Customers at HSBC will have more time to mull over their investment or insurance decision, thanks to a new policy at the bank.
HSBC has extended its free-look period to 30 days for all its retail banking and wealth management products available in Singapore.
During the free-look period, a customer can back out of a deal if he has a change of heart.
The products include unit trusts, both lump-sum and monthly investment, all individual life insurance policies, investment-linked insurance policies and universal life policies.
The free-look period also covers personal instalment loans.
Thirty days is more than what is required by legislation, which is 14 days for insurance policy sales and seven days for unit trust sales.
Mr Paul Arrowsmith, head of retail banking and wealth management at HSBC Singapore, said that those who withdraw from retail products during the free-look period make up only a small percentage of the bank's customers.
However, it wanted to provide this degree of flexibility for them to reconsider their investment decisions and ensure that these are the most appropriate means of achieving their wealth goals.
If customers withdraw from the products within 30 days of purchase, they will be given a refund or waiver of premiums, service charges and related fees.
Consumers Association of Singapore (Case) executive director Seah Seng Choon said this is a welcome move as it will ease any possible pressure that consumers may face to conclude a deal.
"It will allow them more time to do more research into the products they are intending to buy, and will enhance the quality of the decision," he added.
The consumer watchdog received one matter relating to the issue of the free-look period by banks between Jan 1 last year and April 12 this year. The complaint was regarding the consumer's entitlement to the period.
It was a non-filed case, which means that the consumer may have decided to deal with the vendors directly after seeking advice from Case.
Mr Seah added that the cost to HSBC of increasing the cooling-off period will be minimal and will, at the same time, improve the service.
However, Securities Investors Association of Singapore president David Gerald said that even though a longer cooling-off period is helpful, investors should make an informed decision before committing to an investment.
He said: "An investor should not act on rumours or hype. An investor must always make an informed and educated investment decision and not make a decision based on emotion or greed."
DBS Bank and OCBC Bank have dropout rates of 1 per cent and 2 per cent respectively during the cooling-off period, and have no immediate plans to increase their free-look periods.
Mr Brandon Lam, senior vice-president and head of consumer investment and insurance products at DBS Bank, said: "It is more critical to have a robust sales process that establishes the needs of the customer, ensures that the right solution is presented, and that the customer understands the product."
DBS has its supervisors follow up with vulnerable customers within three days to ensure that they understand and are comfortable with their transactions.
Similarly, OCBC Bank's head of global wealth management Lim Wyson said the bank strives to help customers get it right from the start.
"We do this through simplifying our product documents and financial needs analysis process, as well as using visual graphics in our collaterals. Customers give feedback to us that they appreciate our efforts to replace technical jargon with plain English," he added.
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