By Dennis Chan , DEPUTY MONEY EDITOR

Trust is a big issue these days.

I was reminded of this when I chanced upon a heartwarming OCBC Bank television commercial recently. It showed an elderly woman proudly telling a bank staff standing next to an ATM machine that her filial son would never forget to give her pocket money every month despite living half a world away.

The staff was attentive and understanding and not pushy. The underlying message behind the commercial is unmistakable: We care, trust us.

Although a little cheesy, it struck a chord with me as the scenario was all too familiar. Twenty years ago, I was a frontline staff working for a Malaysian bank in Kuala Lumpur. Helping old women to withdraw cash from ATMs was a daily routine back then.

Trust is a precious commodity. But in boom years, it was pretty much taken for granted. When trust is absent in a crisis, even global financial giants may fall, as events of the past year have demonstrated.

We are fortunate in Singapore that our financial institutions have weathered the crisis relatively well. Nonetheless, many have emerged with their reputation bruised. Some are still reeling from the bad publicity generated by aggrieved customers who have publicly protested against the financial institutions that sold them risky products.

It did not help that following a wide-ranging investigation, the Monetary Authority of Singapore concluded that many had failed to meet the standards required of them. In July, it barred 10 financial institutions from selling structured notes for periods ranging between six months and two years.

They are: DBS Bank, ABN-Amro, Maybank, Hong Leong Finance, CIMB-GK Securities, Kim Eng Securities, OCBC Securities, Phillip Securities, DMG & Partners Securities and UOB Kay Hian. They had failed to follow proper guidelines when selling complex structured notes linked to the now-bankrupt US investment bank Lehman Brothers.

To their credit, they have compensated investors where there was clear evidence of questionable sale practices. In particular, they have been accommodating with the investors seen to be the most vulnerable - the elderly who are lowly educated. Many of these were compensated, some in full.

Other investors who do not fall into this group are unhappy. They want compensation for all who had lost money on structured products linked to Lehman, taking a leaf from Hong Kong where 16 banks have agreed to compensate investors across the board at 60 cents to every dollar invested.

Singapore financial institutions, on the other hand, have adopted a case-by-case approach with their customers. It is debatable what the right approach is. It is worth noting that the universal approach adopted in Hong Kong has not left every investor satisfied.

Financial institutions also have to be fair to all stakeholders. Apart from customers, stakeholders include the rank-and-file staff and shareholders. For example, shareholders of Hong Leong Finance received $13.2 million less in interim dividend this year. This may have something to do with the fact that the finance company compensated customers a total of $57.6 million for the mis-selling of toxic products.

Fair-minded shareholders will not begrudge this compensation amount as long as they believe the finance company is also looking after their interest.

Overall, I'm glad the financial institutions have taken a less legalistic approach with vulnerable investors. They deserve extra care and protection.

Incidentally, the Hong Kong banks have recognised that the elderly are more vulnerable than most and, accordingly are giving them a higher compensation payout.

My bank stint in KL 20 years ago gave me a first-hand insight into how vulnerable the elderly and illiterate can be. These customers can be too trusting and naive when dealing with certain people who represent 'authority', who include bank staff.

In the OCBC commercial, the bank staff stood at a discreet distance while the elderly woman withdrew money, which is the correct thing to do as the staff is not supposed to see a customer's PIN number. But in reality, it was hard to adhere to rules when old women came up to you to ask for help to withdraw cash from the ATM while waving a piece of paper with their PIN scrawled in 36-point size. They would brush away my admonishment to safeguard their PIN with a dismissive refrain: 'Nothing will happen.'

Given that the ATM was sited outside the bank at a corner in Chow Kit, the equanimity seemed misplaced. Chow Kit, after all, is a notorious hangout for rascals, drug addicts, pimps and prostitutes.

If there is a silver lining from the Lehman debacle, it is that we have been shaken out of our complacency. Banks are trying hard to rebuild trust with customers. They may succeed as memory fades over time. But trust does not equate blind faith.

Investors must not assume a wholly passive role where money is concerned. Even if they were to leave their money to professional funds to manage, they need to monitor their performance regularly. They should develop a healthy scepticism to investment proposals and not be embarrassed to ask questions.

Risk-averse investors, in particular, must always ask their investment advisers about the maximum amount they could lose in any investment and the circumstances that may lead to this worst-case scenario.

Meanwhile, banks are working hard to clean up their act. Bank tellers are no longer allowed to refer customers to staff selling investment products. It is refreshing to note that bank advertisements these days don't try to entice depositors with high interest rates for their fixed deposits if they buy unit trusts sold by the banks. This is the right thing to do because investment products and plain deposits should never mix.

Hopefully, the newly founded self-restraint adopted by banks on inappropriate cross-selling is here to stay. Banks need to keep things simple and easy to understand for their customers. That is the key to winning consumer trust and keeping it.

This article was first published in The Straits Times.