By Francis Chan

OFFICIALS from the Monetary Authority of Singapore (MAS) have run spot checks on financial institutions that sold Lehman-linked products to ensure investors' complaints are handled properly.

The on-site visits, conducted in consultation with three independent parties overseeing the complaints process, were largely encouraging.

The MAS said yesterday that it was satisfied that all 10 institutions are reviewing complaints based on 'principles of fairness rather than taking the strict legal position they would if the matter went to court'.

But it has asked 'a few' institutions to increase their resources, including engaging external firms to help deal with the mounting cases.

The MAS has also urged institutions that have reached provisional decisions on cases to conduct a final once-over before informing investors.

It says the extra step of due diligence would ensure that the institutions have taken all factors into account. These may include feedback from the independent parties and issues uncovered during the MAS' own investigation into the debacle.

The central bank wants to ensure that the institutions have applied the framework of the complaints procedure consistently, said Mr Shane Tregillis of the MAS' market conduct group.

Although these new recommendations will invariably delay the completion of the review process by a few more weeks, MAS believes 'the final outcome will better serve investors' interests'.

Mr Tregillis said: 'Accordingly, most investors can expect to hear from their financial institution on the outcome of the review of their complaint starting from mid-January.'

Over 90 per cent of complainants have been interviewed and provisional decisions made on 80 per cent of those.

As of Dec 14, almost 5,000 formal complaints had been filed at all institutions that sold structured products linked to now-bankrupt investment bank Lehman Brothers.

But some investors have all but lost faith in the resolution process. 'A second, third, fourth review is not going to do us any good if the bank holds back details like...why cases of mis-selling have been rejected,' said an investor from the 300-strong DBS High Notes 5 group, who requested anonymity. 'Those of us who have been rejected will now proceed to Fidrec,' he added.

Next week, Fidrec (Finance Industry Dispute Resolutions Centre) is expected to provide an update on the number of cases it has examined.

DBS said yesterday that it remains 'on track' to complete the review of all cases by year-end.

This article was first published in The Straits Times on December 18, 2008.