NOW that several financial institutions have agreed to compensate some customers and DBS Bank has done the honourable thing by admitting it may have been at fault in relation to some sales of financial products, three questions arise:

First, what was the level of Monetary Authority of Singapore (MAS) supervision of the sales processes of these financial institutions, and how were they allowed to carry out their business in ways possibly contrary to the Financial Advisers Act, without being detected earlier?

Second, what sanctions will MAS impose on financial institutions whose sales practices have breached the Financial Advisers Act and applicable regulations? To ensure financial institutions comply with the law, there must be punitive sanctions for breach, as in other countries like Britain.

Third, while the Minibond and High Notes products have been the focus of allegations of mis-selling, improper sales practices, where they exist, may permeate an organisation. This is often referred to as 'a pattern of conduct'. What is being done to review the sales practices of financial institutions across the board and across all sales, not just the specific products that have so far received attention?

Stanley Jeremiah

This article was first published in The Straits Times on October 28, 2008.