Sunday, November 13, 2005

When Banks Go Bad - UOB Singapore

The ability of banks in Singapore to abuse their customers continues to evolve. After switching to UOB, (see "When Bankers Go Wild"), I was hoping that things would be more reasonable. Ah hope. I have now been provoked.

Question: When is a time deposit a permanent loan to the bank?
Answer: When you place a time deposit with UOB.

A time deposit normally has a principle amount, an interest rate, and a term. At the end of the term, you receive your principle and interest back from the bank.

Not at UOB. The only choices offered are to renew the deposit with interest, or to renew the deposit without the interest. There is no option to have the deposit returned. This means that your money is perpetually locked into a repeating time deposit. Great funding device for the bank, lousy for the customer.

At first I thought I was just missing something in the Internet banking screen, so I called the customer service staff. They confirmed that return of deposit was not an option.

I then wrote to the Head of Quality at UOB, and copied the Monetary Authority of Singapore. After all, offering a time deposit and then refusing to give somebody their money back seems to be more than a little aggressive banking...

After a couple of weeks, I got an answer from UOB. No peep out of MAS. Basically the response was that there was no market demand for return of deposits, and anyway, they were too busy to change their software right now.

A further letter to UOB and copied to the MAS suggesting this policy was unacceptable has resulted in no written response from either body.

So the moral of the story is: If you want to be rich, open a deposit taking institution that accepts deposits but doesn't return them. Nobody will do anything to stop you.

1 comment:

Anonymous said...

DBS seem to have a similar policy. Make it convenient to place an FD - you can make a placement by ATM. Rollover is automatic for the "convenience of the customer".

To terminate the arrangement, you have to write a letter and mail it to the branch. Then wait for them to process the transaction which can take more than a week.