Investors warned vs high risks

MANILA, Philippines - The inter-agency Financial Sector Forum (FSF) has urged bank clients and the investing public to be diligent in their transactions and at the same time understand carefully the financial products they want to invest in.

FSF recently issued its latest set of advisories to guide bank clients and the investing public as part of its continuing program to promote consumer protection and to strengthen the financial system.

The inter-agency body warned bank clients as well as the investing public about extremely high returns on investments or rates of deposits.  

“The higher the returns, the greater the risk,” FSF declared.

The body urged clients to deal directly with bank employees within the premises of the bank and be wary of offers of unrealistically high interest rates or expensive gifts such as cars, local or foreign trips in exchange for your deposit.

“The rate of interest paid by banks to deposits and other terms and conditions vary among banks. It is best to deposit in a bank offering rates generally comparable with those of other banks. The higher the rates, the higher the risk. Offers that sound too good to be true may not be true at all,” it warned.

It added that bank clients should always keep in a safe place the proof of deposits such as passbooks, copies of deposit slips, certificates of time deposit or confirmation statements.

The FSF is a voluntary interagency body between the heads of Bangko Sentral ng Pilipinas (BSP), Securities and Exchange Commission (SEC), the Insurance Commission (IC), and Philippine Deposit Insurance Commission (PDIC). It is tasked to provide an institutionalized framework for coordinating the supervision and regulation of the financial system.

The body also advised investors to be diligent in understanding the financial products they want to invest in, to carefully read the terms and conditions of any agreement that they sign including the fine print, and to avoid questionable or suspicious deals, such as “get rich quick” offers.

“Know the financial product that you plan to invest in, particularly the terms and conditions in fine print. Do not invest if you do not understand the product or any of its terms and conditions. Do not be enticed by the promise of extremely high returns. Understand that the higher the return on investments, the greater the risk,” the FSF added.

It pointed out that investors should avoid pyramiding investment schemes, including internet-based, that induce investors to recruit others in exchange for more income.

According to the body, investors should make sure that the actual investment product/instrument, if sold in the Philippines, is registered with the SEC or has the prior approval of the Insurance Commission in the case of insurance products.

On the other hand, it added that investment products issued by banks should be authorized by the BSP.

Just like bank clients, the investing public was encouraged to keep proof of investments such as official receipts, investment contracts, certificates of participation in a secure place.