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Protecting consumers

Tan Kin Lian suggests safeguards for consumers.

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Tan Kin Lian

Singapore, the United Kingdom, the United States of America and Australia follow a similar legal system. Laws are passed to balance the rights of consumers and businesses. The aim is to provide an environment that businesses can innovate to improve their products and services and make a profit, and, at the same time, ensure that consumers are fairly treated. 

However, when it comes to the issue of implementing the law, the approaches taken in these jurisdictions differ considerably. I wish to make some personal observations. 

Fair treatment of consumers

Are consumers fairly treated by businesses? 

The prevailing view is that the market can take care of this matter. If there are many competitors providing similar products and services, consumers can make their choice and buy from the most competitive source – based on assessment of the price and service level. 

This concept works well for the market for physical goods – where the specifications can be compared and tested, prior to purchase.

When it comes to services, it becomes more difficult for the consumer to judge. How can the consumer know about the quality and competence of a doctor, lawyer or other professionals? What about the prices and service levels of repairers and contractors?   

It is difficult for the consumer to know what is a fair market price and the expected level of service, especially as the terms of service are decided by the provider. 

Financial products

A bigger challenge arises with financial products, such as the structured investment products and life insurance products. The consumers are given products that are designed by the financial institutions to make a profit. How can the consumer know if the products are fairly designed, and fairly priced? 

In recent years, many bad financial products have been created and marketed to consumers. These products are designed by financial engineers and embedded with high margins for expense and profit.  They are marketed under exotic names, but fall under the broad categories of capital guaranteed, capital protected, credit-linked, equity-linked and currency-linked products. 

These products are described in documents and prospectus that do not give fair descriptions of the risk, features and charges. To put it bluntly, they are designed to “rip off” the consumers to make a large profit for the issuer. 

There is no way that the consumer can know about the undisclosed features of these products. Even a financial experts cannot make a proper assessment as some vital information are not provided, such as the likelihood of certain events that have a material impact on the outcome of the investment.

Protecting consumers

The following approaches are taken by various jurisdictions to protect the interest of consumers: 

a) The regulator scrutinises and tests the products to make sure that they are safe and suitable for consumers. This is the approach taken for the approval of drugs for sale to consumers. 

b) The regulator or the attorney general takes legal action against businesses that contravene the law. This is the approach taken by the New York State Attorney General in charging the banks for the mis-selling of the auction rate securities. The Financial Services Authority of the UK and its counterpart in Australia also take pro-active actions against financial institutions that infringe the law or regulations.  

c) In the USA, lawyers work on contingency fees to handle class actions for consumers.  

Effectiveness

Consumers are fairly well protected by the regulatory practices and legal system in the USA, UK and Australia.  

In my view, the protection of consumers in Singapore is rather weak. The alleged mis-selling of the credit linked notes has caused substantial losses to many consumers, caused by deception or negligence of the financial institutions. 

Some consumers were compensated because they are deemed to be in the “vulnerable group”.   But many other consumers were not given fair or adequate compensation. Their recourse is to take legal action, but it is extremely costly and risky. They will not be able to match the financial muscle of the banks in engaging the top lawyers. 

The consumers worry about paying the fees of their own lawyers. They are more worried about paying the fees of the top lawyers engaged by the banks, if they should lose the case in court and bear the other party’s cost. Perhaps, there should be some clarity and reasonable cap on the other party’s cost, so that it does not become a burden for the consumer. 

In Singapore, the lawyer collects a fee based on the work done, regardless of the outcome. The client has the burden of judging the likelihood of success of the legal action, based on the advice of the lawyer.  

In the recent credit linked crisis, some consumers said, “I have been cheated by the banks in investing in these toxic products. I do not want to be cheated now by lawyers in taking up a hopeless case in court and paying large legal fees.” 

 

Contingency fee

In the past, I held the view that the contingency fee system in the US is bad, as it led the society to be litigious and ridiculous cases are taken up, as reported in the media.

