THE process of compensating investors of Minibonds and DBS High Notes started yesterday, following assurances from DBS, Hong Leong Finance and Maybank that they will review all cases, and also fast track compensation for 'vulnerable customers'. Grace Ng outlines some key steps that the three financial institutions will take to settle the matter with their customers.

DBS (High Notes 5)

Criteria: Cases which did not meet standards that DBS upholds. For example, if the customer is clearly unsuitable for the product.

Process: Review cases for compensation. Priority is given to vulnerable cases and those in difficult circumstances.

The compensation process started yesterday and will continue over the next few months. It is expected to be completed by year-end.

DBS is in the process of unwinding High Notes 5 in Singapore and assessing the final credit redemption amount.

Where customers dispute the bank's assessment, they can approach the Financial Industry Disputes Resolution Centre (Fidrec) or the courts.

Maybank (Lehman Minibonds)

Criteria: 'Vulnerable customers' are being given priority.

Process: Conducted or scheduled interviews with 70 per cent of Minibond customers who had written or contacted Maybank.

Also called more than 50 per cent of the customers identified as 'vulnerable'.

It is reviewing the sales process in cases where customers have complained of mis-selling.

Management will decide on the cases to get compensation. Maybank has already reached a decision on some cases and is working out the details before communicating with the investors.

Hong Leong Finance (Lehman Minibonds)

Criteria: It is purchasing the Minibond notes from its elderly and less well-educated customers who meet two conditions:

1. Main account holder must be 62 years or older at the time of investment with not higher than a primary school education.

2.Joint account holder, if any, must also not have higher than a primary school education.

It will offer full and final settlement of the original investment amount, net of all interest paid to date, to eligible customers in exchange for his or her Minibond programme notes, without admitting any liability.

Process: Worked with independent adviser Law Song Keng to set up complaints handling process.

It determined that a number of 'vulnerable customers' should be given priority in compensation and started contacting customers regarding compensation.

It will continue to review and deal with the remaining cases in a 'fair and equitable manner'.

This article was first published in The Straits Times on October 24, 2008.