Dear Mr Tan,
I am doing a 3-year distance learning course from a UK university. They offer payments by credit card or bank transfer and installment payment for each semester.What is the best way to make payment for my course? Should I open a foreign currency account and convert my money into GBP before the GBP increases?
REPLY
You should not try to speculate on whether the GBP will increase or drop. It can go either way.
When you make payment, look at the exchange rate and the bank charges. Get a few banks to quote to you, so that you get the best rate and lowest charges.
Wednesday, June 24, 2009
China Daily:Banks may face action from SFC
24 June 2009
HONG KONG: The Securities and Futures Commission (SFC) may take disciplinary action against some financial institutions due to misconducts related to the mis-selling of risky derivative products to individual investors, Martin Wheatley, chief executive of the market watchdog, said yesterday.
The SFC has completed its investigation into 11 of the 19 banks that had distributed toxic Lehman Brothers "minibonds" to individual investors, Wheatley told legislators yesterday at a public hearing on the issue by the legislature.
Seven of the banks have been served with a notice of proposed disciplinary action (NPDA) while the other four will soon be served with a similar notice as apparent evidence indicated mis-selling of risky debt derivatives, he said.
Disciplinary proceedings will be taken against these banks unless they agree to compromises, he said.
Sending out an NPDA is the first step the SFC will take after it has decided to start disciplinary proceedings.
A NPDA sets out the findings of the SFC investigation and indicates the sanctions the SFC considers appropriate to impose.
Wheatley did not elaborate on the likely disciplinary sanctions.
But, according to the Securities and Futures Ordinance (SFO), which governs the operation of the SFC, the market watchdog is empowered to discipline regulated persons or firms who are found guilty of misconduct.
Sanctions that could be taken by the SFC include revocation of license or registration, suspension of licence or registration, prohibition of application for licence or registration, fines up to $10 million and reprimands.
Individual investors, who have bought minibonds or other toxic derivatives products, welcomed the latest move by the SFC but claimed that the move is far from enough to force banks to buy back the toxic financial products at their original investment value.
"It is too mild a move. The SFC should have applied for the establishment of a Market Misconduct Tribunal to handle these serious market misconducts," said Peter Chan, chairman of Allied Victims of Lehman Products.
"Banks (that distributed the toxic products) have tried their best to avoid redeeming all the toxic financial products at full face value. The SFC should have taken disciplinary sanctions much earlier," he added.
Wheatley said the market watchdog will complete its investigation of the remaining eight banks as soon as possible.
He also confirmed during the hearing that the SFC had received complaints about mis-selling against financial institutions from investors who had bought credit-linked notes (CLN) and equity-linked notes (ELN) from them.
Many of these investors, who have suffered huge losses from their investment in CLNs and ELNs amid the volatile market in the past several months, claim that they bought CLNs and ELNs only because of mis-presentation by financial institutions.
The market watchdog has not started investigation on these complaints yet, Wheatley said.
He said the SFC had received 8,400 complaints against financial institutions, mostly alleging mis-selling of Lehman minibonds.
Wheatley declined to comment on reports that BOC Hong Kong had offered to buy back all minibonds it distributed at 40 percent discount to the original investment value.
Wheatley is scheduled to attend another public hearing on the minibond issue by the legislature this Friday.
HONG KONG: The Securities and Futures Commission (SFC) may take disciplinary action against some financial institutions due to misconducts related to the mis-selling of risky derivative products to individual investors, Martin Wheatley, chief executive of the market watchdog, said yesterday.
The SFC has completed its investigation into 11 of the 19 banks that had distributed toxic Lehman Brothers "minibonds" to individual investors, Wheatley told legislators yesterday at a public hearing on the issue by the legislature.
Seven of the banks have been served with a notice of proposed disciplinary action (NPDA) while the other four will soon be served with a similar notice as apparent evidence indicated mis-selling of risky debt derivatives, he said.
Disciplinary proceedings will be taken against these banks unless they agree to compromises, he said.
Sending out an NPDA is the first step the SFC will take after it has decided to start disciplinary proceedings.
A NPDA sets out the findings of the SFC investigation and indicates the sanctions the SFC considers appropriate to impose.
Wheatley did not elaborate on the likely disciplinary sanctions.
But, according to the Securities and Futures Ordinance (SFO), which governs the operation of the SFC, the market watchdog is empowered to discipline regulated persons or firms who are found guilty of misconduct.
