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Warning Letters for Churning?

It was reported that 35 financial advisory representatives have been given warning letters by the CPF board for churning, with seven of them suspended.

Just a warning letter?

mutual fundsFor the uninitiated, the practice of churning actually involves the repeated buying and selling unit trusts using CPF monies with a sales charge of 3%. Part of the sales charge is then given back to the CPF member in the form of cash rebates.

You can see regular newspaper advertisements promising “quick cash” – this is one of the ways they operate.

Read one of my earlier stories on churning:

Why churning can hurt your portfolio

It seems that the worst thing that can happen to churners is just termination of service. To curb out this practice, more severe penalties should be implemented and enforced.

It’ not too difficult to seek out the offenders by responding to the newspaper advertisements. It is a question of whether the authorities want to proactively act to clean out this disease in the financial industry.

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3 comments
roddy says 8 years ago

I agree that these advisers are like loansharks. There’s a demand so they’re there to serve it. But to better protect others, we shd be able to identify these so-called advisers. Are their names or those of the companies they work for published?

At least this’ll be a much bigger deterrence.

Reply
Daniel P says 8 years ago

The authorities are never pro-active. Nothing actually happens until a VIP decides something needs to be done, and all of a sudden, the problem is dealt with.

There have been many instances of problems vis a vis public transport, health care etc, when public policy suddenly takes a 180 degree turn due to a minister changing his mind.

It is pretty sad that the victims participate actively to frittle away their own CPF savings, their immediate needs are so over- whelming, they cannot see past the immediate future. Very sad.

As long as there are sharks around and people in need of quick money, ways will be found, the authorities are too probably too slow, so everybody needs to be careful with their own money.

Reply
    lioninvestor says 8 years ago

    Generally, they are reactive in nature. The catalyst can be either VIP like you mentioned, or some press reports. Look at the recent killer litter thing as a good example.

    Reply
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