By Lim Wei Chean

IT TOOK a few years, much cajoling, and not a little teeth-gnashing, but come Nov 1, credit card holders in Singapore will finally get a measure of protection from banks if their precious pieces of plastic become lost or stolen.

Cardholders and consumer advocates are understandably cheered by what amounts to a U-turn by the Association of Banks in Singapore (ABS).

Its announcement on Sept 4 that consumer liability for lost or stolen credit cards would be capped at $100 came after years of unsuccessful lobbying for just such a move from groups such as the Consumers Association of Singapore (Case).

Much of the lobbying took place behind the scenes, so many remained unaware of what was going on. But things changed after this newspaper published a report on July 13 of the case of Madam Tan Shock Ling, who found herself liable for a $17,100 bill after she lost her cards.

The thieves went on a spending spree, buying three Rolexes with Madam Tan's plastic. Despite evidence that she was a victim of theft, the banks held firm: Pay up, or else.

After that, calls for a liability cap in such instances came in thick and fast. The Straits Times' Forum page alone received about 100 letters, making this topic one of the hotter points of discussion this year.

Initially, ABS refused to budge. As recently as July 31, it rejected the calls for a liability cap. Referring to the current practice of holding cardholders liable for transactions that take place before a loss or theft is reported, it said: 'This helps to avoid moral hazard, in that if a customer suffered no loss even if he/she was negligent, there would be no incentive for customers to take precautions or notify banks, as any loss will be borne by someone else.'

That kind of response was typical, said Case. The banks' oft-repeated defence was that a change would lead to people abusing the system.

At first glance, this seems a plausible reason to cling on to a policy that few countries have. The United States, Hong Kong and Malaysia all have liability caps. But look closer and the banks' case does not hold much water.

Singapore has one of the lowest rates of credit card fraud in the world - by ABS' own admission.

For every $1 million worth of credit card transactions here, only $200 is linked to fraud. This works out to a rate of 0.02 per cent. According to the 2007 figures gathered by the Nilson Report, a consumer payment research publication, the worldwide card fraud rate that year was 0.047 per cent.

What this says, in effect, is that Singaporean plastic owners have held up their end of the bargain remarkably well. They take care of their cards and have helped keep fraud rates low.

But when cases like Madam Tan's surface, the banks pay little heed. Their position, essentially, is that the terms and conditions of card use are clearly spelt out. And if you want protection, listen the next time one of those annoying cold callers rings you at an inopportune time and offers you insurance in the event of the loss or theft of your cards.

Clearly, consumers deserve better, and kudos to ABS for finally deciding to change the system.

But this brings up another point - why were Singaporeans denied a benefit that many people elsewhere were enjoying?

Much has been said about our service standards in recent years, most of it bad. As Mr Lim Swee Say, Minister in the Prime Minister's Office and the highest-level advocate of good service in Singapore, said recently, good service is about more than just saying hello and goodbye. It is a state of mind.

Mr Lim might as well have been talking about banks when he observed that businesses have a 'pro-sales', instead of a 'pro-service', culture.

Speaking in his capacity as adviser to the Go the Extra Mile for Service (Gems) movement, he explained that the current focus on the sales bottom line is short-sighted. Instead, he said, establishments ought to view every demand of the customer as an opportunity to serve and satisfy, and that such an attitude will garner repeat visits.

To Case president Yeo Guat Kwang, the recent debate on credit cards was also about service.

Banks, he said, see their service as just one of providing the credit facility. But consumers expect the service to include some measure of protection too, especially when they have done no wrong.

Mr Yeo said one thing businesses need if they are serious about raising service standards is a mindset change. What they think constitutes service may be different from customers' expectations. But too often, businesses fail to see that, or are unwilling to meet those expectations, he added.

The banks' stance of not instituting a liability cap was akin to that of restaurants which refuse to serve tap water for free, even though most customers consider it to be a basic gesture. They want your business, but refuse to consider making a gesture that costs them virtually nothing. Forcing one to pay for bottled water is a move aimed at fattening their bottom lines.

When you think about it, some banks are doing the same thing. They'll fall all over themselves to give you a credit card. But when it matters, you're on your own.

So, yes, the liability cap is a good move, ABS. But the question still remains: what took you so long?

To me, the answer is this: Singapore companies are pretty good about paying lip service to the concept of serving the customer.

When the rubber hits the road, however, it's an entirely different story.

This article was first published in The Straits Times.