Sanctions that could be taken by the SFC include revocation of license or registration, suspension of licence or registration, prohibition of application for licence or registration, fines up to $10 million and reprimands.
Individual investors, who have bought minibonds or other toxic derivatives products, welcomed the latest move by the SFC but claimed that the move is far from enough to force banks to buy back the toxic financial products at their original investment value.
"It is too mild a move. The SFC should have applied for the establishment of a Market Misconduct Tribunal to handle these serious market misconducts," said Peter Chan, chairman of Allied Victims of Lehman Products.
"Banks (that distributed the toxic products) have tried their best to avoid redeeming all the toxic financial products at full face value. The SFC should have taken disciplinary sanctions much earlier," he added.
Wheatley said the market watchdog will complete its investigation of the remaining eight banks as soon as possible.
He also confirmed during the hearing that the SFC had received complaints about mis-selling against financial institutions from investors who had bought credit-linked notes (CLN) and equity-linked notes (ELN) from them.
Many of these investors, who have suffered huge losses from their investment in CLNs and ELNs amid the volatile market in the past several months, claim that they bought CLNs and ELNs only because of mis-presentation by financial institutions.
The market watchdog has not started investigation on these complaints yet, Wheatley said.
He said the SFC had received 8,400 complaints against financial institutions, mostly alleging mis-selling of Lehman minibonds.
Wheatley declined to comment on reports that BOC Hong Kong had offered to buy back all minibonds it distributed at 40 percent discount to the original investment value.
Wheatley is scheduled to attend another public hearing on the minibond issue by the legislature this Friday.
SCMP:At least 11 banks mis-sold minibonds, SFC chief says
24 June 2009
Preliminary findings indicate that at least 11 banks violated regulations when selling Lehman Brothers minibonds, legislators heard yesterday.
Securities and Futures Commission chief executive Martin Wheatley told a Legislative Council subcommittee meeting that was the result of investigations of all 19 banks that sold the complex investment products.
"In seven of those, we have reached our preliminary conclusions where we have either filed preliminary notice of disciplinary action or we have opened settlement investigations," Mr Wheatley said, adding that there was prima facie evidence of lapses in control.
The securities regulator was also concluding initial investigations with four other banks, which would either receive a preliminary notice or face settlement talks, he said.
Mr Wheatley refused to comment on market rumours that the regulator had rejected Bank of China (Hong Kong)'s offer to buy back minibonds from clients at 60 per cent or more of the investment principal.
Earlier, brokers Sun Hung Kai Investment Services and KGI Asia reached an agreement with the commission to buy back minibonds from their clients at their original value.
"In terms of the statement about whether the initial agreements the SFC reached with the brokers is the only model, the answer is no, we are not dogmatic," Mr Wheatley said. "We have said that we will take account of the extent to which any bank mitigates the losses in the enforcement action that we take."
The regulator has received 8,400 complaints since September, most of them alleging that Lehman Brothers minibonds were misleadingly sold.
At the three-hour hearing, Mr Wheatley was repeatedly asked if there was any problem with the demarcation between the commission and the Monetary Authority.
"I think the demarcation is clear," he said.
Saying that the commission had no legal role overseeing the authority in the regulation of banks, Mr Wheatley said the commission was in "a co-ordination role, not a supervisory or an oversight role" with the banking regulator.
Asked whether the commission would regulate the names of financial products, Mr Wheatley said it would ask the issuer to justify the name.
It had also proposed to the financial secretary that more guidelines and codes be developed to cover the marketing of related documents.
Minibonds were not corporate bonds, but high-risk, credit-linked derivatives marketed as a proxy investment in well-known companies.
Mr Wheatley will give evidence again on Friday.
Preliminary findings indicate that at least 11 banks violated regulations when selling Lehman Brothers minibonds, legislators heard yesterday.
Securities and Futures Commission chief executive Martin Wheatley told a Legislative Council subcommittee meeting that was the result of investigations of all 19 banks that sold the complex investment products.
"In seven of those, we have reached our preliminary conclusions where we have either filed preliminary notice of disciplinary action or we have opened settlement investigations," Mr Wheatley said, adding that there was prima facie evidence of lapses in control.
The securities regulator was also concluding initial investigations with four other banks, which would either receive a preliminary notice or face settlement talks, he said.
Mr Wheatley refused to comment on market rumours that the regulator had rejected Bank of China (Hong Kong)'s offer to buy back minibonds from clients at 60 per cent or more of the investment principal.
