Customer claims in financial services contracts in Singapore: enhancing common law rights with statutory protection

Abstract

ABSTRACT The Global Financial Crisis of 2008 (GFC) drew attention to the importance of customer protection in financial services contracts. In Singapore, customers who lost money in the GFC have not been very successful in suing financial institutions under the common law. This is due, in part, to tightly drafted contracts and clauses designed to protect the interests of financial institutions, such as non-reliance clauses, which might also affect rights in tort and equity. The principle of freedom of contract means that there is limited policing of contractual clauses by the courts, the chief control in Singapore being the test of reasonableness under the Unfair Contract Terms Act. Post-GFC, customers have been given enhanced statutory rights to sue financial institutions for damages under the existing Financial Advisers Act, as well as private law rights of action under the Consumer Protection (Fair Trading) Act, which had previously not applied to financial transactions. This article examines the strength of the customer’s legal position in a claim against a financial institution under common law and statute, and assesses the extent to which the new statutory rights potentially improve the customer’s position.