survey of 866 investors, conducted between June 6 and July 25. Of these, 38 per cent said they were interested in buying Hong Kong government bonds, with 62 per cent saying they were not.

NYTimes: Troubled Banks, Hugh Bonuses

The federal pay czar, Kenneth Feinberg, would be right to reject requests for big bonuses at banks feeding from the public trough.....

Mr. Feinberg must object to gargantuan payouts from banks that would be bankrupt
if not for taxpayers’ money. He should not be deterred by banks’ arguments that they will lose superstars and compromise profitability if they can’t pay lavishly.
The superstars caused the problem with financial wizardry they did not fully understand...

Most broadly, Mr. Feinberg must devise a structure to dissuade bankers from blowing up the economy again. In principle, one would like to see firms pay executives as they saw fit. But banks are different. They gamble with ordinary people’s money. They have proved they can do it extremely destructively.

Bankers’ remuneration was among the main factors behind this destructive behavior, encouraging them to take on dubious bets that provided big short-term returns at the expense of their institutions’ and the economy’s future stability...

http://www.nytimes.com/2009/08/03/opinion/03mon3.html

NYTimes: Rewarding Bad Actors ( Who Make Us Poorer )

Americans are angry at Wall Street, and rightly so....

But crashing the economy and fleecing the taxpayer aren’t Wall Street’s only sins. Even before the crisis and the bailouts, many financial-industry high-fliers made fortunes through activities that were worthless if not destructive from a social point of view.

And they’re still at it. Consider two recent news stories....

Just to be clear: financial speculation can serve a useful purpose.... But speculation based on information not available to the public at large is a very different matter....

.... we’ve become a society in which the big bucks go to bad actors, a society that lavishly rewards those who make us poorer.

http://www.nytimes.com/2009/08/03/opinion/03krugman.html
http://en.wikipedia.org/wiki/Paul_Krugman

European CityMobile and CyCab

There is an exciting project involving an automated (i.e. driverless taxi) to provide local transport. Read my blog here.

I have been writing on this matter for a few months, but I learned yesterday that the people in Europe had been working on the same idea much earlier.

Prudential Yield 15/20

Someone posted a comment that the Prudential 15/20 is similar to the Great Link Choice. Can policyholders of this product give feedback on:

a) The structure of the product
b) Does it guarantee against the failure of a certain number of CDOs
c) What is the current value of the various tranches of this product?

NYT: Auction rate securities

The debacle hit individual investors especially hard.

When state regulators investigated the circumstances surrounding auction-rate failures, they found that some of the firms selling the securities had turned their aggressive sales pitches on small investors even when astute institutional buyers had already seen trouble and stopped buying.

Regulators have since forced many brokerage firms that underwrote or sold the securities to buy back their clients’ holdings.

Eight large and small firms have already settled, or agreed to settle, auction-rate cases with the Securities and Exchange Commission.

http://www.nytimes.com/2009/08/02/business/02gret.html?ref=business

Re-build the trust in the integrity and reputation of Singapore

I call on the banks and stockborking firms who are involved in selling the credit-linked notes in Singapore and Hong Kong to offer the same compensation to investors in Singapore that they offer to those in Hong Kong. The compensation is 60% to 70% of the invested sum, and any excess, if the proceeds on maturity exceed the amount of the compensation.

Do act early, to protect your repuation. Equally importantly, your action will rebuild the trust in the integrity and reputation of the the financial system in Singapore in providing honest dealing and fair treatment of customers. This will enhance the role of Singapore as a trusted financial hub of the region.

Tan Kin Lian

Major US financial regulation initiatives

Read this report in Reuters.

I am impressed with the fast and appropriate action taken by the Obama Administration in addressing the failure of the financial market in USA. I believe that the measures are necessary and will be helpful in creating a fairer and better financial system.

This is an example of what can be achieved under a free, democratic system that draws on the best brains from all sides and respect the views and contributions of many people.

TKL Sudoku - Challenging Puzzles

I have printed a book of 128 challenging Sudoku puzzles. It contains tips on how to solve Sudoku puzzles, explains how the puzzles are generated and also gives a history of Sudoku. The book is available for $7.90 from www.easyapps.sg/ishop. Other books on the intelligence (Einstein) quiz and shape quiz (T puzzles) are also available. Watch this video.