Earlier, brokers Sun Hung Kai Investment Services and KGI Asia reached an agreement with the commission to buy back minibonds from their clients at their original value.
"In terms of the statement about whether the initial agreements the SFC reached with the brokers is the only model, the answer is no, we are not dogmatic," Mr Wheatley said. "We have said that we will take account of the extent to which any bank mitigates the losses in the enforcement action that we take."
The regulator has received 8,400 complaints since September, most of them alleging that Lehman Brothers minibonds were misleadingly sold.
At the three-hour hearing, Mr Wheatley was repeatedly asked if there was any problem with the demarcation between the commission and the Monetary Authority.
"I think the demarcation is clear," he said.
Saying that the commission had no legal role overseeing the authority in the regulation of banks, Mr Wheatley said the commission was in "a co-ordination role, not a supervisory or an oversight role" with the banking regulator.
Asked whether the commission would regulate the names of financial products, Mr Wheatley said it would ask the issuer to justify the name.
It had also proposed to the financial secretary that more guidelines and codes be developed to cover the marketing of related documents.
Minibonds were not corporate bonds, but high-risk, credit-linked derivatives marketed as a proxy investment in well-known companies.
Mr Wheatley will give evidence again on Friday.
Tuesday, June 23, 2009
Will Hong Kong investors get a higher compensation?
A few months ago, the media reports gave the impression that a high proportion of credit linked note investors in Singapore received full or partial compensation. The investors in Hong Kong used this reports to pressure their Government to set similar compensation for them. The general public believed that the regulators had intervened to get satisfactory compensation for the Singapore investors.
As the months went by, many Singapore investors, especially those who invested a large sum, were disappointed that their requests for compensation were rejected by the financial institutions or the compensation offers were unacceptably low.
Many investors rejected the offers and brought their cases to be heard in FIDREC. A few cases had their cases adjudicated with disappointing results to the investors.
Some investors did received satisfactory compensation, which they accepted gratefully. But, the proportion appears to be small.
The Legislative Assemby in Hong Kong had summoned the regulatory authority to testify in their chambers. These hearings were well reported in the media. The legislators were unhappy with the measures taken by the regulators before and after the crisis had erupted. In response, the regulators were compelled to take stronger action now to remedy the situation.
Recent media reports suggested that some financial institutions in Hong Kong are now willing to compensate the investors at more than 50%, which is more generous that the settlements offered in Singapore.
In my view, a compensation of 50% of the amount of loss would be fair, as the loss should be shared equally between the distributor (due to their negligence in mis-advising the investors about the nature of the product) and the investors (who wanted to earn a higher yield).
I hope that all investors in Singapore will receive this level of compensation, regardless of their age or educational level.
Tan Kin Lian
As the months went by, many Singapore investors, especially those who invested a large sum, were disappointed that their requests for compensation were rejected by the financial institutions or the compensation offers were unacceptably low.
Many investors rejected the offers and brought their cases to be heard in FIDREC. A few cases had their cases adjudicated with disappointing results to the investors.
Some investors did received satisfactory compensation, which they accepted gratefully. But, the proportion appears to be small.
The Legislative Assemby in Hong Kong had summoned the regulatory authority to testify in their chambers. These hearings were well reported in the media. The legislators were unhappy with the measures taken by the regulators before and after the crisis had erupted. In response, the regulators were compelled to take stronger action now to remedy the situation.
Recent media reports suggested that some financial institutions in Hong Kong are now willing to compensate the investors at more than 50%, which is more generous that the settlements offered in Singapore.
In my view, a compensation of 50% of the amount of loss would be fair, as the loss should be shared equally between the distributor (due to their negligence in mis-advising the investors about the nature of the product) and the investors (who wanted to earn a higher yield).
I hope that all investors in Singapore will receive this level of compensation, regardless of their age or educational level.
Tan Kin Lian
Full refund of premium under ILP
A policyholder was shocked to learn that the surrender penalty under his ILP policy at the end of 2 years was so high that it took away 90% of his savings. He was not properly advised of this matter by the distributor who sold the policy to him.
He pursued this matter vigorously against the distributor who sold the policy and the insurance company who created the product. He met with the senior officials of both organisations and also complained to MAS.
He was given various types of excuses and disclaimers. He was not discouraged but continued to fight on.
He was finally offered a full refund of the premiums paid for the 2 years and was asked to sign a non-disclosure agreement.
Lesson: If you are willing to fight for your right, the financial institutions may surrender, instead of the consumer.
