$200k loss after investing in complex financial product

An investor keen to earn a bit more interest ended up losing all her $200,000 savings after she was swayed into buying a complicated financial product she did not understand.

- Tan Ooi Boon

The woman, a 58-year-old customer service employee earning $3,000 a month, wanted to put the inheritance from her late husband into a fixed deposit but was convinced by a bank sales representative to consider "other products that could give a better interest rate".

The customer - we will call her Madam Goh - had secondary-level education, and could read and understand Chinese, as she was from the Chinese language stream. She was given documents in Chinese to read and sign but she did not check them and chose to believe everything the bank employee told her.

It was not disclosed what returns she would get, but she invested the entire $200,000 without understanding what she was buying. To make matters worse, she did not even read bank statements sent to her over the next five or so years.

She had the shock of her life when she tried to withdraw her money - the account was empty as losses had erased all her savings.

Cases involving bank customers who are sold unsuitable products are not rare, but such cautionary tales seem to escape many people who continue to invest without checking the terms and conditions.

It is hard to cry foul if you choose not to read before you sign, or worse, simply throw away important bank statements without even reading them.

While the Monetary Authority of Singapore has mandated that financial institutions follow fair dealing guidelines, such as not promoting unsolicited investment options to fixed-deposit customers, it is still up to everyone to check and understand what product is being sold.

Madam Goh would not have fallen into a high-risk investment trap if she had just stuck to her original plan of opening a fixed-deposit account and not put the entire $200,000 at risk just to possibly earn a few thousand dollars more.