Please help to promote these books to your friends or buy them as gifts for your family or friends.

http://www.google.com/search?q=cheyenne+shape+quiz&rls=com.microsoft:en-sg:IE-SearchBox&ie=UTF-8&oe=UTF-8&sourceid=ie7&rlz=1I7ADBR

SCMP:Mainland investors claim HK$500m loss on 'misleading' accumulator bets

1 August 2009

A group of mainlanders who said they had lost up to HK$500 million in accumulator investments complained to the Hong Kong banking regulator yesterday about banks in the city allegedly misleading them.

"We were misled by Hong Kong banks into purchasing stock accumulators. We were not warned about the risk of the products," the convenor of the Alliance of Hong Kong Private Banking Victims' - who said he preferred to be known as Jacky Jin Liang - said. With legislator Chan Kam-lam, Mr Jin and six other mainlanders met Hong Kong Monetary Authority executive director Raymond Li Ling-cheung yesterday.

Mr Jin said the alliance's 12 members bought the high-risk accumulator stock derivatives from five banks - HSBC, Hang Seng Bank, Citibank, DBS Bank and ABN Amro Private Banking. They had suffered losses of between HK$400 million and HK$500 million.

He said some were told that the products were "shares with discounted prices" rather than high-risk products. "And some of us believed the stock market would plunge but [the banks] still asked us to buy accumulators that led to severe losses."

Mr Chan said the authority had promised to investigate the alliance's complaint. The lawmaker said the HKMA promised to look into the cases in the coming three months.

An accumulator is a term-limited contract that allows investors to buy shares or foreign currency regularly at a fixed price below the market price when the contract begins. If the value of shares or currency rise, they can make a substantial profit. If the value falls to below the purchase price, there is no limit to potential losses.

At least two of the group made police reports to the Commercial Crime Bureau yesterday.

One, lawyer James Lai Jian-ping, said ABN Amro Private Banking had sent a staff member to Beijing two years ago to ask him to open a Hong Kong account. He said he was then "cheated" 15 times into investing more than HK$100 million.

DBS Bank (HK) and ABN Amro Private Banking said they had stringent sales procedures conforming to regulatory requirements. The Hong Kong Association of Banks and Citibank said they did not have enough information to comment.

Separately, legislator Kam Nai-wai said 18 Lehman Brothers "professional" minibond investors also met Mr Li. They wanted to be covered by the latest repurchase agreement but were told they were not eligible. They would be asked if they wanted the authority to continue investigations into their cases.

The Asian Banker:SFC, HKMA and 16 banks reach agreement on Minibonds

31 July 2009

The Securities and Futures Commission (SFC), the Hong Kong Monetary Authority (HKMA) and 16 distributing banks (the Banks) (Note 1) have jointly announce that they have reached an agreement in relation to the repurchase of Lehman Brothers Minibonds from eligible customers (Note 2).

The Banks have agreed with the SFC and the HKMA without admission of liability that (Note 3):

each of the Banks will make an offer to repurchase from each eligible customer all outstanding Minibonds (Note 4) at a price equal to 60% of the nominal value of the original investment for customers below the age of 65 or at 70% of the nominal value for customers aged 65 or above as at 1 July 2009. Customers will be entitled to retain any coupon payments received to date;

once the underlying collateral is recovered and paid to the Banks, each of them will make a further payment of initially up to 10% (depending on recoveries) of the nominal value of the Minibonds to eligible customers below the age of 65 and, if recoveries exceed 70%, the Banks will pay the entire excess amount to eligible customers who have accepted the repurchase offer (Notes 5 and 6);

each Bank will make available an amount equivalent to the amount of commission income received by it as a distributor of the outstanding Minibonds to the trustee of the Minibonds to assist in the recovery of the underlying collateral for each outstanding series of Minibonds;

each of the Banks will immediately implement special enhanced complaints handling procedures to resolve, in a fair and reasonable manner, all complaints in relation to the sale and distribution of other structured products (Note 7); and

to demonstrate their commitment in serving the investing public with the highest standards of conduct, each of the Banks: (i) will engage an independent reviewer, to be approved by the SFC and the HKMA, to review its systems and processes relating to the sale of structured products, to report to the SFC and the HKMA and will commit to the implementation of all recommendations by the independent reviewer; and (ii) will engage a qualified third party, as approved by the SFC and the HKMA, to review and enhance complaints handling procedures, and will commit to the implementation of all recommendations by such third party.

People who have previously reached settlement with the Banks in relation to Minibonds will not qualify for the repurchase offer. However, the Banks have undertaken to the HKMA to make ex gratia payments to those customers that have already entered into settlements with the Banks and who would have been eligible to receive the repurchase offer where those customers have received settlement amounts less than they would have received under this agreement. The intention is to bring those customers in line with eligible customers under this agreement.

