Fixed Deposits who’s getting Fixed?

April 28, 2007

Case deplores banks’ questionable FD policy

I REFER to the letters by Mr Tan Kee Chye (‘FD counter rate: 2.3%; auto-renewal: 1.8%’; ST, April 21), Mr Lim Poh Seng (‘Is Case looking into 2-tier FD rates?’; ST, April 24) and Mr Arvind Agarwalla (‘Always at the losing end when fixed deposits auto-renewed’; ST Online Forum, April 25).

We are concerned with frequent reports of consumers getting lower returns because they did not renew their fixed deposits (FDs) personally at the bank counter but allowed the banks to renew them automatically.

Complainants have told us that they chanced upon the better rates only when they called at the banks. Consumers should not have to discover such better returns by chance. Depositors would expect the banks to inform them of such differential rates. Omission of such material information is not acceptable.

According to consulting firm Bain & Company in a Business Times report dated March 29, ‘Financial-services firms here and elsewhere in Asia are shooting themselves in the foot by aggressively courting new customers, then failing to meet their needs properly’. We agree.

In fact, we had written to the banks in the past when we received such feedback. However, the banks preferred to deal with such complaints on a case-by-case basis, with no intention of addressing the issue across the board despite knowing full well that depositors were not happy with the status quo.

We believe our banks can do better. They can serve the needs of depositors without such questionable market conduct. They should adopt a more transparent approach and inform all customers that better rates could be offered if they renewed their FDs at the counter or, better still, offer the best rates at any point in time to all their customers, regardless of whether the FDs are renewed automatically or over the counter, like one foreign bank is doing at the moment.

Seah Seng Choon
Executive Director
Consumers Association of Singapore

 

The fact of the matter is that if you don’t manage your finances properly; don’t expect the Banks to! Their main purpose is to manage THEIR earnings, NOT yours.

Is FD a safe and attractive investment after all?

What other investments can yield better FD rates?

Is your FD keeping up with inflation? With GST at 7%, your FD value might be eroding even faster.

Get your friendly reliable needs-based advice here!