Alvin Koo's Blog

The accumulator, a well-known financial product, sold by banks has deemed the name “I kill you later” after astronomical losses suffered by investors who bought this product. Investments do have their ups and downs but the buyer assumes risks. Despite this fact there seems to be another lurking variable contributing to the cause of loss other than the natural course of business. The victims of accumulators have complained and even sued, fighting on the grounds of poor practices by the banks who only praises the benefits of accumulators but withholds the vital information on the magnitude of losses from the customer. Full disclosure of the contract’s pros and cons would probably have prevented the victims from losing fortunes simply because the accumulator itself had limited up sides and bottomless downfalls. The ethical issue comes down to whether the onus falls on the investor to find out the product details or the bank to provide this detail. This poses a case similar to RyanAir who does not disclose necessary information on additional charges. Concealing obligatory information on the disadvantages of a deal, as part of the firm’s advertising strategy, is unethical especially when the firm successfully closes deals by these means.

http://www.ifa-sg.com/scientist-sues-bank-for-accumulator-structured-product/