Investments in Singapore are not covered under the Singapore Deposit Insurance Corporation (SDIC), but that shouldn’t scare you off from smart investing. Here’s what you need to know about why your money is still protected when you invest smartly with licensed platforms like Chocolate Finance.
If you own a bank account in Singapore, you’d likely have seen “SDIC” somewhere in the fine print of your statements. Well, that’s an abbreviation for Singapore Deposit Insurance Corporation, which is a third-party organisation that protects your deposits should the bank or finance company holding your funds go under.
While SDIC is important for bank deposits, it doesn’t apply to all financial products on the market. Investments, for one, are not covered – and that’s ok. We’ll explain why that is, how investor protection in Singapore works, and why your funds with Chocolate Finance remain secure even without SDIC coverage.
What is the Singapore Deposit Insurance Corporation (SDIC) and how does it work?
The Singapore Deposit Insurance Corporation (SDIC) is a private company designated under the Deposit Insurance and Policy Owners’ Protection Schemes Act 2011 to protect depositors and life insurance policyholders in Singapore. It does this via two schemes:
- Deposit Insurance Scheme (DI) – provides protection for bank deposits
- Policy Owners’ Protection Scheme (PPF) – covers life insurance policyholders
Under the DI Scheme, deposits made at banks and finance companies in Singapore are covered for up to S$100,000. This is a total limit that applies per depositor, per bank or finance company and not per account.
Should your bank or finance company fail, you will be able to reclaim your deposits, provided they amount to S$100,000 or less. Any sum exceeding this cap is not covered, which means there’s no guarantee you’ll be able to recover that portion of your deposit. Also do note the Singapore Deposit Insurance Corporation (SDIC) does not cover foreign currency deposits, including USD, in the event of a bank failure. This means that if a bank that holds your USD savings were to fail, your deposits are not protected by SDIC's deposit insurance scheme.
The fact the SDIC is capped at S$100,000 is less than ideal, but still, some protection is better than nothing. However, wouldn’t you rather have the entirety of your money protected?
In any case, now that you have an idea of how SDIC works, here’s why it doesn’t apply to platforms like Chocolate Finance, where your account balance is invested into short-duration fixed-income funds and money market funds, enabling you to earn the returns you enjoy daily.
How are investments protected in Singapore without SDIC?
SDIC is just one part of a robust framework overseen by the Monetary Authority of Singapore (MAS) that governs and protects the financial system here in Singapore. There are other measures in place to safeguard investors and their legitimate interests.
Providers of retail investment services must obtain approval from MAS in the form of a Capital Markets Services (CMS) license. In evaluating the license application, MAS assess several factors, including:
- Credibility and substantiveness of the business model and plan, and the associated risks
- Effectiveness of risk management and compliance controls
- Fund management track record and expertise, parent company and major shareholders
- Fitness and propriety of the applicant, its shareholders and directors
- Ability to meet the relevant minimum financial requirements
I won’t bore you with the details, but suffice to say not anyone can simply set up shop and start selling investment products here on our sunny shores! Under MAS’s framework, investors in Singapore are well protected from unqualified operators or improper business practices that put their funds at risk.
How Chocolate Finance protects investor funds
Investor funds are held separately
Chocolate Finance does not hold investor funds. This means that the funds in your account balances are kept separate from funds used to cover the platform’s day-to-day business operations.
Ring-fencing investor funds this way ensures that your account balance remains safe and available for withdrawal by you at all times – even if Chocolate Finance is acquired, closes down, or is otherwise unable to continue operating.
Additionally, this arrangement also allows for the entirety of your account balance to be protected, with no upper limit.
Neat. But where are investor funds kept? They are held by MAS-licensed custodians, HSBC Trustee and State Street Trust, under the management of fund managers appointed by Chocolate Finance.
Full MAS compliance and advanced security measures
As a licensed fund manager, Chocolate Finance strictly adheres to MAS regulations. Separating investor funds from operational funds, and holding them under custodian control is just one way Chocolate Finance complies with the regulatory framework that safeguards investors in Singapore.
Besides adhering to regulations, Chocolate Finance also takes steps to ensure your balances stay where they are supposed to – in your account earning returns for you, while being accessible by you at all times.
This is accomplished by employing state-of-the art technology on the Chocolate platform that includes:
- Singpass identity verification
- Two-Factor Authentication for significant transactions
- Real-time transaction alerts
- Vigilant monitoring
- Regular audits to safeguard your account
All of these ensure that your funds are not only growing with daily returns but are also protected by modern technology and strict governance.
No SDIC? No problem
Now that you’ve made it to the end of this blog post, I hope you have a better understanding of why not having SDIC isn’t a problem for Chocolate Finance customers like yourself. It’s simply not required as your funds are protected in other ways that are just as secure.
You can put your mind at ease and focus on more enjoyable things, such as daily returns of up to 3% p.a. on SGD balances, and up to 4.3% p.a. on USD balances.
But that’s not all! Did you know you can now earn miles as you spend with your Chocolate VISA debit card? That’s right! Up to 1,000 miles for the first S$1,000 spend, and then 0.4 miles per dollar thereafter.
Even better, with Miles Multiplier, you’ll earn additional miles based on your Chocolate Finance account balance at the end of the month!
Disclaimer:
Chocolate Finance is a brand of Chocfin Pte Ltd and is regulated by the Monetary Authority of Singapore. The views and opinions expressed on this post are solely those of the original authors and contributors as of the date of this post and are subject to change based on market and other conditions. This is for information only and does not constitute an offer or solicitation to buy or sell any of the investments mentioned. Neither Chocfin Pte. Ltd. (“Chocfin”) nor any officer or employee of Chocfin accepts any liability whatsoever for any loss arising from any use of this blog or its contents.
Please note that Chocfin does not guarantee the accuracy, relevance, timeliness, or completeness of the information provided on this post. The inclusion of any links does not necessarily imply a recommendation or endorse the views expressed within them. Chocolate’s returns are currently supported by a promotional 'Top-Up Programme', valid during the Qualifying Period and subject to terms and conditions. Past performance is not indicative of future results. All investments involve risk, including the risk of losing all of the invested amount and may not be suitable for everyone. This advertisement has not been reviewed by the Monetary Authority of Singapore.
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