In consideration of the agreement, the SFC will discontinue its investigations into the sale and distribution of Minibonds by the Banks. The HKMA has also informed the Banks that as the agreement contains detailed arrangements for the settlement of claims and the implementation of robust systems for selling unlisted structured products and dealing with related customer complaints in future, it is not its intention to take any enforcement action against the Banks in relation to Minibond cases that involve eligible customers who accept the offer.

The SFC considers that this agreement meets the SFC's criteria for resolution under section 201 of the Securities and Futures Ordinance for the following reasons:

The repurchase scheme should ensure that eligible customers who accept the repurchase offer will, subject to the recovery and distribution of the underlying collateral, receive a total amount that is equal to or greater than what they would otherwise recover if they were simply paid the current market value of the collateral.

The agreement takes into account that the recoverable value of the collateral is not certain. Even if the recoverable value of the collateral is below the values estimated by experts engaged by the Hong Kong Association of Banks in late 2008, the proposal will still deliver a return for the eligible customers that is equal to or exceeds 60% of their investment (or 70% for customers aged 65 or above).

The agreement includes a commitment by the Banks, as noteholders, to take reasonable steps to expedite the return of the collateral. It is important that any claim on the collateral that might reduce its recoverable value is negotiated robustly.

The agreement represents an opportunity to resolve outstanding investigations involving 16 banks in a way that will bring benefits to nearly all holders of outstanding Minibonds.

The agreement includes special measures in which the Banks will investigate and resolve in a fair and reasonable manner all complaints involving the sale and distribution of other structured products.

The agreement also remediates the Banks' systems and processes to meet the highest standards that will provide enhanced protection to the investing public in the future and give the investing public an assurance that the parties are determined to ensure these events are not repeated.

The SFC and the HKMA believe that the repurchase offer by the Banks is a reasonable one and is in the public interest.

"Strong markets, like Hong Kong's, need strong regulations. This agreement will provide substantial benefits for the vast majority of customers holding Minibonds that would not otherwise be received by them and, given the number of Banks and customers involved, the agreement is a watershed in the regulation of financial services in Hong Kong," said the SFC's Chief Executive Officer, Mr Martin Wheatley.

"Specifically, the agreement paves the way for customers who hold Minibonds to receive a substantial return of their capital. Secondly, the financial support of the Banks, using the commission income received in the sale of Minibonds, will expedite the return of the underlying collateral to Hong Kong Minibond holders. This aligns the interests of the Banks and customers holding Minibonds. Thirdly the agreement provides the framework for the Banks to develop higher standards of practice in the future and to resolve complaints in relation to other structured products. For these reasons, the SFC firmly believes it is an appropriate resolution of the Minibond issue with these banks," remarked Mr Wheatley.

Mr Y K Choi, Deputy Chief Executive of the HKMA, said: "The HKMA welcomes and supports the repurchase scheme and considers it to be practical, reasonable and in the interests of the great majority of Minibond investors. The HKMA encourages eligible customers to consider the repurchase offer by the Banks."

Dr The Hon Sir David Li Kwok Po, Chairman and Chief Executive of The Bank of East Asia, Ltd, said on behalf of the Banks: "The Banks are pleased to have reached this agreement with the SFC and the HKMA which we believe will benefit Hong Kong as an international financial centre. It evidences our joint effort to assist the Minibond investors in Hong Kong who have been impacted by the sudden collapse of the Lehman Brothers Group, and to reinforce public confidence in Hong Kong’s banking, financial and regulatory systems. This agreement demonstrates our unwavering commitment to the good of Hong Kong and the welfare of our customers. We will continue to work with the SFC and the HKMA to maximise the confidence of our customers in Hong Kong’s banks, and to ensure that the standards maintained by Hong Kong’s banks will be in line with international best practice."

The SFC acknowledges the substantial assistance of the HKMA in the investigation of these cases.

Travel Picks: Top 10 cities to visit with children

Read this report. Singapore is listed as No. 8

FISCA Website

First posted on 26 July 2009

I wish to introduce you to the FISCA website.

It will be officially launched in 1 month's time through a media conference. Prior to the official launch, we welcome visitors and feedback. We are also able to take membership at an annual fee of $36 per year.

I invite you to be member of FISCA. At this time, we are providing information free to all vistors. So, as a member you are not getting anything extra benefit, except that it is an opportunity to show your support for this effort to raise the financial awareness, literacy and competency of consumers in Singapore.

