Retiree misled into investing $180k in unsuitable product

Lied to by bank employee, he took up 80k loan even though he had no way of paying it off

- Tan Ooi Boon

We all put a huge amount of trust in banks, but sometimes that trust is misplaced, as five retirees found out in recent years when they were misled into buying unsuitable products that brought only financial pain.

That all these cases involved retirees with low education and who were not proficient in English shows how vulnerable seniors are easy targets for unscrupulous sales staff.

One of these five victims, a 63-year-old man, went to a bank to renew his $100,000 fixed deposit but was duped into buying a costlier $180,000 insurance product that required him to take up an $80,000 loan even though he had no way of paying it off.

The bank employee lied, telling him that the product would provide stable retirement income and that he did not have to worry about repayments as the investment's returns would offset these.

It took a year for the man to realise that he had been taken for a ride: He had not received any income and he had to fork out a significant sum for interest on the loan.

Fortunately, he knew how to take his case to the Financial Industry Disputes Resolution Centre (Fidrec), which ruled in his favour and ordered the bank to compensate him for the mis-selling.

What's worrying is that there have been 76 other retirees like him over the past two years who took their grievances to Fidrec after being sold financial products that left them worse off.

Such cases happened despite many safeguards put in place by the Monetary Authority of Singapore (MAS) to shield vulnerable consumers against poor sales and advisory practices.

For instance, anyone who tries to sell products to people over 62 years old who are not proficient in spoken or written English must take more steps to verify that the buyers truly understand the risks and benefits.

Fidrec resolved 56 of the 77 cases through mediation, while 21 went to adjudication, but only five of the people won and received compensation.