By Yang Huiwen

Disgruntled investors who lost large sums of money in the structured notes debacle are questioning why they cannot be extended the kind of 'goodwill' which was given to investors of GreatLink Choice (GLC) investment-linked insurance products.

Many are also hoping that the proactive stance taken by insurer Great Eastern Life, which sold the GLC products, would lead to similar compensation from financial institutions that sold structured investment products which have gone awry.

Great Eastern is offering to buy back - at full value - all 594 million units of its GLC products it sold to policyholders, a move which will cost the insurer $250 million.

The unprecedented move comes three weeks after an investigation by the Monetary Authority of Singapore (MAS) into the selling of similar structured products.

About 9,900 people lost most or all of their investments totalling about $520 million in structured products such as Lehman Minibonds and DBS High Notes 5. Ten financial institutions were penalised, and 3,900 investors got $107 million as compensation.

A DBS High Notes investor in her 50s said Great Eastern's gesture showed that buybacks at full value can be done, and added: 'Why it is not done for the Minibond and High Notes investors, only the banks will know.'

She invested $100,000 in the credit-linked note and just last week had failed to get any compensation from DBS despite help from the Financial Industry Disputes Resolution Centre (Fidrec).

Last month, more than 200 investors who lost a total of about $17 million on structured notes sold by DBS Bank had to resort to legal action against the bank in a last-bid attempt to get their money back.

A Lehman Minibonds investor who wanted to be known only as Edward said Great Eastern's move 'puts all other 10 banks in a rather bad light'.

Mrs Jesslyn Pan, 35, an investor who bought $200,000 worth of the credit-linked notes from a broker at OCBC Securities, the brokerage arm of OCBC Bank, said: 'I just hope that with this latest development, OCBC will also consider investors like me who were mis-sold Morgan Stanley's Pinnacle Notes.'

Another investor who bought the Pinnacle Notes from a broker at OCBC Securities said: 'It's good news but I hope OCBC, which is the majority shareholder of Great Eastern, will also consider extending this goodwill to customers like me who bought the notes from OCBC Securities.'

Industry observers say Great Eastern's move could put more pressure on other financial institutions to make similar compensations, although Great Eastern chief executive Ng Keng Hooi had made it clear in a statement that it was making the offer voluntarily 'as a gesture of goodwill'.

'This will definitely put pressure on other financial institutions,' said Mr Leong Sze Hian, president of the Society of Financial Service Professionals.

But he added that the insurance industry is 'a whole different ball game' from the financial services industry. 'For the insurance business, the bulk of the more profitable segment of the business comes from its existing customer base.'

'Given the product is sold mainly to existing customers, the loyalty factor is very important. Many could be long-time customers of Great Eastern... If customers lose trust, they may give up their existing policies or not take up new ones for their children,' he said.

'Banks on the other hand depend a lot more on telemarketing, walk-in customers and advertising.'

Additional reporting by Francis Chan

This article was first published in The Straits Times.