Need help. Was my dad scammed by this FA?

Question

Hi everyone, I recently just found out from my dad that he has been investing into a bond fund with Great Eastern back in 2021.The policy name is "PRESTIGE LIFE REWARDS 3" which has been discontinued now. If I am not wrong, the policy essentially locks in your initial premium payment and promises to provide monthly payouts for a lifetime at a fixed interest rate. In my case Dad's case, it was a 300K payment at a fixed rate of 2.8%.

Basically the FA, lets name her J, managed to convince my dad who is illiterate in finance into believing that the rates back in 2021 was high, when covid was still rampant and there was plenty of fear/uncertainty. Additionally, J also advised my dad to get a loan from a bank and even personally went with him to help him borrow more than his default credit limit (around 216K) to invest in the fund.

So far my Dad has received 0 payouts due to the 3-year lock in policy and has been stuck paying back the bank at the increased interest rates. When my dad confronted J about it, J mentioned that she didn't know better that rates back in 2021 would rise and that she was also personally invested into the fund which I think is bullshit.

I am genuinely devastated and don't know what to do in this situation as my family does not earn much and the interest paid back to the bank is bleeding us. I appreciate any help given and thank you in advance.

in askSingaporeby MunchyCrunches

91%

17d

1dontcum

184

17d

You need to go talk to FIDREC about this. Convincing an old man to get a loan from a bank to pay for this is against GE policy. Fuck that FA make sure to talk to GE too

MunchyCrunches

17d

Thanks for the advice :)

1dontcum

17d

Do collate the WhatsApp convo between your dad and the FA as well as all relevant information. All the best I hope it ends well

FluidRelease7044

16d

Second this. Had a bad personal experience with GE so as a word of advice I suggest when you talk to them be very assertive and firm make sure that they escalate this to FIDREC

1dontcum

16d

Is it just me or GE FAs are scummy af. I too have bad experience with them. The mf tried to play on my insecurities to buy cancer shield. She said and I quote “1 in 4 singaporeans will have cancer. Your chances of striking cancer higher than toto. Not buying it is irresponsible to your family, SO, and yourself”

LookAtItGo123

16d

Lmao just tell them if I die I die. Then go to singlife later and ownself purchase your insurance as you see fit. Agents are a thing of the past, it's all self DIY now.

FluidRelease7044

14d

No they are. And sadly it’s not regulated enough. Like I think a lot about the individuals like your parent who do not have people in their circle who are vocal and willing to advocate for them. Then how? How much $$ has been scammed there?

ilmboots

121

17d

Edit: Saw the product, typical retirement income product

However, in any case, convincing your dad to go the bank to borrow money for this should be against what a FA should be advising, let alone doing. This is essentially over leveraging. Do you have evidence of this? I’ll advice you to report the FA to the parent company and consult a lawyer pro bono

MunchyCrunches

17d

I'll start collecting now! Thanks for the advice :)

fijimermaidsg

16d

It's not an annuity but some rojak combination of investment fund offered by insurance company to fleece people...

silentscope90210

17d

Definitely scammy to get a financially illiterate elderly to take out a huge loan just to invest in the fund. Gather evidence and lodge a complaint against that FA.

midaschan

17d

Not only that, the FA is also financially illiterate (like many of the FAs around nowadays). 99% of them do not even know their products well and do not even have basic general finance knowledge.

DuePomegranate

17d

Financially illiterate can cover a wide ground. At first I thought that the father was actually illiterate, then OP will surely win the case.

But if OP thinks that the FA should have been able predict in 2021 that the bond fund would do badly, and that leverage would turn against them, I think that's a real stretch. Plenty of FAs were recommending this kind of tactic a few years ago. And plenty of educated people bought into it and made a loss too.

Shdwfalcon

17d

First thing you should NOT do is to meet up with the FA.

Next, report this to Fidrec and let them look into the case.

Your "investment plan" probably wouldn't be red flagged, but the loan definitely will. That would be the angle of investigation and attack.

biyakukubird

16d

It will also depend on the father's testimony and FA testimony. If the courts find that the Father is sufficiently advised by the FA and know what the product does, then it won't be the FA fault. The father has accepted the risk and did not withdraw from the policy during the freelook period.

OP will also need to explain why he / the father did not withdraw the policy during free look period and this will be the biggest hurdle for them.

bananaterracottapi

17d

It's a scummy sales tactic used to get bigger premiums (and therefore bigger comms). Can do when interest rates are low but they don't see interest rates can change. Obviously an illiterate agent out to get big sales. If your dad is old enough (60+ years old) go straight to fidrec and report her. Chances of winning will be high

6Hee9

17d

What type of cunt FA advises someone to get a loan to buy into a fund wtf.

opoeto

17d

Looks like it could be a breach of fair dealing rules. Would advise maybe get help from a pro-bono lawyer. Using the right words might generate more impactful statement. Make sure to go through all correspondences done with FA and with Bank.