At a later date, members will be entitled to discounts in participating in the educational and other activities of FISCA.

Do join now, to show your support and encouragement for the small handful of volunteers who are spending time to give a start to FISCA. We welcome more volunteers to come forward.

NYT: In search of competent (and honest) advisers

Read this article in New York Times. It is relevant to Singapore.

Great Eastern Life shows the way

Great Eastern Life has decided to give a full refund to purchasers of its GreatLink Choice policies. The refund is for the full invested sum, less any payments received by the policyholders. The total loss from the buy back is estimated to be $250 million.

Great Link Choice is a structured product that guaranteed against the failure of a certain number of collaterialised debt obligations (CDO). Due to the financial crisis, several CDOs have defaulted and the value of the structured product (GLC) had dropped considerably.

Great Eastern Life probably took this decision to buy back the product, following complaints by policyholders that they were badly or wrongly advised by the insurance advisers.

I congratulate Great Eastern Life and its parent company, OCBC Bank, for taking this bold decision. This will give relief to 18,000 the policyholders, who must have agonised over the loss of their savings during the past year.

On hearing the news yesterday, I wondered whether the loss would be borne by the policyholders in general (out of the surplus used to pay their bonuses) or by the shareholders. From the Straits Times report, it appears that the loss will be borne by the shareholders, including the parent company. This is a fair and correct approach, and I congratulate Great Eastern Life and OCBC for this decision as well.

I hope that Great Eastern Life will enhance its reputation by offering life insurance products (for savings and protection) that give good value to consumers, while making a reasonable profit for its shareholders. This require the products to be kept simple, described transparently and for the commission, marketing and other expenses to be kept at a modest level.

Being the oldest local life insurance company with 100 years of history, Great Easter Life can set a lead in this new direction to serve the people of Singapore.

I hope that this decision by Great Eastern Life will encourage the banks and stock-broking firms in Singapore, who have sold similar products to their customers, including the Lehman Minibonds, DBS High Notes, Morgan Stanley Pinnacle Notes and the Merill Lynch Jubilee Notes, to make a similar buy back offer to their customers who were badly or wrongly advised on these structured products.

Even if the financial institutions do not adopt the buy back arrangement similar to Great Eastern Life, a settlement similar to the one adopted in Hong Kong will be appreciated by the investors of these credit linked notes in Singapore.

I hope that the Monetary Authority of Singapore will encourage these financial institutions to consider such a settlement.

Tan Kin Lian

Great Eastern Announces One-time Redemption Offer to GreatLink Choice Policyholders

http://www.lifeisgreat.com.sg/en/jsp/corporate/files/p_jul_3109.jsp

SCMP:Investors set for legal fight over lost millions

30 July 2009

The legal sector is bracing for a flood of litigation as a growing number of investors take their bankers to court in efforts to recover huge losses resulting from high-risk financial products.

On Tuesday, 77-year-old Chan Wai-yee filed a writ and statement of claim against Swiss-based investment bank UBS for allegedly advising her to buy an equity accumulator package which resulted in her losing HK$260 million.

Solicitor Bonita Chan Bow-ye of Hastings & Co, the law firm which represents the elderly Chan, said yesterday the company is also handling several other similar cases, and that it was likely more investors will follow suit.

``After seeing some investors taking their cases to court, others who are in a similar situation may consider doing the same, so it's very likely we will see more lawsuits concerning these high- risk financial products,'' Bonita Chan said.

A senior partner of ONC Lawyers, Ludwig Ng Siu-wing, told The Standard he is now handling several cases involving mainland investors who claim they had been advised by their Hong Kong bankers to buy equity accumulators months before last year's market crunch, resulting in losses totaling tens of millions of dollars.

However, Ng said not many law firms were willing to handle such cases, as they not only involved the novelty of financial products but also the potential conflict of interest between the banks and the law firms.

``Equity accumulators have become common only in the past few years, and the subject is still quite new to some lawyers,'' Ng said. ``In addition, several major law firms have close business ties with the banks, such as preparing legal documents for mortgages, and such firms may be reluctant to take up such cases.''

Ng said minibond investors were a different matter.

``Equity accumulators are for experienced investors, and where the transaction is through private bankers who normally serve only the very rich. It also means their investments in the accumulator would be huge, running into tens of millions of dollars. So those investors are a completely different group from those who subscribed to minibonds,'' Ng explained.

