Wednesday, August 26, 2009

FISCA The New Consumer Watchdog?

It has just been reported in the newspapers that Tan Kin Lian has started a new non-profit organisation named Financial Services Consumer Association(FiSCA) with FiSCA membership starting at S$36 per year.

Why the need for FiSCA when Consumer Association of Singapore (CASE) has been around? Could this duplicity be a necessary evil to address shortfalls in CASE's approach in helping consumers with financial products?

FiSCA's stated core mission for now is "to teach people about long term financial security" and "educate people on the importance of diversification...don’t take too much risk" and will provide online reviews on investment products with the intent to eventually create a white—list of financial products for consumers and even to the extent of linking up lawyers with investors who face disputes with financial institutions.

Will FiSCA be successful or end up to be a fiasco? In reality, investment seminars are already being conducted by existing groups and the Monetary Authority of Singapore but turnout is often poor, according to the Association of Financial Advisors, with less than 50% attendance in conducted sessions. Generally, in Singapore, there is still apathy amongst the masses in being educated for financial literacy. Is FiSCA going to have some innovative ideas that will help it grow strength to strength besides leveraging on the discontented consumers whom had lost millions through their structured products purchases when Lehman Brothers failed?

It is also important to remember that the founding President of FiSCA is Mr Tan Kin Lian whom had previously headed NTUC Income and introduced the unpopular IDAC scheme that had been perceived to be ineffective in keeping motor premiums low. He had also previously indicated an interest to run for the Presidency of Singapore but it appears that he has yet to garner the 100,000 Singaporeans lending him their support.

What sort of approach will FiSCA eventually adopt? Knowing the thoughts of FiSCA's founding President will shed much light. His advice for the young is to buy term policies, this advice for personal insurance is to buy term policies, his advice for low cost products is again term insurance. Personally, I believe that doling out such advice is not right. As a CEO of a financial institution for 30years, it should have became second nature to him that appropriate financial advice can only be provided with a clear understanding of the individual's circumstances. Will his personal beliefs drive FiSCA or will FiSCA be infused with additional brains and provide a more holistic approach?

The turnout for FiSCA's programmes may be a good gauge for its potential to succeed. Noting, of course, that whatever turnout numbers should exclude disgruntled minibond investors in order to get a most representative view of Singaporeans' interest in this new non-profit organisation.

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