The picture of the elderly lady that appeared on the front page of Straits times in tears, because she lost her life savings of $100k because of the collapse of the lehman mini-bond "guaranteed" savings plan, is stuck in my mind.
Do banks target retirees and customers who are unsuspecting and unprepared with offers too good to be true, my anecdotal observations seem to point to the affirmative?
My father who went to the bank about a year ago to renew his fix deposit was gently ushered to a relationship manager to offer him a capital guaranteed product. The same happened to my mother-in-law in another bank. A friend from one of the local banks told me that all relationship managers are given targets to cross-sell and their performance was strongly tied to this key performance indicator, possibly giving rise to perverse incentives. My wife was targeted the same when she went to the bank to withdraw our savings to put into another savings account with higher interest. Personally, it also happened to me. It all sounded so convincing - "no risk" and all upside! Moreover, they are our BIG local banks - very easy to trust unconditionally, especially the elderly and put their life savings there.
Even though customers are supposed to read the fine prints but how many people can understand. many times, even the very people selling the product will have difficulties themselves. When that happens, they throw in the blanket statement "very safe one, nothing to lose, even if you don't trust me, you can trust the bank... Singapore bank you know".
Buyers beware - I know the standard line, but I guess this is what we need to learn to expect as Singapore turns more capitalistic...sigh!
PS: As I am writing this, I received an sms from Channelnewsasia that MAS has officially initiated investigation into possible poor practices of banks. Hope some justice will be done.
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