consumerrightsA new consumer watchdog (officially formed in Apr 09) FiSCA or Financial Services Consumer Association , aims to be the champion of consumers of financial products and services, declaring itself to be independent unlike the incumbent and recognized route for financial services related disputes like FiDREC. What’s this all about?

The interim President, Mr Tan Kin Lian, former CEO of NTUC Income, and a well-known figure in the local financial services scene expressed the role of the association to be encompassed in (extracted from Objectives of FiSCA):

  • Providing consumer financial education especially in terms of collective investment products and insurance
  • Seek consumers’ active participation to represent consumers’ rights and interests

with the aim of:

  • Protecting consumers from unscrupulous practices in the financial industry
  • Encourage Best Practice and combat abuses in the market

The way it’s role is to be carried out is:

  • website content: topical education, product reviews and financial news
  • workshops and short courses

Mr Tan has been very active in garnering support for action against miselling of credit-linked notes, which led to a greater awareness of the public, and likely put some pressure on regulators and financial instututions to provide a better solution. His clout and previous exposure as ex-CEO of NTUC Income, gives him the necessary leverage to take regulators and financial institutions to task.

While that might have been the case, he is also a controversial figure, frequently embroiled in tangles with NTUC Income (latest being Bonus Cuts by Income), citing alternative (to the incumbent) political parties web-links and political ambitions? So what is the motivation for Mr Tan in founding FiSCA?

This latest move is clouded by a duality of purpose in (1) Financial Education, with a lesser emphasis (2) represent consumer rights.

There are already quite a few public and private Financial Education content providers giving very good quality Financial Literacy content (like CPF Board, MoneySense, I’m Savvy etc). While the seminars, workshops certainly provide a way to fund the association, the content should not overlap too much of what’s already available in the market, and if they are already up-to-mark. In my opinion, where FiSCA can really plug the gap, is on independent product reviews with a daring opinion while navigating the regulations requirements, rather than go the way of “How much should they save?…”

The first and credible attempt POSB’s MyHome Fund would be one of the many items I’ll read personally. However, I think this is going to be a moumental task in keeping up with various products of banks, insurers, investment companies. I suspect the momentum will soon be subsiding, especially if they are “non-profit” and poorly funded to have the manpower to cover so many products.It might be a better idea to cover classes of products and group them together instead of individual products.

The other gap that FiSCA could really assist the public would be the raising of unfair practices by citing case studies, compiling complaints especially on how financial products are sold in various situations: like road shows, over-the-counter in banks, unsecured loans, etc. Thereafter provide simple advice on how to go about pursuing the case with the recognized resolution bodies. A list of lawyers trained or willing to take up smaller cases would also be very useful.

The impact on Financial Advisory Practitioners?

You have to understand what can constitute mis-selling and improve your processes, as well as quality of advice. Merely filling up the Financial-Needs-Analysis and Risk Profiles may no longer be enough.

  1. The understanding of the financial products and what’s at your disposal
  2. Suitability of the products for your client in meeting his needs
  3. Adequate disclosures and understanding on the part of the client about your products
  4. Managing client expectation on levels of service and advice, Delivering what you promised

The way Mr Tan and FiSCA is heading with an example of article about Term Insurance, you better know your products and not just follow some old adage in the industry like “Why buy term, there’s no Cash Value”. If the term insuranace product is available in your company, and you failed to recommend it given the client’s budget and Needs instead you recommended an endowment policy, this could be construed as inappropriate advice.

Be careful not to end up as one of the statistics of “unscrupulous practices”, and end up on the wrong end of the tree.



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