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THE recent spate of letters and reports on banking products prompts one to ask: Who is looking after banking customers in Singapore.
The Monetary Authority of Singapore appears to supervise banks with a light touch, preferring not to micromanage and leaving the banks to self-regulate. The Consumers Association of Singapore has hardly been visible.
The banks' invariable response to complaints is that customers have been apprised of the features of the product, including their liabilities and responsibilities, so the banks are not liable. The onus is thrown back to customers, never mind if banks should improve product security and features.
The Minibonds saga produced different outcomes for banking customers in different countries. Does a happier outcome for customers depend on how the supervising authority views its role on customer protection or the presence of a strong consumer advocacy group?
The current discussion on liability for unauthorised credit card transactions will not lead anywhere, because most merchants do not check signatures as the banks will pay them regardless of the authenticity of the signatures, knowing that customers will ultimately bear full responsibility.
The banks can therefore be expected to continue acting in their own interests and protect themselves as far as possible. Banks can point to the establishment of the Financial Industry Disputes Resolution Centre (Fidrec) as well as their own codes of consumer banking practice. But are the banks independently audited to check their adherence to their own codes or do they even do a self-appraisal? There is no point going to Fidrec if bank customers are already at a legal disadvantage, as in the case of unauthorised credit card transactions.
Reliance on banks' goodwill and self-regulation has not left customers better off.
In many countries, consumer protection has been hived off to an independent legislated watchdog, leaving the monetary authorities with the role of maintaining the financial system. In the United States, there is now pending legislation to establish a consumer financial protection agency.
Perhaps this is an opportune time to review whether we should have such a formal legislated protection agency in Singapore. Concerned individuals should consider forming a banking consumer advocacy group if nothing is done.
Patrick Low
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