Claim limit for victims of mis-selling by financial institutions to go up to $150k

Amount, up from 100k, will apply to losses suffered and not the size of the initial investment

- Tan Ooi Boon Invest Editor

Victims who have been duped into financial buying inappropriate products will soon be able to claim more in compensation.

The Financial Industry Disputes Resolution Centre (Fidrec) has proposed to raise the claim limit by 50 per cent, from $100,000 now to $150,000, if investors suffer losses from misconduct, negligence or contractual breach by employees of financial institutions.

The move is significant because the higher amount will apply to the losses suffered, not the size of the initial investment. Take a bank customer who is misled into a buying an unsuitable $1 million product.

He can have his case adjudicated by Fidrec if he suffers losses of up to $150,000.

If his losses exceed the limit, he can still ask Fidrec to hold a mediation, which does not cap claim amounts, so both sides can try to settle the dispute amicably.

This change and others on Fidrec's wish list are likely to be in force by the third quarter of 2024 and will further strengthen Singapore's standing as a leading global financial hub because such access to speedy justice will come at virtually no cost to investors.

Fidrec's mediation service is free for claimants, while those who go for adjudication in such cases have to pay only a small fee of $54.50, including GST.

Such easy recourse for consumers who suffer losses due to misconduct or misrepresentation should be reason enough for financial institutions to tighten their supervisory and regulatory checks to weed out rogue employees.

If not, they will have to spend a lot of money and effort to deal with the deluge of claims that may land at their door as investors become more aware of their rights.

Consider a recent case where Fidrec helped a 75-year-old woman recover her investment losses after she was duped into sinking $100,000 in a risky product.