Last week, the Securities and Futures Commission announced a settlement with 16 banks for them to buy back all outstanding Lehman Brothers minibonds at 60 to 70 percent of their original value. The deal reached put an end to a 10-month saga.

Solicitor Henry Chiu Tuen-ting of Henry Chiu & Partners said the key element in such disputes would be whether the banks clearly explained and honestly disclosed the possible upside and downside of the stock market.

Features of life insurance policies

Hi Mr Tan,
Can you tell me what are the features for these insurance policies?
1) Limited pyament whole life insurance
2) Regular prenium investment-linked policies
3) Anticipated Endowment Insurance

REPLY
I will only give a brief explanation here. Please search Google for a more detailed explanation.

A limited payment whole life policy requires you to pay premium for a certain number of years and be insured for the whole of life. If you pay premium for a shorter period, the annual premium is higher.

A regular premium investment linked policy requires you to pay a regular premium over many years. The premium is invested in an investment fund. You will get the value of the invested units.

An anticipated endowment policy pays the maturity benefit in installments during the term. For example, if you insure for 50,000 over 20 years under an anticipated endowment policy, the $50,000 is paid to you in installments over the 20 years. The annual premium for an anticipated endowment policy is much higher than an ordinary endowment policy.

A life insurance policy may take away as much as two years of your premium to pay commission to the agent. This is too much to be taken away. If you pay a premium of $300 a month, two years of premium amount to $7,200. This is the money taken away from you to pay the agent.

I advise people not to buy all of these types of insurance policies, including critical illness policy, which pays high commission. It is all right to buy term insurance policy (where the premium is low) or a single premium policy, where the commisison is less than 3%.

All the best.

Coops in focus in US healthcare debate

Read this article in Reuters.

Aging, inequity and poverty

Read this blog. The record in Singapore is not good.

Expensive car park in Singapore

Where is the most expensive car park in Singapore? Read here.

Health care realities

Article in New York Times

Quote: ... private markets for health insurance, left to their own devices, work very badly: insurers deny as many claims as possible, and they also try to avoid covering people who are likely to need care. Horror stories are legion: the insurance company that refused to pay for urgently needed cancer surgery because of questions about the patient’s acne treatment; the healthy young woman denied coverage because she briefly saw a psychologist after breaking up with her boyfriend.

The Health Debate: At a Fever Pitch

Letter to New York Times.

Permits required to appeal to the public for funds

Source: http://www.guidemesingapore.com/business/c656-singapore-non-profit-organization-part2.htm

For fund-raising appeal through door-to-door collection or soliciting in public places, the House to House and Street Collection Permit must be obtained from the Police. A licence is not needed if it is a private collection that is confined to friends or relatives, appeals made through the telephone or the media such as the Internet and newspapers, appeal letters by post or approaching individual donors.

Petition to PM on credit linked note (6)

Petition.

Update: 522 signatures as at 10 PM on 24 July. On the way to target of 1,000 signatures.
Update: 590 signatures as at midnight of 27 July. The pace of signatures has slowed down. Please pass the word around for more signatures to reach the target.

Pelosi lashes out against insurance companies

WASHINGTON (Reuters) - U.S. House of Representatives Speaker Nancy Pelosi on Thursday ramped up her criticism of insurance companies, accusing them of unethical behavior and working to kill a plan to create a new government-run health plan.
"It's almost immoral what they are doing," Pelosi said to reporters, referring to insurance companies. "Of course they've been immoral all along in how they have treated the people that they insure," she said, adding, "They are the villains. They have been part of the problem in a major way. They are doing everything in their power to stop a public option from happening."
(Reporting by Richard Cowan, Editing by Sandra Maler)

Promote the use of car sharing

Car sharing can give you the same convenience of private use of a car, but at a fraction of the cost. Read how it works here.

No parking space in HDB estates

Have you wondered why HDB estates are congested with cars, and it is difficult to find a parking space when you visit someone in HDB during the day? Find the answer here.

Online Donation towards Gathering on 22 August

If you wish to meet an online donation towards the expenses of the Gathering of 22 August, please make an internet banking or fund transfer to this account:

POSB Saving 508-01812-6

For internet banking, please give the reference "22 AUG". For funds transfer, please send an e-mail to kinlian@gmail.com giving details of your payment.

Waiting for the stockmarket to bottom

A few months ago, when the ST index was around 1,500, some people commented that they will buy when it reached 1,200. That was their target for the stockmarket to bottom out.

