Dear Mr Tan:
1 I fully agree with you that compensation for loss in relation to the defaulted high risk structured product to retail investors should not be solely based on consideration on "vulnerability", standard of education, age or other factors at the expense of the principle of fairness and justice.
2 In their 3-steps guide for investors, MAS clearly state that FIs should take responsibility for cases where (a) there are sufficient indications that the product was mis-sold, or (b) it was clearly inappropriate given the investor's profile and circumstances. It is clear that investor's profile and circumstances (i.e. vulnerability, standard of education, age or other factors) should be taken into consideration only for cases where there is no clear evidence of mis-selling. This is to help the vulnerable and needy group of customers and should be given the priority.
3 The approach adopted by the FIs on consideration merely based on investor's profile and circumstances is against and not abiding by the MAS's guiding principles. Instead, we can see how smart the FIs are in turning these guiding principles into their favor. These principles were actually meant for fairness and justice to be given to all retail investors but utilized by the FIs to reject complaints from probably all the non-vulnerable group of customers, and this non-vulnerable group of investors have the major portion of the total investment
4 The existing Financial Adviser Act (FAA), though incomplete, are rather stringent for the sale of financial products to customers. Section 27 of the FAA requires FIs to pay damage or loss for inappropriate sale of high risk financial product to vulnerable customers. Under Section 25 of the FAA, it is an offence for not disclosing the complete product material information to customer during the process of sale and the contravener is liable to a fine and imprisonment. We all know that the true nature and risks of the product were not or fully disclosed to retail investors. As such, ones can see that mis-selling of financial product mainly occurred as a result of breach of laws by the FIs. The mis-selling of financial products here is not much different from that in Hong Kong but the Hong Kong SFC has taken the pro-active approach in the administration of fairness and justice to be given to their citizens and this has been seen by majority of the Hong Kong people and our Singaporeans as well.
5 It is timely that you have called upon MAS, who is the regulator, to exercise their authority to maintain the principle of fairness and justice in the spirit of law. MAS has the responsibility to ensure that laws are adhered to by the FIs. MAS play a decisive role on this matter.
RK
Wednesday, July 1, 2009
SCMP:Policy chief expects march to reflect increasing civil discontent
1 July 2009
The government's top adviser expects the turnout for today's march to surpass last year's 47,000 because of the economic downturn and growing discontent with the administration's handling of controversial issues.
Lau Siu-kai, head of the Central Policy Unit, yesterday said that regardless of the turnout, the government should strive to improve its governance and restore people's confidence in the economic outlook.
Professor Lau said it was not sensible to use the turnout for a single march as the only yardstick to gauge changes in the political climate. He said economic indicators such as the jobless rate and the number of personal bankruptcy petitions should also be taken into account.
Professor Lau, who predicted shortly before the July 1 march in 2003 that only 30,000 would join the protest, declined to give an exact estimate for today's rally. Half a million turned out for the 2003 march.
He said he expected the number of people at today's march to be higher than last year.
He said the Central Policy Unit had conducted surveys recently on whether people intended to take part in the rally, but declined to reveal the outcome.
The Civil Human Rights Front, which organises the annual prodemocracy march, estimated that 47,000 people protested last year. But the police estimated last year's turnout at 15,500. A government source said earlier that the turnout for this year's march was expected to reach 100,000 or more.
Professor Lau admitted that Hong Kong's economy was facing hard times and many people were worried about the prospects for the economy.
"The government's handling of several issues in the past year has aroused dissatisfaction among many people," he said.
The top adviser cited the controversy over the appointment of deputy ministers and political assistants, the public outcry over the government's approval of an application by former housing chief Leung Chin-man to work with property developer New World China Land, and the administration's perceived failure to monitor the sale of minibonds issued by Lehman Brothers. Minibonds are not corporate bonds, but consist of high-risk credit-linked derivatives.
Professor Lau noted that young people were increasingly dissatisfied as the jobless rate for this sector of the community was higher than for other age groups.
"Many young people feel their expectations can't be realised, as social mobility in recent years is lower than for previous generations," he said, "A considerable number of young people have developed an anti-establishment mentality."
Professor Lau said economic development ranked much higher than democratic progress among the concerns of Hong Kong people.
Ivan Choy Chi-keung, a political scientist at Chinese University, said Professor Lau's assessment of public discontent was sensible. Mr Choy predicted a turnout of around 100,000 for today's march.
The government's top adviser expects the turnout for today's march to surpass last year's 47,000 because of the economic downturn and growing discontent with the administration's handling of controversial issues.
Lau Siu-kai, head of the Central Policy Unit, yesterday said that regardless of the turnout, the government should strive to improve its governance and restore people's confidence in the economic outlook.
Professor Lau said it was not sensible to use the turnout for a single march as the only yardstick to gauge changes in the political climate. He said economic indicators such as the jobless rate and the number of personal bankruptcy petitions should also be taken into account.