I now view the contingency fee system to be fair and necessary for the protection of consumer rights.  If a consumer has been unfairly treated or cheated, and the authority is not willing to take action, the consumer has to seek redress through legal action.  

Under the contingency fee system, the lawyer takes the risk of the legal outcome. If the lawyer loses the case, the lawyer cannot bill the client. This system makes the lawyer more careful about taking up a case where there is a fair chance of winning. 

There is a possibility for contingency fee system to be abused. However, these bad examples cannot be taken to discredit the contingency fee system. It is possible for the system to be designed to avoid or minimise these abuses.  

Conclusion

I hope that the legal system be reviewed to give better protection to the rights of consumers.  

I hope that the respective parties review the case for adopting the contingency fee system in Singapore.  

Perhaps, there should be some clarity and reasonable cap on the other party’s cost, so that it does not become a burden for the consumer. 

——

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Ng Eng Hen: Dust clouds likely caused armoured vehicle collision during Exercise Wallaby

Dust clouds limiting visibility likely contributed to the collision between two Hunter vehicles during Exercise Wallaby, Defence Minister Ng Eng Hen explained in his parliamentary reply. 12 servicemen sustained mild injuries, but safety measures prevented more serious outcomes. A formal investigation is ongoing to ensure further safety improvements.

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SINGAPORE: Low visibility caused by dust clouds was identified as the likely cause of the collision between two Hunter armoured fighting vehicles (AFVs) during Exercise Wallaby last month, Defence Minister Ng Eng Hen said in a written parliamentary response on Tuesday (15 October).

The incident, which occurred in Queensland, Australia, on 24 September 2024, resulted in mild injuries to 12 servicemen.

Dr Ng’s statement was in response to a parliamentary question from Mr Dennis Tan, Workers’ Party Member of Parliament for Hougang SMC.

Mr Tan asked for details on the accident, specifically its cause and whether any lessons could be applied to enhance training and operational safety within the Singapore Armed Forces (SAF).

The collision took place during a night-time movement of Hunter AFVs at the Shoalwater Bay Training Area.

The vehicles were returning to base when one rear-ended another. Dr Ng explained that the dust clouds generated by the AFVs’ movement significantly impaired visibility, might likely contributing to the accident.

The 12 affected servicemen sustained mild injuries and were promptly taken to the nearest medical facility.

None of the injuries required hospitalisation, and all 12 servicemen were able to rejoin their units for training the next day.

According to the minister, adherence to safety protocols—such as wearing seat belts and protective gear—played a crucial role in limiting the injuries to mild ones.

Following the incident, a safety pause was immediately implemented, with all drivers being reminded to maintain proper safety distances, especially when visibility was compromised.

Troops were also reminded to adhere strictly to safety protocols, including the proper use of safety equipment, Dr Ng added.

The safety lessons from the incident were shared not only with the affected units but also with other participating groups in the exercise, as well as units back in Singapore, through dedicated safety briefings.

Mr Tan also asked about the broader implications of the incident. In his response, Dr Ng said that a formal investigation had been launched in accordance with SAF’s safety incident protocol.

The investigation aims to assess the circumstances more thoroughly and identify any further measures that could be taken to enhance safety.

Dr Ng shared that recommendations arising from the investigation will be implemented where necessary.

Exercise Wallaby is SAF’s largest unilateral overseas exercise, and the 2024 edition began on 8 September, running until 3 November.

The exercise involves approximately 6,200 personnel, including 500 operationally ready national servicemen.

The exercise has been conducted at Shoalwater Bay Training Area in Queensland since 1990, and it is a key part of SAF’s overseas training program.

The Hunter AFV, one of the vehicles involved in the collision, is a state-of-the-art platform jointly developed by the Defence Science and Technology Agency, the Singapore Army, and ST Engineering.

