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Yap Leng Kuen
Wednesday, Jul 30, 2014

Singapore

S'pore acts swiftly to protect retail investors from scams

The Star/ANN | Yap Leng Kuen | Wednesday, Jul 30, 2014

The Monetary Authority of Singapore.

After tightening its anti-money laundering rules, Singapore is taking more steps to strengthen its position as a wealth management centre.

Following a series of scams, proposed rules to improve investor protection will make investment schemes involving landbanking and most precious metals unavailable for retail investment.

Exceptions are expected for investment schemes linked to gold, silver and platinum provided they meet specific rules for retail participation.

Buyback arrangements involving gold, silver or platinum will be regulated by the Monetary Authority of Singapore (MAS) as debentures, and must meet prospectus disclosure requirements, said the Singapore Business Times (SBT).

The MAS has also proposed that all investment products sold to retail investors should be rated based on the complexity of the products' structure, and the risk of loss of the principal invested, said SBT.

Singapore is quick to propose proactive and sweeping changes to its investment rules.

In this case, it acknowledges the importance of retail participation and is taking steps to protect retail investors from potential scams.

While the Philippines and Thailand are relaxing their foreign ownership rules, Indonesia is considering a bill for foreign banks to sell down holdings in Indonesian banks to a maximum 40 per cent in a decade, said Reuters.

The central bank has since 2012 limited foreign banks' holdings in local lenders to a maximum of 40 per cent.

Foreign banks that own controlling stakes in Indonesian lenders include Malayan Banking Bhd, CIMB Group Holdings Bhd, and HSBC Holdings PLC.

The proposed bill also seeks reciprocity for similar market access in these foreign banks' home countries. It also calls for foreign banks to be locally incorporated which will force them to ringfence a pool of capital in Indonesia.

Indonesia should acknowledge that it still requires foreign capital and balance this with the need to protect its banking sector.

While the proposal to sell down to 40 per cent within a decade gives foreign banks fairly adequate time to wind down, Indonesia has to consider the contribution made by these banks from those early days.

Britain's big four banks could be forced to break up sooner than the original 2015 deadline. The new Competition and Markets Authority is launching a sweeping investigation into the banking sector on claims that small business and current holders are not getting good service.

The big four - the two bailed-out banks Lloyds Banking Group and Royal Bank of Scotland, along with HSBC and Barclays, control 77 per cent of current accounts and 85 per cent of small business (SME) current accounts, said Reuters, which added small firms have not seen the full benefits of reduced costs, increased choices and better access to finance. Big banks have to realise that among the benefits of size and scale, the ultimate criteria for evaluation is customer service.

That is the feedback from the ground that they must heed if they are to continue on the successful road of reform.

Columnist Yap Leng Kuen sees encompassing challenges for banks as they delve into every nook and cranny.

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