Dear Sir,

I refer to "Pushing structured deposits, despite poor returns" (Today, 9 October 2004).

2   MAS has given banks until 1 June 2005 to comply with our recently issued Guidelines on Structured Deposits.  This transition period allows time for termsheets and marketing materials to be amended to ensure they disclose all relevant product information including the nature of the investment, risks involved, fees and charges and benefit illustrations under worst case scenarios. Banks might need time to train the staff distributing these products.

3   Banks will also have to reclassify structured deposit products which fail to satisfy the characteristics of a deposit as clarified by MAS. Re-classified products may attract prospectus and Financial Advisers Act requirements. Book-keeping changes may need to be made, and reserve requirements adjusted accordingly. The transition period allows time for banks to make these system changes and move their re-classified products to the new regulatory regime.

4   In the interim, MAS has encouraged banks to move quickly where possible and adopt the standards in the Guidelines as best practices. To help address concerns of aggressive sales practices during the transition, we have released a consumer guide "Making Sense of Structured Deposits" to raise awareness of the features of structured deposits, the risks involved and what consumers should look out for when investing in such products. The guide is available on the MAS "For the Consumer" portal under MoneySENSE - Consumer Guides and other Publications.

5   Structured deposits are not one of the approved investment products under the CPF Investment Scheme (CPFIS). MAS does not regulate CPFIS.

Yours sincerely,

Angelina Fernandez
Director (Communications)