COMPLAINTS RECEIVED BY MONETARY AUTHORITY OF SINGAPORE AGAINST FINANCIAL INSTITUTIONS

Mr Chng Hee Kok asked the Minister for Finance if he will state the number and nature of complaints received by the Monetary Authority of Singapore against financial institutions for the years 1990 to 1992.

Dr Richard Hu Tsu Tau: The total number of complaints received by the Monetary Authority of Singapore (MAS) was 186 in 1990, 301 in 1991 and 209 in 1992. The types of complaints include those on disputed interest, foreign exchange, penalty rates and service charges, dispute over claims and premium charges, quality of service and unprofessional conduct, unauthorised transactions, and complaints against the institution's management and its policies. The MAS has followed up on all these complaints with the financial institutions concerned and help seek redress where the complaints are genuine. It will continue to encourage the banking and financial community to improve its services to customers.

Mr Chng Hee Kok (Tampines GRC): Sir, will the Minister explain if there were complaints against banks for not posting their effective interest rates and whether any action was taken by the MAS?

Dr Richard Hu Tsu Tau: I am not quite clear about the Member's question. His question is to enforce effective interest rates.

Mr Chng Hee Kok: Yes, that is right.

Dr Richard Hu Tsu Tau: What effective interest rates?

Mr Chng Hee Kok: There were cases of complaints that banks did not post their effective interest rates. Currently, all banks post the nominal rates, which vary from one bank to another, and there is no basis for consumers to compare. So why should not MAS impose upon banks to make sure that whatever loans they provide they should post the effective interest rate?

Dr Richard Hu Tsu Tau: By "effective interest rate", does the Member mean the average interest rate over the life of the loan? Is that the idea?

Mr Chng Hee Kok: Actual interest rate, Sir.

Dr Richard Hu Tsu Tau: I see. I will ask MAS to look into this. I am not aware that there is a major problem.

Mr Chng Hee Kok: I would like to point out the difference between "effective interest rates" and "nominal interest rates". There are some problems in this area. Many consumers are not fully aware that when they take up a loan at 5 3/4% interest rate on an annualized basis it is not the same as taking a loan on the same percentage interest rate but on a daily or monthly-rest basis.

Dr Richard Hu Tsu Tau: I understand. For example, the effective interest rate for a car loan could be substantially higher than the nominal rate.

Mr Chng Hee Kok: That is right.

Dr Richard Hu Tsu Tau: I will look into it.