MAS reviews deposit insurance scheme to give customers more protection
SINGAPORE: The Monetary Authority of Singapore (MAS) is looking
at measures to boost investors' confidence in the financial system. It
is also tightening its supervision of financial institutions (FIs) that
sell investment products.
For the average man-in-the street, one worry has always been the
kind of protection he would get if his bank or finance company goes
bust. To protect such individual depositors, Singapore started the
Deposit Insurance Scheme in April 2006.
A limit of S$20,000 per individual investor per institution was
set, allowing 87 per cent of individual investors to be fully insured.
The coverage ratio has since dipped to 83 per cent, which is the lower
end of MAS' targeted range.
Now, in the wake of the global financial crisis, MAS wants to raise
the coverage limit to above S$20,000 to better protect bank customers
and to ensure that the scheme is relevant and in line with
international practice.
At the same time, MAS said this should not lead to a substantial
increase in costs to the industry which could be passed on in some form
to bank customers.
The regulator will consult the public and industry over the next
six to nine months before implementing the revised scheme next year.
FIs will also come under closer scrutiny after the recent fiasco where
many retail investors lost money when the complex structured notes they
bought became worthless.
While ten financial institutions have been banned from selling such
products and some investors have received varying settlements, there
are still questions as to the responsibility that senior bank
management and even MAS itself, should bear.
Shane Tregillis, deputy managing director, Market Conduct, MAS,
said: "MAS' role was to check the disclosure agreements, but not the
merits of the investment. There are lessons clearly for FIs on what
they need to do better and clearly, we need to reflect on the types of
issues going forward in our supervision."
In the pipeline are measures to further safeguard consumer interest
and boost industry standards – from stricter training of frontline
staff to all-round financial education for consumers.
In terms of staff training, MAS is proposing a new Capital Markets
and Financial Advisory Services examination module on product knowledge
for bank staff who want to sell complex investment products.
It will also intensify its supervision of financial institutions
and probe steps taken by its senior management to ensure fair dealings
with customers.
MAS said it would also need to focus on new products when they are
launched and plans to develop a financial literacy core programme that
will aid the average man-in-the street make informed financial
decisions at all stages of his life.
- CNA/yt/so