Enhancing Consumer Awareness of Investment Schemes through Investor Alert List

Er Dr Lee Bee Wah asked the Prime Minister (a) how many investors are affected by the investigation into Genneva Pte Ltd; (b) why MAS does not regularly publicise the companies on its Investor Alert List through the media; (c) how many other gold bullion companies are currently operating buy-back schemes; and (d) whether the MAS or CAD will consider giving updates to the public on its investigations.

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The MAS Investor Alert List (IAL) contains a list of companies which are not licensed by MAS but, based on information received by MAS, may have been wrongly perceived as being licensed or authorised by MAS. MAS assesses public feedback as well as documentary evidence on the entity in question before deciding whether to place it on the IAL. The list is updated regularly.

The IAL is publicly available on the websites of MAS and MoneySENSE, which is the national financial education programme. Er Dr Lee Bee Wah has suggested that MAS should publicise companies listed on the IAL through the media. Indeed, we do so. MAS works with the media, both the English and vernacular media, on programmes to educate consumers about unregulated investment schemes. In 2012 alone, so far this year, we have about 20 media stories about unregulated schemes and entities listed on the IAL. They have been carried in the papers as well as on TV and radio. Such media programmes often include consumer tips from MoneySENSE on the risks involved in dealing with unregulated entities. Likewise, the MoneySENSE website has a Consumer Alerts section which publicises media articles and consumer guides on schemes, such as landbanking and gold trading.

The IAL is not exhaustive. The fact that a company is not listed on the IAL does not mean that the company is sound or credible. Consumers must exercise caution when dealing with all unregulated entities, not just entities that are listed on the IAL. Consumers can check if an entity is regulated by MAS, as well as the activities it is licensed to conduct, by referring to the Financial Institutions Directory on the MAS website.

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However, the fact that a company is listed on the IAL does not necessarily mean that it has breached any of MAS' regulations. Nor does it mean that MAS has the power to monitor its activities or to investigate its operations. Where there is evidence of fraud or any other breaches of law, action will be taken by the appropriate enforcement agency, which typically is the CAD.

There are currently five companies operating buy-back schemes, which Mr Teo and Er Dr Lee Bee Wah had mentioned, which are listed on the IAL. Some companies are currently under investigation by CAD. The exact number of affected investors is not known at this point as the investigations are still ongoing. In the meantime, the public can refer to CAD's website for updates on the investigation.

MAS will continue its efforts in educating Singaporeans on the pitfalls in dealing with unregulated entities and the risks of unregulated schemes, such as gold buy-back schemes.

The public has to play its part. Before committing to any investment scheme, any investor should first check if the entity is licensed by MAS and what regulated activities it is authorised to conduct. The second critical step is to assess if the potential returns that are offered are realistic and seek to understand how these operators generate their returns and what the risks are. Thirdly, consumers should assess if there is any protection or recourse if the entity should fail. These are the three basic steps, and they are very important steps when you are dealing with unregulated schemes. It is truly unfortunate when people lose their money in schemes that turn out to be fraudulent or unsustainable. But if every consumer were to follow these steps, we would have far fewer cases of people losing their money this way.

Sir, I would like to thank the Deputy Prime Minister for his answer. I realise that quite a number of those who are so-called being cheated or swindled are the elderly who hardly read English. I have come across some of them, who are my residents. I would like to ask the Deputy Prime Minister whether MAS would consider working with other organisations in order to reach out to more residents on the IAL, for example, the Consumers' Association.

We certainly will. We have been stepping up our activities through MoneySENSE in the last two years quite considerably, engaging in many more activities in the neighbourhoods, for instance. We have been using the non-English language media actively and we will continue to find every way of reaching out particularly to people who do not normally look at the financial pages in the newspapers. So, we are very keen to do more in this regard.

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I would like to ask the Deputy Prime Minister if the banks are today working with the MAS on perhaps publicising the list. Unless many of these citizens are actually keeping money under the bed, I would suspect many of them would have to withdraw money from the banks. Perhaps putting signs on the ATMs or giving out brochures as they withdraw money from the banks would be useful. Is the MAS working with the banks to educate consumers on this?

Not specifically to publicise the Investment Alert List, but it is something which we can consider. We have to make sure that there are no competitive implications. But it is something which we will consider.

I thank the Deputy Prime Minister for the explanation. In the case of the Genneva Pte Ltd, was there any lapse or delayed action by the MAS officials in alerting the public?

Genneva has been on the Investment Alert List for some time. I think there were some members of the public who did notice this.

Sir, to follow up on Mr Teo's question, if a product published or advertised a return that is too good to be true, would the Government intervene and point this out in a more proactive manner?

That is a very useful point. One of the things that we do have to look into is tightening of the rules on advertisement, particularly for any investment scheme. I think what was implied in the question is the old adage, which is that if something is too good to be true, it is not true. Unfortunately, people keep forgetting this adage. So, it is important also to try and minimise the scope to mislead through advertisement. It is something which the MAS is now following up with MCI and other agencies to see whether we can tighten the rules on advertisements.

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