Professor Lau, who predicted shortly before the July 1 march in 2003 that only 30,000 would join the protest, declined to give an exact estimate for today's rally. Half a million turned out for the 2003 march.
He said he expected the number of people at today's march to be higher than last year.
He said the Central Policy Unit had conducted surveys recently on whether people intended to take part in the rally, but declined to reveal the outcome.
The Civil Human Rights Front, which organises the annual prodemocracy march, estimated that 47,000 people protested last year. But the police estimated last year's turnout at 15,500. A government source said earlier that the turnout for this year's march was expected to reach 100,000 or more.
Professor Lau admitted that Hong Kong's economy was facing hard times and many people were worried about the prospects for the economy.
"The government's handling of several issues in the past year has aroused dissatisfaction among many people," he said.
The top adviser cited the controversy over the appointment of deputy ministers and political assistants, the public outcry over the government's approval of an application by former housing chief Leung Chin-man to work with property developer New World China Land, and the administration's perceived failure to monitor the sale of minibonds issued by Lehman Brothers. Minibonds are not corporate bonds, but consist of high-risk credit-linked derivatives.
Professor Lau noted that young people were increasingly dissatisfied as the jobless rate for this sector of the community was higher than for other age groups.
"Many young people feel their expectations can't be realised, as social mobility in recent years is lower than for previous generations," he said, "A considerable number of young people have developed an anti-establishment mentality."
Professor Lau said economic development ranked much higher than democratic progress among the concerns of Hong Kong people.
Ivan Choy Chi-keung, a political scientist at Chinese University, said Professor Lau's assessment of public discontent was sensible. Mr Choy predicted a turnout of around 100,000 for today's march.
Tuesday, June 30, 2009
Administration of Justice (1)
Singapore has built a strong reputation for observing the rule of law and having a fair and efficient administration of justice. It has won high international recognition for a transparency, consistency and justice in handling of commercial affairs.
Under the rule of law, all parties can look towards the law to be applied in a consistent and fair manner, as it is written, and that the law can be interpreted in the right spirit, to serve justice and fairness to all parties.
In the saga involving the Lehman Minibonds and other credit linked notes, the letter of the law are clearly spelled in the Securities and Futures Act and the Financial Advisers Act. These law requires the financial institutions to make proper disclosure about the financial product and imposes a duty on financial advisers to give appropriate advice to consumers.
I could not find any part of these law that define that people should be treated differently according to their "vulnerability", standard of education or age or other factors.
I do not quarrel with the generous decision of the financial institutions to give full compensation to the "vulnerable" investors. I also accept that it is within their prerogative to take the commercial approach to reject the complaints from the "non-vulnerable" investors.
However, I believe that the aggrieved investors, being ordinary people, have the right to expect justice to be administered according to the rule of law, especially from the following parties:
a) The regulator, who has the duty to investigate and prosecute any party that is found to have breached the law
b) The judges, who have the duty to decide in accordance to the letter and spirit of the law. This duty also falls on the Financial Industry Dispute Resolution Center (FIDReC).
I hope that FIDReC will adjudicate according to the law, and not principles of “vulnerability” as this is not stated in the law.
I believe that the investors and the distributors have to share the blame equally for the disastrous mistake. It would be most unfair, if FIDReC were to rule that the investors are fully responsible and that the distributors are not culpable (as they have failed in their duty to give proper advice to the investors).
Although the distributors have asked the investors to sign a disclaimer, this does not absolve the distributors from their legal duty under the Financial Advisers Act. I hope that FIDREC will take a similar view, in the interest of justice.
Tan Kin Lian
Under the rule of law, all parties can look towards the law to be applied in a consistent and fair manner, as it is written, and that the law can be interpreted in the right spirit, to serve justice and fairness to all parties.
In the saga involving the Lehman Minibonds and other credit linked notes, the letter of the law are clearly spelled in the Securities and Futures Act and the Financial Advisers Act. These law requires the financial institutions to make proper disclosure about the financial product and imposes a duty on financial advisers to give appropriate advice to consumers.
I could not find any part of these law that define that people should be treated differently according to their "vulnerability", standard of education or age or other factors.
I do not quarrel with the generous decision of the financial institutions to give full compensation to the "vulnerable" investors. I also accept that it is within their prerogative to take the commercial approach to reject the complaints from the "non-vulnerable" investors.
However, I believe that the aggrieved investors, being ordinary people, have the right to expect justice to be administered according to the rule of law, especially from the following parties:
a) The regulator, who has the duty to investigate and prosecute any party that is found to have breached the law
b) The judges, who have the duty to decide in accordance to the letter and spirit of the law. This duty also falls on the Financial Industry Dispute Resolution Center (FIDReC).
I hope that FIDReC will adjudicate according to the law, and not principles of “vulnerability” as this is not stated in the law.