Tan Kin Lian
He pursued this matter vigorously against the distributor who sold the policy and the insurance company who created the product. He met with the senior officials of both organisations and also complained to MAS.
He was given various types of excuses and disclaimers. He was not discouraged but continued to fight on.
He was finally offered a full refund of the premiums paid for the 2 years and was asked to sign a non-disclosure agreement.
Lesson: If you are willing to fight for your right, the financial institutions may surrender, instead of the consumer.
Tan Kin Lian
Monday, June 22, 2009
The Standard:BOCHK, regulator reach minibond impasse
23 June 2009
Talks between Bank of China (Hong Kong) (2388) and the Securities and Futures Commission have stalled over how much Lehman minibond investors should be compensated despite nearly two months of discussions.
BOCHK will not accede to the regulator's demands that it pay back 100 percent of the purchase value of the toxic investments and is suggesting a maximum offer of 70 percent, sources said.
Peter Chan Kwong-yue, chairman of the Allied Victims of Lehman Products, said he is disappointed by the development and demanded BOCHK take responsibility.
``They did not even show they felt sorry for the situation and it is not acceptable to just pay back 60 percent,'' he said.
Investors aged 65 or older would get up to 70 percent of their capital back. Everyone else would be offered 60 percent. Both offers are on the condition that BOCHK does not accept liability for misselling of the toxic products.
The government has no intention of intervening, The Standard has learned.
A government spokeswoman said: ``We hope the matter can be resolved as quickly as possible.''
BOCHK, the city's largest distributor of Lehman minibonds products in Hong Kong, has submitted a proposal to the SFC and is awaiting its response, sources said.
BOCHK's proposal was based on the government's buyout plan submitted last year with an ``additional premium,'' a source said.
The administration last November suggested banks refund 55 percent of the principal on all minibond products but this proposal was scrapped for legal reasons.
The SFC has insisted on pursuing the same 100 percent rebate for investors that it has already negotiated with Sun Hung Kai Investment and KGI Securities.
BOCHK led minibond sales in Hong Kong with 40 percent of the market. Dah Sing Financial was the second-biggest seller of the structured products, according to research.
BOCHK's settlement will set a precedent for other banks' negotiations with the SFC.
Its 60 percent proposal will cost it HK$2.52 billion, according to Citigroup Global Markets, while paying back 100 percent would cost HK$4.2 billion.
It has so far set aside HK$769 million in provisions.
Dah Sing Financial sold about HK$1.1 billion in Lehman minibonds. So far it has put aside HK$300 million in provisions, according to Citi.
Talks between Bank of China (Hong Kong) (2388) and the Securities and Futures Commission have stalled over how much Lehman minibond investors should be compensated despite nearly two months of discussions.
BOCHK will not accede to the regulator's demands that it pay back 100 percent of the purchase value of the toxic investments and is suggesting a maximum offer of 70 percent, sources said.
Peter Chan Kwong-yue, chairman of the Allied Victims of Lehman Products, said he is disappointed by the development and demanded BOCHK take responsibility.
``They did not even show they felt sorry for the situation and it is not acceptable to just pay back 60 percent,'' he said.
Investors aged 65 or older would get up to 70 percent of their capital back. Everyone else would be offered 60 percent. Both offers are on the condition that BOCHK does not accept liability for misselling of the toxic products.
The government has no intention of intervening, The Standard has learned.
A government spokeswoman said: ``We hope the matter can be resolved as quickly as possible.''
BOCHK, the city's largest distributor of Lehman minibonds products in Hong Kong, has submitted a proposal to the SFC and is awaiting its response, sources said.
BOCHK's proposal was based on the government's buyout plan submitted last year with an ``additional premium,'' a source said.
The administration last November suggested banks refund 55 percent of the principal on all minibond products but this proposal was scrapped for legal reasons.
The SFC has insisted on pursuing the same 100 percent rebate for investors that it has already negotiated with Sun Hung Kai Investment and KGI Securities.
BOCHK led minibond sales in Hong Kong with 40 percent of the market. Dah Sing Financial was the second-biggest seller of the structured products, according to research.
BOCHK's settlement will set a precedent for other banks' negotiations with the SFC.
Its 60 percent proposal will cost it HK$2.52 billion, according to Citigroup Global Markets, while paying back 100 percent would cost HK$4.2 billion.
It has so far set aside HK$769 million in provisions.
Dah Sing Financial sold about HK$1.1 billion in Lehman minibonds. So far it has put aside HK$300 million in provisions, according to Citi.
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