Investing can be both rewarding and terrifying. So, it would be good if fair play, at least, could be institutionally ‘encouraged’…
If you’re an investor, good for you! Investing is exciting and potentially rewarding. But let’s be honest: Its potholed, serpentine, long road to riches is strewn with pitfalls, obstacles and uncertainty. Bottom line: Serious investing isn’t for the mentally lazy or cowardly.
Thankfully, for all the risks associated with capital market investing, there’s one organisation that helps Malaysians and non-Malaysians alike who have disputes involving financial loss they can’t resolve with financial institutions or their staff or agents, which they feel is due to unacceptably low service standards, non-disclosure of material risks and information, or, most commonly, mis-selling.
It’s the Securities Industry Dispute Resolution Centre, most often called SIDREC, which helps parties involved in a dispute constructively discuss the problem leading to, say, a financial loss. If escalation is needed, then SIDREC can also adjudicate the matter and make a fair decision based on the facts and circumstances of the case.
Unfortunately too few people in Malaysia are aware of SIDREC’s existence and even fewer know of its cool functions and lofty goals. (I also mentioned SIDREC in last week’s column, which you may read at www.nst.com.my/lifestyle/sunday-vibes/2018/11/432400/money-thoughts-can-...)
Investors should always be fully aware that market ups and downs are par for the course. Nonetheless, it’s only fair that investors large and small should have redress when the financial system itself fails them through greed, malice or incompetence. Toward that end, take comfort: SIDREC has our backs!
HOW IT WORKS
SIDREC protects the investing public by providing, where necessary, an independent and impartial expert dispute resolution channel when there are corporate and individual lapses on the part of a financial intermediary.
SIDREC was established by Malaysia’s Securities Commission (SC) in 2010 as part of the SC’s broader investor protection framework. It started operations in 2011.
After writing last week’s column, I contacted SIDREC’s CEO Sujatha Sekhar Naik for additional insights into her organisation. When I pointed out that a great deal more needs to be done in Malaysia to raise the general awareness of SIDREC and how it might help regular people seek redress for relevant capital market stumbles, she agreed.
Therefore, if you’re a regular reader of this column, please help strengthen Malaysia’s capital market and thus, by extension, strengthen Malaysia by:
1. Reading this entire column.
2. Passing on this information to friends and family who invest in the Malaysian capital market (which encompasses our debt and equity markets). It doesn’t matter if they’re savvy or novice investors in unit trusts, private retirement schemes (PRS), structured products, stocks, bonds or derivatives.
As you help disseminate this message, you may like to know that SIDREC has 185 members, which include banks (that sell capital market products), stockbrokers, derivatives brokers, fund management companies, unit trust management companies, institutional unit trust advisers, corporate unit trust advisers, PRS providers and distributors, and corporate PRS advisers.
Note: SIDREC’s services are free for investors who have claims up to RM250,000. (Since ‘free’ is everyone’s favourite price that alone warrants all of us telling people about SIDREC!)
Sujatha said to me: “Our intention in our efforts in raising awareness is not to drum up claims, but to ensure the investing public is aware of the help we provide and how to access our help, if needed.” She then explained that the financial institutions (FIs), which are SIDREC members, also benefit from insights gleaned on challenges faced by investors. She pointed out that any gaps identified in the FIs’ processes or in the conduct of their representatives may beneficially feed into their own risk management.
SO IF YOU THINK SIDREC MIGHT HELP YOU…
Even if investors who feel somewhat wronged aren’t certain if their complaint or grievance has merit, it’s better to ask! They should pick up the phone (03-2282 2280) or shoot off an email (info@sidrec.com.my) to make their enquiry.
In 2017 alone, SIDREC received 628 claims and enquiries broken down into 481 enquiries, 75 ineligible disputes, and 72 eligible disputes. Drilling down further, an analysis of those 72 eligible disputes indicates 44 of them pertained to market conduct matters, 23 to service standards, and five to SIDREC’s members’ practices or policies.
Investors who feel they have a claim should know that SIDREC has two schemes for dispute resolution: the Mandatory Scheme, in which the SIDREC member MUST participate, if the investor seeks SIDREC’s help (free; and for claims up to RM250,000) and the Voluntary Scheme where both parties agree to seek SIDREC’s help (not free; and for claims over RM250,000 or court-referred mediation).
Just as FIs that are SIDREC members should keep raising the bar of their service deliverables to investors through the dispute resolution process, and by learning from their own mistakes, SIDREC benchmarks itself against the highest global standards for dispute resolution.
Back in 2014 it joined the International Network of Financial Services Ombudsman Schemes (INFO Network), which comprises parallel bodies across the world. (Sujatha serves on the current 2017-2018 INFO Network Committee, which reflects admirably on Malaysia’s commitment to protect investors).
The main takeaway that you as a regular retail investor might derive from this column is knowing that there exists a valuable framework established by our SC to protect domestic and international investors within our capital market.
As such, it makes sense for each of us to be a little braver than we otherwise might be when investing because of SIDREC’s role and calming presence.
© 2018 Rajen Devadason
Rajen Devadason, CFP, is a Licensed Financial Planner, professional speaker and author. Read his free articles at www.FreeCoolArticles.com; He may be connected with on LinkedIn at https://www.linkedin.com/in/rajendevadason, or via rajen@RajenDevadason.com; You may follow him on Twitter @RajenDevadason