It’s usually not that easy to get such a large loan if your income is not high. And you also need to check if your dad ever declared himself as an accredited investor to the agent, and if so what was given.

Admirable_Entry_6901

17d

The product itself isn't that bad if bought without borrowing. But many FAs were promoting this "borrow since rates are so low" bs to get people to buy even more. Pretty damn shitty.

Bra1nwashed

17d

Actually most bankers also sell this with leverage. It is actually quite a good leverage product with cash values building and the coupon able to service the interest since you do not need to pay back the principle sum

MunchyCrunches

17d

But the interest back in 2021 was low :(. The payout now will not be able to cover the rates that my dad has to payback now

Bra1nwashed

17d

Refinance it

MunchyCrunches

17d

My dad told me that the fund rates is fixed, hence the predicament. I'm going to schedule a meetup with the FA to find out more.

Bra1nwashed

17d

It's not fixed. There's a fixed and variable component

MunchyCrunches

16d

I see! That's really reassuring to hear. Thank you for this. The fear I had was based on the rates being fixed and it being like a negative arbitrage kind of situation.

Bra1nwashed

16d

Yah your FA might be inexperienced in advising this policy.

Creative-Macaroon953

17d

Wow your dad limit is 216k ? Which bank do unsecured landing for 216k. Your dad must be some high net worth individual?

MunchyCrunches

17d

We are definitely not high net worth. I have no idea how the FA helped him to get this amount. I fear that the HDB might have been pledged as collateral.

Creative-Macaroon953

17d

Hdb cannot be use for collateral, dont worry.

MunchyCrunches

17d

Thank goodness

Creative-Macaroon953

17d

Your dad most likely collateral the insurance for the loan. The idea is a bank collateralised loan shld be lower interest than the interest generated on the bond fund, generating positive net cash flow.

Dismal-Mark3479

17d

Hi, I am an owner of this policy as well (but not an FA)

How he is able to get a higher amount than you would expect is because the principal is not to be repaid, your dad will be in perpetual debt (it is not as scary as it sounds, really)

Rates are fixed for the first 2 years. After that, they are floating rates.

So actually, this works in the policy owners' favour.

Your investment yield will be based on total policy size, financing costs will be based on your loan amount x i/r. Again, principal is not to be repaid. Which means i/r rates have to be quite high for your dad to not breakeven

You will get a small payout from y4, y5 onwards, bigger payouts.

MunchyCrunches

16d

Hey there, this is really reassuring to hear! Thank you :).

mrscoxford

17d

Back then a lot of FAs and banks were pushing such premium financing products and they based all their returns illustrations on the ultra low rates back then

chronoistriggered

17d

If u can show/prove that it’s the FA idea to take loan to buy policy, then u can sue the arse out of her and GE

shinnlawls

17d

You should expose this FA for our ref, avoid at all cost

Strong_Guidance_6437

17d

So what's the surrender like, or assignment if possible

MunchyCrunches

-3

17d

I am unsure, definitely scheduling a meetup with the FA now to find out.

CheekyWanker007

17d

yo yo i wldnt meet up with the FA after he blatantly scammed yr dad. hes gonna take some damage control measures and perhaps snake his way out of all the trouble.

report her ass, i believe regulations in singapore can offer u a full refund if its possible to prove fraud. contact a lawyer, not too sure about the proper authorities and such

Kazozo

17d

Reading through the posts, it seems no, your dad wasn't actually scammed. Just a very unfortunate financial decision.

The product itself seems ok, but just very unsuitable for a financially naive person.

jupiter1_

16d

Gotta understand the nature of this product

And that your dad took leverage to buy this product. Tbh nothing wrong with this as long as he knows what he's doing it. Back when interest rates was low, this was ideal to take advantage. But off course now rates has increased, so the loan interest rates also naturally increased.

Sadly and practically speaking, for this product to "pay off" and worthwhile is if your Dad passed away right now.

Another alternative is to try to secure cheaper financing than the current one to pay off this thing. The rate also just be below 2.8% to make this worthwhile.

If reverse the situation back to 2021, it make sense because interest rates were low and 2.8% would have sound decent.

ChanPeiMui

17d

Has the policy reached its 3rd year anniversary? It says in the GE website that this series is supposed to pay out on the 3rd policy year and from what I understand is that they will do so once it hits the the anniversary date.

MunchyCrunches

17d

So far still no payouts. Even if there are payouts, my dad will still lose money due to the fact that the fixed rate from the fund was 2.8% and the current rates are around 4%.

