Reply to COS Debate on A Centre for Financial Education
Date: For Parliament Sitting on 7 March 2013
Name and Constituency of MP
Mrs Lina Chiam, NCMP
A Centre for Financial Education
Answer by Mr Lawrence Wong, Acting Minister for Culture, Community and Youth on behalf of Mr Tharman Shanmugaratnam, Deputy Prime Minister and Minister in Charge of MAS:
1 With interest rates very low for a prolonged period of time, there has been a proliferation of schemes that claim to provide high returns with seemingly low risk. They include all manner of investment schemes or training courses. Mrs Chiam raised this concern in Parliament last month, and I had explained what MAS would be doing to step up its efforts to deal with such “get-rich-quick” schemes. Let me elaborate on these measures.
2 First, MAS intends to limit the scope for entities to mislead or deceive consumers through false advertising. MAS is working with the Advertising Standards Authority of Singapore (ASAS) and other government agencies to enhance the rules on advertising. Mrs Chiam has raised the possibility of setting up a new regulatory agency to license and regulate these schemes and activities. We should recognize that regulation is not cost fee. We have to be careful where we draw the line for regulatory measures because too much regulation may end up imposing additional cost not just on the industry but also on the consumers. So we need to find the right balance and consider how best to regulate, MAS is reviewing whether there is a need to refine its regulatory framework to account for changes in the investment landscape.
3 Second, MAS will continue to step up its financial education efforts. I think this is the more important long term endeavour. MAS has published, through its national financial education programme, MoneySENSE, a consumer alert on “Get-Rich-Quick Seminars” to highlight the key things that consumers should consider before parting with their monies to attend such training seminars. MoneySENSE has also sponsored educational materials in various media platforms to reach out to the public. For example, a Business Times article on 23 February 2013 drew attention to so called trading ‘gurus’ who run Forex training seminars. The article highlighted that consumers should be skeptical when a trainer boasts about his or his students’ trading track records. They should be on guard against any hard sell tactics and be mindful of the risks of dealing with offshore unlicensed brokerages if these are recommended.
4 Better-informed consumers are the best defence against get-rich-quick schemes. Consumers should be wary of promises of high returns that seem too good to be true. They should always ask themselves what the catch is. As the old adage goes, if something seems too good to be true, it usually is.