But, it did not reach that level. Instead, the ST index had recovered 1,100 points (more than 70%) over the past few months. Those who waited for the stockmarket to reach 1,200 missed the boat.

Lesson 1: Do not be greedy. If you find the stocks to be of good value, you should buy and keep for the long term.

I bought my shares when the stockmarket was around 2,500. I did not sell the shares when they lost nearly half of its value. I kept them for the long term. These shares have since recovered in value (nearly).

Lesson 2: Avoid trying to catch the right time to sell or buy. If you are not sure, keep the shares for the long term, provided that they are blue chip shares. Do not sell, when the share price is depressed due to liquidity or fear.

BBC; Car insurance premiums rising

Read this article of what is happening in UK.

Are you sure democracy cannot help you financially?

Read this article.

50% compensation for Minibond

Hi Mr. Tan
Thank you very much for helping the CLN victims. Your Blog has been my lifeline for the past few months. I have signed your petition to PM Lee.

I invested $X in Minibond. I have filed my case with FIDREC. Upon mediation, FI offerred 20%. I rejected and went for adjudication. FI then offered 35%. I submitted additional documents.

Later, the FIDREC case manager informed me that the FI offerred 50%, the amount I initially asked for. The final offer of 50% made me shocked, very angry and felt very bullied again. I wanted to go ahead with the adjudication. Can I ask for 100% compensation? Can I accept the compensation, as I already signed the Petition?

REPLY
It is all right for you to accept the compensation, although you signed the Petition. I suggest that you should ask for compensation of 50% and any balance on maturity (in case the matuirty sum exceeds 50%). Some of the Minibond actually has value more than 50%.

Lesson: It is quite bad for the financial institution to make it so difficult and stressful for the customer to get fair compensation.

Company Y not wanting to pay out my insurance claims

Dear Mr. Tan,
I was diagnosed and operated upon for my brain cancer. The cancer is classified as terminal. With the doctor's recommendations & letters, CPF paid all my savings into my bank account. Company X initially refused to allow me to claim my DPS but after I send them the CPF statement - they paid me as well.

I did a similar claim with Company Y for 3 policies. For more than a year, they have been giving excuses after excuses in not wanting to pay me by saying the requirement for us to pay a claim for Total & Permanent Disability is:-

"totally & permanently disability so that life assured cannot engage in any occupation, business or activity which pays any income"

OR

"suffers total and irrecoverable loss of effective use of
- both eyes; or
- any 2 limbs at or above the wrist or ankle;
- or one eye and any one limb at or above the wrist or ankle"

Company Y is adamant in not wanting to pay me - I even got a letter from my last employer as to why they could not hire me back and they verbally told me they need more proof of further rejection letters. I had paid my insurance premiums monthly for the last 23 years without any default to date.

I hope you can take advise me on how best to approach Company Y.

REPLY
You can lodge a complaint with the Insurance Commissioner's Office in MAS. Show them evidence of payment by CPF and Company X. MAS will ask Company Y to justify their delay.

You can also make a complaint to Fidrec, www.fidrec.com.sg. As your claim exceed $100,000, you can select one or two policies that fall within this limit to lodge your complaint.

Lesson: Insurance companies usually make it difficult for the customer to claim under its permanent disability of critical illness cover, especially for large sums. This is why I recommend against insuring for large sums under critical illness. There is no point in paying so much premium and to face difficulty in making a claim.

Gathering on 22 August at Hong Lim Park (2)

The gathering of investors of the credit-linked notes will be held as follows:

Venue: Hong Lim Park
Date: Saturday 22 Aug 09
Time: 5 pm to 6.30 pm.

There will be signing of the Petition asking the help of the Prime Minister to get a settlement similar to Hong Kong for investors of the credit-linked notes. The online Petition has gathered 600 signatures. The physical signing is for investors who were not able to sign the online Petition.

There will be a donation box for investors to make a contribution towards the expenses of the Gathering. Any excess will be used towards an advertisement on the Petition (if there are sufficient money) or contributed to the newly formed Financial Services Consumer Association (FISCA). Any deficit will be underwritten by some well-wishers.

Books and puzzles

I like to introduce you to my books and puzzles. They are good for children, adults and seniors. They develop logic, intelligence and exercise the mind. Have hours of fun and enjoyment.

More details are found here:
www.easyapps.sg/ishop

The Standard:Bank wiped out my $260m

29 July 2009

An elderly woman who claims to have lost nearly HK$260 million on high-risk financial products is taking a Swiss- based investment bank to court.