It replaced the SAF’s aging fleet of Ultra M113 AFVs in 2019, which had been in service since the 1970s. The Hunter is equipped with advanced features, including a 30mm cannon, a 76mm smoke grenade launcher, and an automatic target detection and

tracking system designed to enhance operational effectiveness. It is also capable of traveling at increased speeds and covering longer distances, making it a versatile asset for the SAF.

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Government to “carefully consider” Lee Hsien Yang’s demolition application for 38 Oxley Road

The Singapore Government will “carefully consider” Mr Lee Hsien Yang (LHY)’s application to demolish the house at 38 Oxley Road. LHY announced his intent on Tuesday morning following the recent death of his sister, Dr Lee Wei Ling, reaffirming his commitment to honour his parents’ wish for the house’s demolition.

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The Singapore Government has indicated that it will “carefully consider” Mr Lee Hsien Yang’s (LHY) application to demolish the family home at 38 Oxley Road.

LHY, the youngest son of Singapore’s founding Prime Minister, the late Lee Kuan Yew (LKY), announced his intention to apply for the demolition in a Facebook post on 15 October 2024, following the death of his sister, Dr Lee Wei Ling, on 9 October.

The announcement marks a significant development in the ongoing saga over the fate of the historically significant property, which has been at the heart of a family dispute since LKY’s passing in 2015.

In his will, executed in December 2013, LKY expressed his desire for the house to be demolished “immediately after” Dr Lee moved out of the property. Dr Lee, a prominent neurologist, had been the last remaining resident of the house.

LHY reaffirmed his commitment to carrying out his father’s wishes, stating, “After my sister’s passing, I am the only living executor of my father’s estate. It is my duty to carry out his wishes to the fullest extent of the law.”

He added that he would seek to build a small private dwelling on the site, which would be “held within the family in perpetuity”.

LHY also referenced his brother, Senior Minister Lee Hsien Loong’s (LHL) remarks in Parliament in 2015, when he was Prime Minister, stating that upon Dr Lee’s passing, the decision to demolish the house would rest with the “Government of the day.”

In response to media queries regarding LHY’s announcement, a spokesperson for the Ministry of National Development (MND) acknowledged the intended application and emphasised that the Government would “carefully consider issues related to the property in due course”.

The spokesperson also highlighted that any decision would need to balance LKY’s wishes, public interest, and the historical value of the house.

The house at 38 Oxley Road, where key decisions about Singapore’s path to independence were made, has been a focal point of public and political discussion.

The future of the house became contentious in 2017 when LHY and Dr Lee publicly accused their elder brother, LHL, of trying to preserve the house against their father’s wishes for political reasons.

LHL denied the accusations, issuing a Ministerial Statement in Parliament, where he also raised concerns over the preparation of their father’s final will. He clarified that he had recused himself from all decisions regarding the property and affirmed that any government action would be impartial.

In 2018, a “secret” ministerial committee, which was formed in 2016 to study the future of 38 Oxley Road, proposed three options: preserving the property and designating it as a national monument, partially demolishing the house while retaining the historically significant basement dining room, or allowing complete demolition for redevelopment. LHL accepted the committee’s conclusions but stated that no immediate decision was necessary, as Dr Lee was still living in the house.

In a statement conveyed by LHY on behalf of Dr Lee after her passing, she reiterated her strong support for her father’s wish to demolish the house. “My father, Lee Kuan Yew, and my mother, Kwa Geok Choo, had an unwavering and deeply felt wish for their house at 38 Oxley Road to be demolished upon the last parent’s death,” the statement read.

She added, “He had also appealed directly to the people of Singapore. Please honour my father by honouring his wish for his home to be demolished.”

Despite selling the house to LHY at market value in 2015, LHL’s stance regarding the house’s preservation became a public issue, especially after the family disclosed that the Government had raised concerns about reinstating the demolition clause in the 2013 will. The ministerial committee had reviewed the matter, but a final decision was deferred until now.

The fate of 38 Oxley Road remains to be seen, but the Government’s decision will likely have lasting implications for the legacy of the Lee family and the conservation of Singapore’s historical landmarks.

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