ChanPeiMui

17d

Wait a little longer and see how. If still no payout, call GE.

Honestly, no FA should ask the client to go get a loan just to close a deal. That's unethical.

Bra1nwashed

-5

17d

Only 2.8? Weird, my clients are getting around 4-5%

MunchyCrunches

17d

I may be wrong but I was told from my dad that was the rates that the fund locked in back in 2021.

ChanPeiMui

17d

The rate back then is 2+%. I remembered.

whatever72717

17d

Either way if all else fails, use the payout to fund the future bank payment, and please nominate the policy in case ur dad passed on before the policy terminates.

I can tell u, the rate of getting anything back is pretty damn low other than surrendering

MunchyCrunches

17d

The payout won't be enough to cover the rates from the bank :(. I'm looking into how to exit with minimal losses.

Xanf3rr

17d

Your dad got hustled big time. Get legal advice ASAP.

babynekomeow

17d

Lets hope that a prohibition order gets issued against her :)

Consistent-Chicken99

17d

Report the FA… do it asap… evidence can slowly gather and feed them.

DamonicSlay

16d

As an FA, I would think it's illegal for an FA to recommend to take a loan to finance an investment bond. You could report this to MAS due to putting own interest above clients and unethical conduct - offering unjustified financial advice to invest when your dad doesn't have the money to.

DuePomegranate

16d

What do you mean “I would think it’s illegal”? You are an FA and you don’t know for sure whether it’s illegal or not?

It was very common for FAs to push this kind of strategy in the low interest rate era. It’s still described on Income’s web page.

https://www.income.com.sg/blog/premium-financing

DamonicSlay

16d

There could be other factors at play, etc Fathers business suddenly picking up and hence theoretically being able to pay off the debt in 1yr if business continues well etc etc, but yah generally FA's do alot of fishy shit like that without much consideration of the other party. Time will weed out the scammy FAs

DamonicSlay

16d

Regarding the payouts, it's controlled by GE and not up to the FA's discretion, but you could sue the FA for unethical practice.

Also, kinda unfortunate that you can't take the money out and still have to pay increasing rates.

But there ARE other factors as well, eg did your family lose source of income during covid, etc etc since your dad might have been financially capable at the start of covid

anonnasmoose

16d

I’ve seen fidrec come down hard on FAs for doing similar. Clear cut case if the Fa was dumb enough to leave a trail of whatsapp messages. You should easily get the money back and some compensation on top of that.

Lopsided_Chemist9984

16d

Wa same situation here mate. My financially illiterate mum (doesn't know english too) got convinced by her bank's FA to buy under bank's joint venture with prudential. She didn't dare tell me only 6 months later? lol. got the FA down and wrecked them real hard. But there's nothing to be done since the free look period was long over... heard from other insurance agent friends that this plan secures them a mdrt. now my mum is just compensating the overly high rates..

babyboo8

16d

I got this policy. I think it’s a good policy if u know what you are doing. Basically you take a loan from a bank to pay for the policy and then slowly repay the bank back. You can choose not to take the bank loan if you are able to pay for it upfront.

I just paid everything upfront and have been getting the monthly payment after the holding period.

biyakukubird

16d

2020, 2021 was a low interest period so 2.8% is considered high interest back then.

While you can say your dad is illiterate in finance, ultimately he is the one who sign the policy. There is a freelook period during the policy and he could have cancelled it then. It was his decision to carry on with this policy. High chance he do it out of "beauty trap" from J but that is another topic.

Best thing to do now is to reduce the loan as much as possible if it's a floating interest rate loan. Defaulting on the premium is also bad as you lose the initial invested sum. What you can do is find richer friends/families to "sell" part or whole of the policy so they pay the premium for you and then get the payout.

How did your dad know the FA? through a roadshow? This is why MAS should have a law that bans FA from approaching anyone that even looks remotely like a boomer, or make such plans only available to accredited investors.

chrimminimalistic

16d

Asking people to borrow money to invest is ridiculously scammy.

Only_Run7280

14d

One of them tried to sell me an ilp saying their funds were a guaranteed win recently. I basically looked at what they were investing in and gave her a geopolitical lesson instead.

xxxLourrr

-5

17d

I have no idea why your dad is getting 2.8% from PLR 3, my customers are getting 4% minimum.

I think J is inexperienced in selling high NW products like the PLR. She should get her boss over sit down with you and your dad and do a proper explanation on the plan.

The PLR isn't a bad plan.

Puzzled_Training5096

16d

garbage fund getting shilled by FAs 😂

akumian

13d

Unpopular opinion but this is a common strategy used by investor. High risk high returns which the FA should not sell to your dad's risk profile.

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