Banks must caution employees against unethical behaviour

The advice by the Monetary Authority of Singapore's (MAS) managing director Ravi Menon is timely (Call for banks to be fair in dealing with customers, June 4).

Financial institutions, in their relentless pursuit to chalk up a healthy profit, often compromise on their relationship with clients.

Therein lies the root of the trust deficit that banks are facing at the moment.

Dishonest acts by irresponsible employees also exacerbate the fragile trust in the banking industry (Ex-bank officer cheated 2 retirees of over $200k, June 7).

Customers are often treated like cash cows. There is minimal concern over the impact of milking them for their money, and this often contributes to detrimental relationships.

Relationship managers at banks are expected to provide suitable care and supervision of accounts under their management, as well as to fulfil personal performance targets.

When discharging these responsibilities, they often walk a fine line between sealing deals to achieve earning expectations and missing out on opportunities if product risks are clearly revealed to clients in compliance with banks' guidelines.

Hence, sales staff feel protected and are often not forthright in disclosing investment risks to clients.

Time has dimmed the memory of the unpleasant Lehman Brothers minibond saga.

With a prevailing low interest rate environment, investors are, once again, drawn into high-yield investment alternatives.

Blinded by attractive yields and not cognisant of the risk-reward trade-off, they are exposed to substantial losses that could occur during the holding periods of such investments.

Understandably, banks have to make profits from their operations and staff are remunerated based on their successful efforts.

However, that should not be attained by exploiting customers' vulnerabilities.

Employees ought to be cautioned against unethical and self-serving behaviour that leads to adverse consequences.

Lim Kheng Yee

A version of this article appeared in the print edition of The Straits Times on June 12, 2019, with the headline 'Banks must caution employees against unethical behaviour'. Print Edition | Subscribe