I believe that the investors and the distributors have to share the blame equally for the disastrous mistake. It would be most unfair, if FIDReC were to rule that the investors are fully responsible and that the distributors are not culpable (as they have failed in their duty to give proper advice to the investors).
Although the distributors have asked the investors to sign a disclaimer, this does not absolve the distributors from their legal duty under the Financial Advisers Act. I hope that FIDREC will take a similar view, in the interest of justice.
Tan Kin Lian
Brain Workout in The New Paper (weekend)
Dear Mr. Tan
I like the Brain Workout that appear in The New Paper every weekend. But, I am not able to find the book in the major bookstores. Where can I buy them?
REPLY
You can buy them from this website. You pay the same price as in the bookstore. There is no additional charge for postage delivery in Singapore. Enjoy the puzzles.
You can try the online version of the puzzles here, for free.
The Standard:Banks, SFC meet to thrash out Lehman deal
30 June 2009
Representatives of 16 Lehman Brothers products distributor banks yesterday met with the Securities and Futures Commission in a bid to thrash out a settlement, sources said.
But no agreement was reached as yesterday's meeting was only of a "touch base" nature.
Bank of China (Hong Kong) (2388), the largest distributor of Lehman minibonds, was among the group to present the banks' proposal for settlement, according to sources.
Lenders were supporting BOCHK's proposal to offer an average of 60 percent of the principal invested as settlement and about 70 percent to those aged 65 or above.
Banks are also willing to repay the difference if collateral were sold at a higher price in the future, sources said.
However, some lenders also expressed their concern that the sum to be repaid was much higher when compared with penalties according to rules.
According to an SFC ordinance, if a bank is penalized for failing to reach a settlement, the total penalty would only be three times the commission earned.
As the total industry commission for distributing Lehman Brothers products was about HK$300 million, banks would only need to pay about HK$900 million and this is much less than that BOCHK's proposal, they said.
A spokesman for the SFC declined to comment, while one banker source said he hopes there may be breakthrough soon, saying: "Hopefully common ground can be reached in coming days."
Other sources said there might be a chance the banking group and the SFC could reach a compromise as Martin Wheatley, the SFC's chief executive, said last Tuesday the Sun Hung Kai Investment method "was not the only model" for resolution.
As the Lehman-related products sold were worth about HK$12 billion, a settlement at 60 percent would mean distributor lenders as a whole would pay out about HK$5 billion.
Representatives of 16 Lehman Brothers products distributor banks yesterday met with the Securities and Futures Commission in a bid to thrash out a settlement, sources said.
But no agreement was reached as yesterday's meeting was only of a "touch base" nature.
Bank of China (Hong Kong) (2388), the largest distributor of Lehman minibonds, was among the group to present the banks' proposal for settlement, according to sources.
Lenders were supporting BOCHK's proposal to offer an average of 60 percent of the principal invested as settlement and about 70 percent to those aged 65 or above.
Banks are also willing to repay the difference if collateral were sold at a higher price in the future, sources said.
However, some lenders also expressed their concern that the sum to be repaid was much higher when compared with penalties according to rules.
According to an SFC ordinance, if a bank is penalized for failing to reach a settlement, the total penalty would only be three times the commission earned.
As the total industry commission for distributing Lehman Brothers products was about HK$300 million, banks would only need to pay about HK$900 million and this is much less than that BOCHK's proposal, they said.
A spokesman for the SFC declined to comment, while one banker source said he hopes there may be breakthrough soon, saying: "Hopefully common ground can be reached in coming days."
Other sources said there might be a chance the banking group and the SFC could reach a compromise as Martin Wheatley, the SFC's chief executive, said last Tuesday the Sun Hung Kai Investment method "was not the only model" for resolution.
As the Lehman-related products sold were worth about HK$12 billion, a settlement at 60 percent would mean distributor lenders as a whole would pay out about HK$5 billion.
Monday, June 29, 2009
Rally in Hong Lim Park
Dear Mr. Tan,
Can you please organise another rally in Hong Lim Park (Speaker's Corner), so that the investors who were rejected by the FI or FIDREC can express their feelings? Many investors will like to attend. It has been too long since the last rally.
REPLY
If there is sufficent investors who are willing to attend, I will organise the gathering on a Saturday or Sunday in August at 5 p.m.. I also like some of the investors to speak and express their feelings. If you are interested to attend or speak, please complete this survey.
Can you please organise another rally in Hong Lim Park (Speaker's Corner), so that the investors who were rejected by the FI or FIDREC can express their feelings? Many investors will like to attend. It has been too long since the last rally.
REPLY
If there is sufficent investors who are willing to attend, I will organise the gathering on a Saturday or Sunday in August at 5 p.m.. I also like some of the investors to speak and express their feelings. If you are interested to attend or speak, please complete this survey.
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