How Sporns Got Conned into Buying Financial Toxic Waste @ Sg Banks

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<TABLE cellSpacing=0 cellPadding=0 width="100%" border=0><TBODY><TR>BANKS' RELATIONSHIP MANAGERS

</TR><!-- headline one : start --><TR>How pushy can they get?

</TR><!-- headline one : end --><TR>'I call them relationship damagers,' says one angry customer. Clients accuse them of downplaying risks but they have their targets to meet </TR><!-- Author --><TR><TD class="padlrt8 georgia11 darkgrey bold" colSpan=2>By Tan Dawn Wei and Jamie Ee Wen Wei

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<!-- START OF : div id="storytext"--><!-- more than 4 paragraphs -->Customer walks in to open or renew a fixed deposit account even though the prevailing interest rate is dismally low.
He is persuaded by the bank's 'relationship manager' to invest in a higher interest-bearing product instead.
The relationship manager extols the virtues of the product. He is persuasive. The customer is convinced.
Familiar? Read on.
Retiree N.W. Leong, 68, was at his bank in February last year to ask about opening a fixed deposit.
A counter staff member referred him to a relationship manager who advised him to put his money in a so-called structured derivative, the Minibond Series, which would give him 5 per cent interest.
This was far more than the 0.6 to 0.9 per cent the bank was giving on its fixed deposit product then.
'She assured me it was very safe,' Mr Leong said agitatedly.
He added that the prospectus she showed him was much too complicated, 'even for savvy investors'.
Upon her assurance, he plonked $100,000 of his savings on the derivative. Then came the bad news on Sept 15 that investment bank Lehman Brothers had collapsed.
He found out from newspapers that because Minibond was linked to Lehman Brothers, he might lose all his hard-earned capital.
'My relationship manager didn't call me at all. I had to find out about it in the papers,' he said.
Another angry customer, who wanted to be known only as Mrs Tay, railed: 'Relationship managers? I call them relationship damagers.'
Mrs Tay, too, had wanted to put her retirement funds of $200,000 into a fixed deposit when a counter staff at her bank recommended her a relationship manager, who offered to explain a 'low risk' product to her.
'What was presented to me was far less complex than what the product really is. It's now the relationship manager's word against ours,' she said, adding that she signed on the dotted line before she received the prospectus.
Flurry of complaints

Such accounts, by angry clients, have put the spotlight on banks' relationship managers - or financial advisers - in the past two weeks. They have been accused of overselling certain investment products and underplaying the risks.
Apart from the Minibond Series, DBS High Notes 5 is another product linked to Lehman Brothers. Those who bought this product are worried too.
Last Wednesday, the regulatory body, the Monetary Authority of Singapore (MAS), asked financial institutions that sold the products to appoint independent parties to look into investors' grouses.
The central bank also said it would work with the Financial Industry Disputes Resolution Centre (Fidrec) - set up in August 2005 to deal with disputes between financial institutions and consumers - and also the independent parties and financial institutions.
Fidrec received a total of 531 complaints between July 2006 and last year.
Of these, 227 were directed at banks and finance companies' service standards, market conduct such as inappropriate advice or misrepresentation, and the institutions' practices or policies.
Between September 2005 and June 2006, Fidrec had received a total of 493 complaints of which 134 referred to banks and finance companies.
One retail investor recounted how a relationship manager talked his 79-year-old mother into buying a structured product with a seven- year tenure.
The retiree kicked up a fuss at the bank and wrote two letters to its management before the bank refunded his mother's money.
A 63-year-old retiree, whose 80-year-old mother was persuaded to buy Minibonds and who wanted to be known only as Mr Ong, said: 'The relationship manager is like a doctor. When you go to see the doctor, you expect him to know how to treat you.'
Tellingly, in a mystery shopping exercise MAS carried out in 2006, only one in 12 representatives of a financial institution was found to have highlighted warnings, exclusions and product disclaimers to customers during the sales process.
Banks like Citibank, DBS Bank, OCBC Bank, United Overseas Bank (UOB) and Standard Chartered Bank told The Sunday Times their relationship managers - also given titles like personal wealth managers or personal finance consultants - go through rigorous in-house training before they are dispatched to the branches to serve retail customers.
Such training can last between one and two months.
These bank officers also need to attain both external certification mandated by MAS and internal certification by the individual banks.
Mr Anil Wadhwani, head of consumer markets at Citibank Singapore, said its in-house programme not only educates its relationship managers on all its banking and wealth management products, but also equips them with the 'soft' skills to help them deal with clients when carrying out needs-based analyses and risk profiling.
They also have to continually update themselves on market trends by attending talks, seminars and courses.
Ms Wendy Teo, head of sales and distribution at UOB, said the bank also emphasises to its relationship managers the need for 'heartware'.
She added that the bank has internal controls to make sure its officers don't 'step out of line...even as they pursue their sales targets'.
Ms Koh Ching Ching, head of group corporate communications at OCBC Bank, said its financial consultants have to go through a checklist after sealing a deal, to make sure they have satisfactorily done their job.

