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Granny claims she didn't know $50,000 savings invested in high-risk unit trust. -TNP

Mon, Sep 15, 2008
The New Paper

By Elysa Chen

SHE wanted to put her $50,000 in a fixed deposit account to earn more interest.

But the 62-year-old grandmother, who wanted to be known only as Mrs Ong, ended up putting all the money in a unit trust fund because she ignorantly listened to a bank employee, who allegedly told her it would earn her a higher interest.

So she did, not realising that it was high risk, unlike a fixed deposit which is risk free.

But as the global market tumbled, so did her investment in the fund.

Now, six years later, she has only $30,000 left, after suffering a 40 per cent loss.

Mrs Ong claimed that despite the bank employee's explanation, she did not understand what the fund was about at the time, but was under the impression that she was opening a fixed deposit.

Mrs Ong told The New Paper: 'I was frightened to death when I realised how much I had lost. I'm so angry with myself for making this mistake.'

She had no inkling of the huge loss that she suffered until last week when she went to the bank to withdraw the money.

What is worrying, is that Mrs Ong is not the only customer who has lost money as a result of such investment products.

Be transparent

A check with the Consumer Association of Singapore (Case) revealed that there have been 28 cases of misleading claims by banks reported since last year.

Of these, seven involved elderly and illiterate people.

Case President Yeo Guat Kwang said banks need to exercise special care when recommending investment options to senior citizens or illiterate consumers who do not understand the risks involved.

Families should also tell elderly parents that they should not sign any agreement before consulting them.

Said Mr Yeo: 'The bottomline is that all financial institutions should be transparent, adopt fair trading practices and should not mislead or make misrepresentation at all.'

In Mrs Ong's case, she had gone to the POSB bank at Beauty World in September 2002 intending to open a fixed deposit account.

She claimed a bank employee then told her that leaving her money in a fixed deposit would earn her little, and advised her to invest in the unit trust fund instead.

After the bank employee allegedly reassured her that she would get her principal investment back after five years, Mrs Ong signed the papers, even though, she claimed, she did not understand what was written on them.

She claimed she had asked for Chinese copies of the documents, but was told by the bank employee that they could not provide such copies.

She did not tell her husband or her children about her investment, because she assumed it was a normal fixed deposit.

She said: 'I didn't want my children to worry about me, and my friends tell me that we do not need to let our husbands know how much we have.

'I realise now that kind of thinking is wrong. We should always let them know.'

Although the bank had sent her quarterly updates on how the fund was doing, Mrs Ong said she was unaware of her losses as she did not understand the letters, which were written in English.

She also did not pass these documents to her children.

Mrs Ong had needed the money to pay the deposit for a $300,000 resale HDB flat in Bukit Panjang that she and her husband wanted to buy.

To her horror, she found out that there was only $30,000 left in her account.

Worried, she called her eldest daughter to tell her what had happened to her savings.

Her daughter, a 38-year-old hawker, said: 'This was money that my mother had saved since she was 24 years old. It was her life savings.'

Mrs Ong was so affected by the incident she claimed she could not sleep for days.

She said: 'I never dared to splurge on myself, or to spend on expensive food and clothes, so that I would have enough savings to get by in my old age.

'It was such a waste to have my hard-earned money lost like this.'

She has not only closed her accounts with the bank, but has also withdrawn all her other savings which had been placed with another bank.

Worried that another person would go through the same ordeal, Mrs Ong decided to share her plight.

She said: 'The bank was wrong for not explaining the investment more clearly to me, and I was also wrong for not finding out more.'

When asked about the details of Mrs Ong's case, a DBS spokesman said they could not comment as investigations are ongoing.

The spokesman said: 'In general, the bank's process is to conduct a fact find to understand the client's financial needs, risk tolerance, investment time horizon, prior to recommending any investment product to a client.

'Features of the product, the risks involved, fees and charges, etc will be explained to the client.

'For all unit trust investments, relevant prospectus will also be given to them.'

Check what you invest

* Familiarise yourself with the financial products offered on the market to get the best deal.
* Go through the terms and conditions of the agreement carefully, even if they are mostly in fine print.
* Beware of hype. Never focus solely on expected profits, but pay close attention to possible risks and losses as well.
* Most banks have a quality service manager whom you should contact first in the event of a dispute.
* If the dispute remains unresolved, the Financial Industry Disputes Resolution Centre can help to resolve the dispute. It is an independent and impartial institution specialising in the resolution of disputes between financial institutions and consumers.