6 individuals issued prohibition orders for mis-selling investment products: MAS

For the first time, five former insurance agents have been issued prohibition orders (PO) for mis-selling investment products, said the Monetary Authority of Singapore on Thursday (May 17).

Out of the five former insurance agents, three – Heng Goid Hoon, 50, Koh Mei Ling, 35, and Jane Yeo Hui Rong, 31 – were representing AIA Singapore while the remaining two – David Hiah Xinkai, 35, and Nigel Chua Bingquan, 32 – were from Prudential Assurance Company Singapore.

A sixth individual, Zheng Xuemei, a 36-year-old former relationship manager from Citibank Singapore, was also issued a PO for mis-selling investment products.

The actions taken against them follow a “series of wide-ranging investigations”, said the MAS.

Between 2009 and 2015, the six individuals committed one or more of the following types of misconduct on 29 clients: Forgery; making false or misleading statements to clients; making false or misleading representations to the insurer; providing financial advice without due consideration of clients’ financial situation; and improper switching of policies.

Forty-eight policies were involved, as well as the sale of one structured note.

For most of the cases, the misconduct took place between 2013 and 2015 with one case taking place in 2009 and 2014, said an MAS spokesperson. In mis-selling cases, some time may elapse between the sale of the insurance policy and the date on which the customer submits a complaint to the insurer or relevant authorities, the spokesperson added.

All six individuals will be prohibited from providing any financial advisory service and from taking part in the management, acting as a director or becoming a substantial shareholder of any financial advisory ranging between two and seven years.

The POs took effect from April 30 for Heng, Koh and Yeo and from Monday for Hiah, Chua and Zheng.

Hiah and Heng faced lengthier POs of seven years and four years, respectively, for mis-selling investment products to vulnerable clients.

Two of the affected 29 clients were considered “vulnerable” based on the following indicators: aged 62 years or older; not proficient in written or spoken English; and has below GCE ‘O’ level or ‘N’ level qualifications.

In Hiah’s case, he had forged the signatures of several policyholders to effect switches in their investment-linked policies without their knowledge or consent. The former Prudential insurance agent was concerned that the policyholders would surrender their policies and that he would face disciplinary action by his employer if it were to happen.

He also intentionally provided false or misleading information relating to his clients’ personal details to Prudential when arranging insurance contracts. Hiah’s actions resulted in his clients losing their policy rights while he earned commissions from the sale of these contracts.

For Heng, she had advised her client to switch investment-linked policies offered by AIA without disclosing the switching costs to the client and made false declarations in the client’s policy application to avoid scrutiny from her employer.

As a result, the client incurred significant switching costs without any real benefit from the policy switch, while Heng was able to secure commissions by deliberately delaying the switch.

The other former agents Koh, Yeo and Chua were each given three-year POs.

Former Citibank Singapore employee Zheng, who was issued with a two-year PO, was also prohibited from performing any regulated activity under the Securities and Futures Act and from taking part in the management or becoming a key shareholder of any capital market firm.

In Zheng’s case, she had made a false statement to her client by informing him that the structured note was called back by the issuer. The client was misled into executing an early redemption of the structured note. She also made a false declaration in the sale document of the client’s reinvestment to avoid scrutiny from Citibank.

Lee Boon Ngiap, assistant managing director (capital markets) at MAS said, “Representatives of financial institutions who give advice on financial products have a duty of care to their customers. MAS will take stern action against representatives who betray the trust placed in them and provide false or misleading information or give irresponsible advice to their customers.”

The authority “will not hesitate to weed out errant representatives from the industry”, he added.

A Citibank spokesperson told Yahoo News Singapore that Zheng was dismissed in 2016. “We do not tolerate any misconduct that goes against the laws of the country and/or the policies of the bank,” the spokesperson added.

An AIA spokesperson said that the firm strictly adheres to a “zero-tolerance policy against any fraudulent acts” by their representatives.

“The affected customers in the cases of the three former representatives had been remediated for any losses that they may have suffered,” added the spokesperson.

Prudential declined to respond to queries from Yahoo News Singapore on the matter.

The last PO issued by the MAS against an insurance agent was on 24 January for fraud.

Tan Peng Khoon, formerly from AIA, had deceived a customer, who did not understand English, into signing documents to surrender a personal life policy for a cash value of $2,018 and to take a policy loan of $6,500.

He was issued an eight-year PO and sentenced to 18 months’ in jail on 27 November 2015.

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