Is it a coincidence that the two financial services regulators announced reviews this week, whose endgame is for retail investors to be treated with more respect? The Singapore Exchange started the week with a review of fines for companies which don't do the right thing by investors. The Monetary Authority ended it by seeking "views on proposed Guidelines on Fair Dealing – Board and Senior Management Responsibility for Delivering Fair Dealing Outcomes to Consumers". If it is a coincidence, it is certainly a happy one.

This story may sound familiar: you go to the bank to make a transaction. The PYT (pretty young teller) offers you some sort of financial product, which her bank is currently promoting in order to collect a 5% sales charge. Like, a commodities unit trust (great timing, now that commodities prices have likely seen the best of the gains in the current cycle), or a capital-protected fund (to ride on the fears of consumers about the current economic uncertainty, just at a time when the markets have fallen so sharply that there is – in the longer term – more upside than downside). Nary a question about the three wise main points about your finances are asked: your investment objectives, your time horizon, your risk profile.

So when the MAS says that the fair dealing outcomes that Financial Institutions should strive to achieve are, among others…

Financial institutions offer products and services that are suitable for the consumer segments they target; and
Financial institutions appoint competent representatives who provide consumers with advice that meet their financial objectives and suit their personal circumstances

…it seems to me they have a lot of work ahead of them.

We probably also all know about the get-lost attitudes most banks take when you have a complaint, so when the MAS asks "Financial institutions [to] handle consumer complaints promptly and in a consistent manner", it appears they have their work cut out for them in this aspect, too.

What is really scary about the MAS' proposed guidelines is that they are not rocket science. If anything, they are common sense, and it is utterly appaling that the MAS should even have to crack the whip on financial services institutions to get these basic tenets of decency right.

Moreover, the guidelines are targeted at the "board and senior management".

My god, if this relatively small group of people can't get it right, what the hell are they doing running multi-billion dollar companies? And if the people at the top need to be told these basics, what can we expect from the PYTs?!

Imagine if similar guidelines were written about hospitals:

Hospitals should offer treatment only to patients who actually need such treatment, and
Hospitals should appoint doctors who can give advice commensurate with the patients' condition.

We would be aghast if hospitals and doctors needed such guidelines.

Granted, while money is a very serious issue indeed it is not quite a life-and-death situation like doctors.

Further, banks are not charities. This is a mistake many people make, and the MAS is right to say consumers "need to take responsibility for their financial decisions, and acquire basic financial know-how before they invest".

But only to protect themselves from the banks!

Banks have a special place in the economy because the economy cannot function without them. It is simply impossible to go through life these days without being a customer of a bank. And that's why its incumbent on the banks – more than any other industry in the economy – to play fair.


Mark Laudi, who can't remember the last time he was surprised pleasantly by a bank's service.

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Labels: banks, fair trading, MAS, Monetary Authority of Singapore