<TABLE cellSpacing=0 cellPadding=0 width="100%" border=0><TBODY><TR>Sold Lehman products? Now pay Fidrec
</TR><!-- headline one : end --><TR>Dispute-solving body facing extra work tells 10 firms to chip in $1m </TR><!-- Author --><TR><TD class="padlrt8 georgia11 darkgrey bold" colSpan=2>By Lorna Tan, Senior Correspondent
</TD></TR><!-- show image if available --></TBODY></TABLE>
<!-- START OF : div id="storytext"--><!-- more than 4 paragraphs -->THE body that handles financial disputes here has told the 10 institutions caught up in the structured products scandal to chip in more than $1 million to help pay for the extra work it is doing to sort out the mess.
The Financial Industry Disputes Resolution Centre (Fidrec) said it will levy the firms - many are blue chip names in the financial sector - as it has been swamped with complaints and needs extra resources to deal with them.
It has fielded almost one third as many claims centred on the structured notes as it gets in an average year relating to all other financial disputes. And its resolution process can be lengthy and costly as it can involve lawyers and other experts.
Fidrec will initially collect $1,039,200 from ABN Amro, CIMB-GK Securities, DBS Bank, DMG & Partners, Hong Leong Finance, Kim Eng Securities, MayBank, OCBC Securities, Phillip Securities and UOB Kay Hian.
But the amount could rise depending on the claims it eventually deals with.
Fidrec, which is funded by subscriptions from more than 300 financial institutions, is allowed to impose such levies, something it has done before.
Fidrec chief executive Ng Wee Jin said on Monday that there has been a significant increase in complaints relating to structured notes and it expects more in coming months. 'Fidrec will be imposing a supplementary levy to recover the increased costs of handling these complaints from subscriber financial institutions which distributed such products.'
The products linked to now failed-Lehman Brothers plunged in value when the investment bank went belly up last September. Thousands of investors say they were sold the complex products when they were clearly unsuited for them.
Fidrec, a one-stop avenue for resolving disputes with financial institutions, said 561 formal claims on the products had been lodged by the middle of last month. Of these, 485 are pending mediation while 42 went to adjudication.
So far 34 claims have been resolved at the mediation stage. In 32 of these, the parties made some form of settlement. In the other two cases, they decided not to pursue the matter further.
These claims are on top of the usual complaints lodged with Fidrec. It received 1,677 cases from July 1, 2006 to June 30, 2007. Most were resolved via mediation and within six months.
Fidrec declined to comment on how long it would take to resolve structured notes complaints. It depends on factors such as the complexity of the case and the time to locate evidence.
The centre adopts a two-stage process. This starts with mediation, where the consumer and the financial firm are encouraged to resolve the dispute amicably. If this fails, there is a face-to-face conference with Fidrec facilitating.
If the dispute is still not settled, it goes to adjudication, where it is heard by a Fidrec adjudicator or a panel of adjudicators.
Hundreds of claims have already been settled by the institutions themselves with many investors getting refunds. Fidrec said the levy will apply only to claims lodged from Sept 15 last year, when Lehman went bust, to Dec 31 this year in respect of credit-linked notes sold here.
The levy is not limited to the 10 firms.
After Dec 31, Fidrec will re-apportion its actual fixed cost expenses according to the claims lodged against each firm.
Some firms might get a refund; others levied further. Other firms with claims lodged against them at Fidrec will also be charged for their share of the costs. [email protected]
</TR><!-- headline one : end --><TR>Dispute-solving body facing extra work tells 10 firms to chip in $1m </TR><!-- Author --><TR><TD class="padlrt8 georgia11 darkgrey bold" colSpan=2>By Lorna Tan, Senior Correspondent
</TD></TR><!-- show image if available --></TBODY></TABLE>
<!-- START OF : div id="storytext"--><!-- more than 4 paragraphs -->THE body that handles financial disputes here has told the 10 institutions caught up in the structured products scandal to chip in more than $1 million to help pay for the extra work it is doing to sort out the mess.
The Financial Industry Disputes Resolution Centre (Fidrec) said it will levy the firms - many are blue chip names in the financial sector - as it has been swamped with complaints and needs extra resources to deal with them.
It has fielded almost one third as many claims centred on the structured notes as it gets in an average year relating to all other financial disputes. And its resolution process can be lengthy and costly as it can involve lawyers and other experts.
Fidrec will initially collect $1,039,200 from ABN Amro, CIMB-GK Securities, DBS Bank, DMG & Partners, Hong Leong Finance, Kim Eng Securities, MayBank, OCBC Securities, Phillip Securities and UOB Kay Hian.
But the amount could rise depending on the claims it eventually deals with.
Fidrec, which is funded by subscriptions from more than 300 financial institutions, is allowed to impose such levies, something it has done before.
Fidrec chief executive Ng Wee Jin said on Monday that there has been a significant increase in complaints relating to structured notes and it expects more in coming months. 'Fidrec will be imposing a supplementary levy to recover the increased costs of handling these complaints from subscriber financial institutions which distributed such products.'
The products linked to now failed-Lehman Brothers plunged in value when the investment bank went belly up last September. Thousands of investors say they were sold the complex products when they were clearly unsuited for them.
Fidrec, a one-stop avenue for resolving disputes with financial institutions, said 561 formal claims on the products had been lodged by the middle of last month. Of these, 485 are pending mediation while 42 went to adjudication.
So far 34 claims have been resolved at the mediation stage. In 32 of these, the parties made some form of settlement. In the other two cases, they decided not to pursue the matter further.
These claims are on top of the usual complaints lodged with Fidrec. It received 1,677 cases from July 1, 2006 to June 30, 2007. Most were resolved via mediation and within six months.
Fidrec declined to comment on how long it would take to resolve structured notes complaints. It depends on factors such as the complexity of the case and the time to locate evidence.
The centre adopts a two-stage process. This starts with mediation, where the consumer and the financial firm are encouraged to resolve the dispute amicably. If this fails, there is a face-to-face conference with Fidrec facilitating.
If the dispute is still not settled, it goes to adjudication, where it is heard by a Fidrec adjudicator or a panel of adjudicators.
Hundreds of claims have already been settled by the institutions themselves with many investors getting refunds. Fidrec said the levy will apply only to claims lodged from Sept 15 last year, when Lehman went bust, to Dec 31 this year in respect of credit-linked notes sold here.
The levy is not limited to the 10 firms.
After Dec 31, Fidrec will re-apportion its actual fixed cost expenses according to the claims lodged against each firm.
Some firms might get a refund; others levied further. Other firms with claims lodged against them at Fidrec will also be charged for their share of the costs. [email protected]
