Banks, structured products & deception
An extract from a forthcoming book: A Reporter’s Memoir NO HARD FEELINGS
On one occasion, I succumbed after getting a few phone calls urging me to come for a chat with my customer care officer to be eligible for an attractive offer. I had my doubts but still signed up, vowing to check the details during the grace period.
After a few calls, I knew what the game was about and went to the bank to withdraw my participation in some kind of a structured product.
How could a seasoned person like me fall for it? To salvage my pride, I wrote a letter to the branch manager saying that I did not want to be a treasured client, and that I would take steps to make myself ineligible to be a member of that select group.
I said that I felt I would be much better off without a customer care officer peering over my shoulders and checking my account balance on the sly. The next day, I opened an account with another bank and transferred half of my money.
After further checks, I realised that most of the investment products offered to members of the public like me were loaded in favour of the issuer.
They could ride on their profits and cut their losses whenever the trend went against them. In other words, if they win, they would win big; but if they lose, they will lose the minimum. It was the other way round for the customers, because if the trend went against them, they would lose out big.
This was like me playing poker in the past. In those days, I ranked my standing in the world of poker as only a BB (Baby Buaya). I dared not get into the water when I saw the adult buayas (crocodiles) and the sharks, but I would happily dive in with the selars, tambans and ikan bilis (Malay names of small and tiny fishes).
Whenever I won, I would win big, and if luck went against me, I would only sustain nominal losses. I have stopped playing poker. After a time the conscience starts to prick.
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