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Cash Back Schemes

>> Thursday, December 9, 2010

There are currently many CPF cash back schemes and it is provided by financial advisory services in the sale of financial products such as unit trusts to its clients.

It targets working-class investors and procure them to purchase unit trusts from the financial advisers using their otherwise inactive Central Provident Fund (“CPF”) monies in exchange for cash-backs. This way, the investors would receive an immediate cash return simply by using their CPF funds to purchase unit trusts.

Under this arrangement, everyone was supposed to benefit, the financial advisers and the investors. At the height of these schemes, one firm, Acclaim Insurance Brokers Pte Ltd earned commissions in the tune of some $3 million in less than one year. One of the advisers reportedly earned about $450,000 in commission in just four months, the bulk of clients were predominantly from the Malay community.

It seems like a very lucrative business and it was in the financial interest of all parties. Hence, these practices will continue and what is MAS doing to prevent it? Introducing more forms to fill and adding more complex procedures will not stop people's money from being cheated. However, it will discourage genuine people from proper financial planning.

1 comments:

sample December 15, 2010 at 1:03 PM  

After reading this i feel the CPF is best for me..thanks for the short and informative post!


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