Friday, December 25, 2009

CPF Scam?

A recent report on the straits times that details how consumers should be warned against this kind of CPF Scam. I guess in this case, both CPF fund members and the financial advisers are in collusion to get some cash back from the CPF money which they cannot touch. It is pretty similar to those of the HDB cash back practice amongst real estate agents that was rampant over the past few years.

CENTRAL Provident Fund members have been warned they face fines of up to $10,000 if they take part in a scam that has just come to light.

The CPF Board issued the stern warning after a report in The Straits Times on Thursday exposing a practice adopted by unscrupulous financial advisers who plunder members' CPF investment funds.

Some CPF members who are desperate for fast cash have agreed to take part in the scam, which involves the rapid buying and selling - or 'churning' - of investment products using CPF money.

The members dip into their retirement savings to buy and sell investment products under the CPF Investment Scheme - and in doing so they become eligible for cash rebates used as a carrot by errant financial advisers. The advisers get to pocket healthy commissions.

CPF rules prohibit members from pocketing such cash rebates. All gains or rebates from CPF investments must be put back into members' CPF accounts, to ensure they have enough for their golden years.

A CPF Board spokesman said: 'CPF members found guilty of working with errant financial advisers to pocket cash rebates which amount to premature withdrawals of CPF monies may be fined up to $2,500. For second or subsequent convictions, the fine may be up to $10,000.'

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