Chan Wai-yee, 77, says UBS advisers talked her into buying an equity accumulator package just months before last year's market crunch.

The High Court writ filed by Chan comes less than a week after 16 Hong Kong banks agreed to buy back Lehman Brothers minibonds at 60-70 percent of their original value.

She claims she did not understand the documents she signed because they were in English, and no one from UBS informed her of the risks and nature of the investments.

The writ states that Chan was a client of Hang Seng Bank for four decades, and she opened a Prestige account there in January 2003. She was advised on investments by managers Wong Mei- lun and Shirley Cheng.

Chan says her nest egg was accumulated through hard work, and she had limited experience in stock investments. As she did not understand English, she relied on advice from Wong and Cheng.

She was only interested in low-risk investments because she wanted to preserve her capital, Chan says.

So she never went into any risky investments while her money was with Hang Seng Bank.

Then, during the market boom in mid-2007, Wong and Cheng left Hang Seng Bank to work for UBS.

Chan claims that Wong then approached her and invited her to move her assets to UBS.

She signed various documents from time to time to open an account at UBS, but never indicated to Wong, Cheng or any staff member at UBS that she was interested in changing her investment strategy.

In June 2007, Chan signed different documents, all in English, that included a client acknowledgement form, an "acceptance to be treated as a professional investor" and a "request for subscription of equity-linked notes and blocs."

Chan then transferred shares and cash from her Hang Seng account to UBS, totaling HK$260 million.

In September 2007, Chan says, Wong telephoned and persuaded her to buy a financial product known as an UBS OTC Equity Accumulator.

She claims to have been "induced" into 25 equity accumulator transactions between September 2007 and February 2008.

Last October, a total of nine equity accumulators had not been knocked out, meaning that the stock-price ceiling set in the contract with the bank had not been breached.

After taking losses of more than HK$200 million, she told UBS she wanted to terminate all investments.

As of July 23 this year, her UBS account balance was only HK$1.6 million.

Besides recovering the money, she is seeking interest, damages and costs.

NJ sues Merrill Lynch over $300 mln stock purchase

NEW YORK, July 28 (Reuters) - New Jersey sued Merrill Lynch for selling its pensions $300 million of preferred stock in January 2008 "based on misleading information" about the brokerage's finances, the state attorney general said on Tuesday.

Anne Milgram, the state attorney general, said in a statement that the lawsuit, filed in the Law Division of state Superior Court in Hudson County, also names Bank of America Corp as a defendant.

Bank of America acquired Merrill Lynch last year and is named as "a successor entity," Milgram said.

Work near your home

Reduce travelling time and enjoy a better quality of life. Read this.

For the benefit and welfare of the people

In his talk and the answers to questions from the floor, Dr. Boediono (Vice President Designate of Indonesia) said that decisions will be taken for the benefit and welfare of the people.

When asked about the policy on privatisation and the use of natural resources, he said that the key criteria is to improve efficiency and ensure that the outcome will be for the benefit of the ordinary people.

He also said that Indonesia has been transformed into a democratic country and that the recent general election has been completed peacefuly and fairly. The test of democracy is its ability to improve the lives of the people.

Indonesia has gone a long way in improving its governance structure to reflect the will of the people. Watch out for a printed copy of his talk, when it is reported in the mainstream newspapers.

Honesty in Politics

I attended a talk given by Professor Dr. Boediono, Vice President Designate of Indonesia arranged by the Rajaratnam School of International Studies in Singapore.

One Singapore minister asked the question to Dr. Boediono, "What is your experience during the election campaign? How much of your success is due to hard politics and how much do to soft politics?" He used an Indonesian term to describe soft politics, which appealled to human emotions.

Dr. Boediono replied, "I do not know what is hard politics and what is soft politics. I only know what is correct politics, and that is being honest."

I like this answer. It confirms that politics does not have to be manipulating public opinion or the election process. It is possible to be honest and sincere and win over the trust of the people.

What is the future for this country?

QUOTE:
If you, MAS people, the best educated and smartest people in Singapore, allowed such unfair things to continue, I won't cry for my money, but cry for your future. If the best educated, smartest people are not looking for justice, what is the future for this country?
GD

Read this letter.

Free market - success and failure

The free market works for certain products which are physical, transparent and easy to understand. It has produced better quality products at lower prices.

The free market has failed to work well for many services, such as financial, medical and legal services. The consumers require an expert to advise on these matters. If the experts are allowed to charge any fee and define their own standard, it is likely to lead to exploitation of consumers.

