Response to "Banks committed to act fairly on fixed deposits: MAS" (ST Forum,2007)
I refer to recent letters to the media on the issue of fixed deposit rates.
The Monetary Authority of Singapore (MAS) does not see the setting and offering of fixed deposit rates as an issue for which we should set regulatory rules. Rather, we view this primarily as a matter of good business practice and customer service.
We believe the boards and senior management of financial institutions should regard good, fair customer outcomes as a critical part of the way they do business.
The Association of Banks in Singapore (ABS) has issued a Code of Consumer Banking Practice. The code is premised on four principles - fairness, transparency, accountability and reliability - which establish 'the bedrock for building a trusting and open relationship between (the customer) and (the) bank'. All ABS member banks have committed to this code.
As such, ABS and its member banks should carefully consider the issues of fairness and transparency raised by customers in the current matter of fixed deposit rates, in line with their commitments under the code. It is in their interest to deliver good customer outcomes and to clearly explain how their business practices meet the standards of fairness and transparency laid out in the code. This is essential to preserve the banking sector's reputation within the broader community.
Rather than issuing more prescriptive regulation, we should look increasingly to market discipline in creating the right incentives for customer-friendly practices by banks. In this regard, customers have an important role to play. Many banks declare that they are customer-focused organisations in their mission statements. Customers should choose to give their business to those banks which best deliver on this promise.
MAS has conveyed these views to ABS and its member banks.
Angelina Fernandez (Ms) Director (Communications) Monetary Authority of Singapore