Ms. Kim (not her real name) is a foreigner who come to Singapore to teach in our local university. She save a large part of her monthly salary to be used for her husband to start a business in a few years time in her home country. She was approached for an independent financial adviser who recommends to her an investment plan.
Being trained in financial matters, she asked carefully about the charges from the investment plan. She was told that the charges are less than 1%, which was acceptable to her. She received a monthly statement that showed the monthly savings, the modest charges, and the investment units purchased from her savings. It looked quite satisfactory.
She bought the investment plan because of the attractive bonus given to her upfront, which was subject to certain conditions - which she found to be acceptable.
After 18 months, the monthly statement started to show the charges to be 4% of the monthly savings. She was shocked. She approached the financial institution and was horrified to learn the following:
a) She had bought an investment-linked policy that have high distribution cost.
b) The 4% monthly charge would apply for 20 years, taking away a large part of her future gains and giving a poor return on her savings
c) If she terminate the plan now, she would have to pay a penalty that took away almost half of her accumulated savings, giving her a loss of about $50,000.
d) The page that was supposed to contain the charges was deliberately removed by the financial adviser. She could not prove this fact, and had signed a statement "I am aware about the terms and conditions of the policy".
e) The 18 month delay in applying the high charges was a deliberate design of the policy to get her to commit a lot amount of savings before discovering the nature of the contract.
Ms. Kim complained to the insurance company - which pushed the responsibility to the financial advisory firm. The firm investigated her complaint and said that she could not provide the evidence of being misrepresented.
She was very sore and felt cheated by "the system". She never imagined that she could be cheated in this manner in Singapore. Her faith in the integrity in Singapore was badly shaken by this event.
The insurance company and the financial advisory firm is still offering this investment product to the public. A few other high net worth individuals have been caught by the same trap.
Being trained in financial matters, she asked carefully about the charges from the investment plan. She was told that the charges are less than 1%, which was acceptable to her. She received a monthly statement that showed the monthly savings, the modest charges, and the investment units purchased from her savings. It looked quite satisfactory.
She bought the investment plan because of the attractive bonus given to her upfront, which was subject to certain conditions - which she found to be acceptable.
After 18 months, the monthly statement started to show the charges to be 4% of the monthly savings. She was shocked. She approached the financial institution and was horrified to learn the following:
a) She had bought an investment-linked policy that have high distribution cost.
b) The 4% monthly charge would apply for 20 years, taking away a large part of her future gains and giving a poor return on her savings
c) If she terminate the plan now, she would have to pay a penalty that took away almost half of her accumulated savings, giving her a loss of about $50,000.
d) The page that was supposed to contain the charges was deliberately removed by the financial adviser. She could not prove this fact, and had signed a statement "I am aware about the terms and conditions of the policy".
e) The 18 month delay in applying the high charges was a deliberate design of the policy to get her to commit a lot amount of savings before discovering the nature of the contract.
Ms. Kim complained to the insurance company - which pushed the responsibility to the financial advisory firm. The firm investigated her complaint and said that she could not provide the evidence of being misrepresented.
She was very sore and felt cheated by "the system". She never imagined that she could be cheated in this manner in Singapore. Her faith in the integrity in Singapore was badly shaken by this event.
The insurance company and the financial advisory firm is still offering this investment product to the public. A few other high net worth individuals have been caught by the same trap.
:.
0 comments:
Post a Comment