Is it a bank? Is it a fund manager? Chocolate Finance meltdown highlights need for clear distinction

[SINGAPORE] For less-savvy investors, wealth investing platform Chocolate Finance appears to offer some sweet deals. But industry watchers warn that customers must always read the fine print.

On its homepage, Chocolate Finance dangles the prospect of “a new place for your spare cash”, with “happy returns” of 3.3 per cent a year on the first S$20,000, and 3 per cent annually on the next S$30,000.

Customers are also promised that they can withdraw their money any time, with no restrictions or penalties. And there is the Chocolate Visa debit card, which allows you to “spend with ease” and enjoy “probably the best FX rates in town”.

Some observers say the firm had marketed itself like a bank. While it did not call the cash that investors put into the platform “deposits” – as a bank would – customers would have to do some digging into the frequently asked questions page and terms and conditions to realise that they are actually buying investment products, and that their money would be invested into a portfolio of fixed-income funds.

To be clear, Chocolate Finance is not a bank, but a fund manager with a capital markets services (CMS) licence from the Monetary Authority of Singapore (MAS).