These services need to be regulated to protect the interest of consumers. It also needs a strong consumer association to help the consumers to understand and exercise their rights, and to ensure fair treatment of consumers.

In the past years, these professional services are regulated by the authority and self-regulated by the professional bodies.

The standards of regulation and self-regulation has dropped in recent years during the era of the free market. The authority believed that consumers can take care of themselves and choose the advisers who can serve them best. This view goes against empircal evidence. Many consumers are fleeced by some unscrupulous so-called experts.

The role of government is to govern. It cannot be delegated to the "free market". The government has to ensure honest and fair behaviour for the benefit of society. It has to set the example for businesses and the people to follow. It is time to re-think the role of the free market.

Tan Kin Lian

Reuters: Investors dump brokers to go it alone online

Article.

Quote: "I will never again trust anyone who is commission-driven to manage my portfolio," said Mallah. "If they're not making money off you, they have no use for you."

NY Times: Of banks and bonuses

Editorial.

Lehman victims international/ planning for Sep. 15

Planning for the protests on the Lehman anniversary on Sep. 15 is progressing in Germany. We are actively discussing activities and locations in our forum here: http://lehmanschaden.19.forumer.com/viewtopic.php?t=2170 (all in German, sorry about that...)

We want to stage one or two larger events in Frankfurt (that's the banking center in Germany and that's where Lehman had their offices) and/or Düsseldorf (that's where Citibank Germany is headquartered, they sold 75% of all Lehman bonds to individual investors over here). Other cities may stage small events or vigils on that day, especially for people who cannot/will not travel. Many of the victims are elderly...

I would like to find out which other cities/countries are willing to co-ordinate a joint protest on Sep. 15. The aim is to maximize our joint press coverage and make clear that our fate is a global phenomenon and not just a local/regional aberration. The banks (and Lehman) screwed little people everywhere!!!

Please state which city/country you represent and how many people you could mobilize. Any city/country would do their own planning, we would just co-ordinate stuff like press releases and maybe some big banners.

Please forward this e-mail to anyone you know that represents Lehman victims in other places. As far as I know, we now have the following cities/countries on this distribution list:
- Hong Kong SAR
- Taiwan (?)
- Singapore
- Spain
- Switzerland
- UK
- Germany

I'm looking forward to hearing from you!

LS from Germany
Web: http://www.lehman-zertifikateschaden..biz
Forum: http://forum.lehman-zertifikateschaden.biz

Why markets can't cure health care

Article by Paul Krugman.

The Standard:61pc of minibond investors undecided on offer

27 July 2009

Investors who bought Lehman Brothers minibonds appear to be softening their stance on the banks' repurchase scheme.

According to the preliminary results of a survey conducted by the Democratic Party at a meeting yesterday, 61 percent of 431 investors are now undecided on whether or not to accept the banks' scheme, while 27 percent plan to reject the offer and just 11 percent will accept it. Previously the investors were overwhelmingly against accepting the plan.

Some 29,000 investors _ more than 90 percent of Hong Kong minibond investors _ will be refunded about 70 percent of their original investments, financial regulators said last week.

``I will not pursue litigation as I don't want to get entangled with the bank,'' an investor surnamed Lee said at yesterday's meeting.

The political party estimated more than 1,200 minibond investors attended the two sessions it held.

Investors also criticized the Hong Kong Monetary Authority and the Securities and Futures Commission for not making clear the requirements for claiming their money back. ``It's confusing as an HKMA staffer told me on phone I am a professional investor if I've invested HK$8 million,'' an investor surnamed Yu said. ``However, another person from the HKMA said the next day that it depends on whether we have signed documents to describe ourselves as professional investors.''

On concern over the definition of ``professional investors,'' HKMA executive director Raymond Li Ling-cheung said on Saturday that investors with more than HK$8 million in investments will not be classified as ``professional'' as long as they have not signed any documents to say they are professional investors.

``I advised investors not to make their final decision in a hurry as they have 60 days to consider the offer after banks inform them in early August,'' said legislator Kam Nai-wai.

Meanwhile, a representative of a group of Lehman underlying equity- linked notes investors said they hope to meet Secretary for Financial Services and the Treasury Ceajer Chan Ka-keung today and they will hold a meeting themselves on August 2, according to Sing Tao Daily, sister publication of The Standard.

A spokesman for the secretary said yesterday: ``Resources from the two regulators could focus on misselling complaints of other non-minibond structured products.''