Reply to Today Paper - "Structured Products ....."

Editor
Today paper

Dear Sir,

I refer to the article by Christie Loh entitled "Structured Products: Let's not forget about personal responsibility" in today's TODAY.

The writer appeared to be supporting the banks in shifting the blame to the investor much as the rich and powerful people like Prof. Lan Luh Luh of the NUS in that regardless of situation, product or organisation, consumers must be at the receiving end of caveat emptor.

I can agree if the consumer is an experienced investor, but certainly not with the average man in the street who have been assured by these bank relationship managers that Lehman Brothers, et al, are infallible, and with Singapore's biggest and most trusted bank, DBS, selling the products nothing can go wrong.

It is the element of TRUST that even the fairly experienced investor would be persuaded to trade in for the caveat and when things go wrong, the bank, and sadly, the influential academics and the politicians are singing a different tune: it is still caveat emptor, serve you right!

The manner in which these structured deposits and minibonds are sold have mislead most consumers to believe, and were actually told by the relationship managers, to be another form of time deposits with a fixed interest rate and a maturity period. Unless one is a CPA or trained financial analyst, one would not have associated such instruments as a form of investment with the accompanying risks.

Given this scenario, even fixed deposits and current account balances are no longer safe although the government has temporarily given its warranty during the current financial crisis. Does this mean that once the warranty expires, depositors would have to revert to the caveat emptor principle and keep less than $20,000 with any one bank?

If that is the case, then we should all shop for a safe and keep the excess cash at home once the warranty period expires: better safe than sorry.

James Tan