Lack of MAS Regulatory Action Disturbing

What is the point of having a regulatory body like the MAS if it is not enforcing the regulations it is tasked to police? Last Saturday, we were told that nearly a third of customers of banks and insurers were 'steered to unsuitable investments'.

Mr Lee Chuan Teck, the MAS assistant director for capital markets was quoted as saying the findings were "particularly disturbing". No mention of penalties or even reprimands to the offending companies and their financial advisers were disclosed. Imagine if you made a police report of a burglary at your house and all the police constable did was to tell you he found it "disturbing"!

This practice of giving bad and outright damaging financial advice will not be curbed until appropriate penalties are meted out to offending companies and their staff. Further, the way in which the financial advisers are compensated for their work needs to be changed. When a significant portion of their income is commission based, financial advisers are naturally tempted to sell those products that generate the highest commission income for themselves rather than look out for their customers interests, fiduciary duties be dammed. The conflict of interests is again just too great.

Until those guilty of flouting these guidelines/regulations are fined, jailed or otherwise suitably punished, such practices will continue. More mystery shopping are a waste of time. What in this whole exercise will result in a change in such practices? Zilch. Zero. Nada.

If the tables were reversed and a mystery shopping exercise were carried out against the officers of the MAS, I wonder how many of them will pass. How many MAS officers who are supposed to regulate the industry actually UNDERSTAND the products they are supposed to be regulating? If they, officers of the MAS cannot explain the benefits and risks of such products, how do they expect the general investing public to do so?

Consider this, if MAS or a financial adviser cannot explain the benefits and risks of a financial product in 140 characters or less, then such a product should not be approved for sale to the public, only perhaps to institutional investors. Health Sciences Authority does not approve for sale medicines that have not undergone rigorous trials to proof their efficacy. I do not see why MAS should have a lower standard and then excuse their own responsibility with "Caveat Emptor!"

What is the point of having a dog without teeth or equally useless, a dog with teeth that doesn't bite? It is almost like having a cabinet full of highly paid ministers, at least half of whom have no idea what they are doing. Oops....