I REFER to yesterday's reports, 'MAS acts against 10 institutions' and 'Payouts just a fraction of total invested'. The penalty imposed by the Monetary Authority of Singapore (MAS) on the financial institutions is, in my view, grossly inadequate. When financial institutions engage in unethical or unprofessional conduct, it relates to their way of doing business and not the sale of one or two products.

The MAS ban relates only to the sale of similar financial products, which misses the point. In any event, structured products are out of favour now, so the ban is likely to have minimal impact on the institutions.

Financial institutions engage in improper conduct for financial gain. As in the case of those who evade tax, penalties must have a deterrent effect. Like tax evaders, the financial institutions should have faced penalties of up to three times the fees and commissions they earned as a result of their misconduct. Regulators in other jurisdictions have found that removing the financial gain is an effective deterrent.

Stanley Jeremiah

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