 

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Not an easy job

While none of the banks would say how many relationship managers they employed - there are no official statistics available - these financial advisers are likely to be in the thousands, given the number of banks and their numerous outlets across the island.
Relationship managers interviewed by The Sunday Times said many among them do not have finance or business backgrounds.
A number of them have engineering or social science degrees. A degree isn't a must either.
Role-playing, to assess candidates' aptitude for dealing with clients, seems to be a common test at job screenings.
Before Fidrec was set up in 2005, there had already been complaints of pushy behaviour, inadequate knowledge and mis-selling by sales staff, including concerns about pitching investment products to the elderly and the illiterate.
In 2002, a Code of Consumer Banking Practice was introduced by the Association of Banks in Singapore, while MAS implemented the Financial Advisers Act.
Under the Act, financial advisers are required to collect information about a client's financial objective, risk tolerance, employment status and financial situation, among other things, before they can make a recommendation on an investment product.
They also have to spell out the risks involved in an investment, plus the commission or fee attached to a product.
But with more financial instruments being rolled out - from unit trusts and commodity funds to insurance plans - relationship managers are finding it a challenge to stay on top of everything they offer.
'There are so many products on the market. We may not be know-
ledgeable about all,' conceded Ms Esther Ling, 30, a former relationship manager in a foreign bank who now works as a financial adviser in a non-bank institution.
Giving another perspective, she said: 'Most customers don't have the patience to sit and listen to everything about the product.'
The elderly and the less educated, in particular, tend to skim over the details.
'You may have explained the details to them but whether they take it all in or not is another thing,' said Ms Ling.
A 24-year-old relationship manager at a foreign bank, who spoke on condition of anonymity, said: 'It's not possible to tell the customers everything about the product. But you must at least tell them the important things, like whether their principal sum is protected or not.'
She said relationship managers have to write a report for every investment product they sold, justifying their recommendation.
Relationship managers lament that their job isn't a walk in the park. Like their more glamorous colleagues - the private bankers who deal with high-net-worth customers - those who service the ordinary clients also have to send out Christmas cards or take clients out for meals.
The hours are long too, sometimes stretching past midnight because of the paperwork.
Then, there is the pressure to meet sales quotas.
'The managers ask us daily, 'Where are the numbers?' In this industry, it's all about numbers,' said one 24-year-old relationship manager, who has worked in two local banks in the past two years.
Still, there is good money to be made. While their basic pay may be nothing to write home about - entry-level relationship managers earn a basic monthly salary of between $2,400 and $3,000 - in a good month, they can make $8,000 to $9,000 in commissions.
But with the current financial turmoil, the good times seem to be over, for now at least.
Many are still receiving hostile calls from disgruntled or worried customers.
As one relationship manager laments: 'When clients are making money they don't complain, but when they lose money, they will turn around to bite you.'
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The gist of it
'It's not possible to tell the customers everything about the product. But you must at least tell them the important things, like whether their principal sum is protected or not.'
A 24-YEAR-OLD RELATIONSHIP MANAGER at a foreign bank
Misrepresentation
'What was presented to me was far less complex than what the product really is.'
MRS TAY, who had wanted to put her retirement funds of $200,000 into a fixed deposit but was offered a 'low-risk' product by a relationship manager instead