'The Minister's answers sound like the MAS shouting across the river, while watching a fire burning,' -Mr Low Thia Kiang
.It seems like this is turning out to be a small matter - I thought SM Goh himself would appear before parliament to answer the questions as chairman of MAS but he sent his deputy Mr. Lim Hng Kiang to do the job instead. Contrast that with Hong Kong where Donald Tsang himself spoke up in the legislative council to answer every single question and pledged to seek justice for the affected investors. I guess our PM and SM had more important duties to attend and have to leave this matter for Mr. Lim to handle.
Mr. Low suggested the Government could form a committee 'to deal with the matter directly'. Directly investigate the banks to find out how the RMs are trained, what instructions were given to them to market these products and whether there are checks in place to ensure that no mis-selling take place. What MAS has done is to appoint "individuals to help review the complaints handling and resolution processes of the FIs who have sold the toxic structured products. The independent parties are to determine whether FIs' complaints handling and resolution processes are independent, fair and transparent and conducted in a timely manner"[Link]. In other words, MAS will not get its hands dirty with direct investigations. It will get data from the complaints handling process of the banks via these independent parties and then proceed with inquiries.
Given the number of "vulnerable" old folks who were targetted and mis-sold these risky products, there is enough to believe that are systemic issues with the FI that led to products being mis-sold. Such systemic issues can only be uncovered through direct investigation into the processes, internal communication and remuneration system. Instead of a case by case approach in which individuals have to negotiate their own compensation limited by their own evidence, the authorities can help establish important facts that will bring about a better resolution for many of investors.
It took the Hong Kong govt less than 2 days to decide to conduct direct investigations into mis-selling. While Mr. Low demands more "action" from the People's Action Party, the Hong Kong govt has already found evidence of mis-selling in 2 banks and are ready to punish them probably forcing them to compensate investors fully or face severe sanctions : [Link]. All the Singaporeans investors are asking for is truth and justice. The truth cannot be established if the govt does not investigate these FIs. Asking the investors to go one by one to the FIs with their complaints and to seek redress from the FIDReC with their limited evidence will reduce the chance of getting an outcome that is just. For example, UBS was forced to buy back billions worth of ARS (auction rate securities) which were mis-sold to investors in the US. This outcome is only possible because regulators stepped in to conduct direct investigations into mis-selling. If American investors where told to go to the banks one by one, they won't stand a chance.