Great Briton may be economically strong yet many banks and financial institutions let their customers down by misselling them inappropriate financial products.
Cases for missold investment bonds run in millions and in almost every British household. This article makes an attempt to see what are the reasons behind, banks and other financial companies, misselling their portfolios.
Seeking Numero Uno Position By Misselling
UK is just one of the many countries in the International jungle of finance market where misselling financial products, is quite rife & rampant. The scene is appalling more so due to financial crisis in the past which furthered fulled unethical misselling in the finance industry.
Banks, financial institutions and related financial agents try to systematically sell high risk investment products such as investment bonds. These investment bonds fetch higher commissions in comparison to low risk investment products that are more common among investors’ due to low risk involved. When investors complain about their cases of missold investments, invariably the financial institutions claim doing nothing wrong.
Banks and financial institutions in the quest to capture Numero Uno position in the market place try to expand their customer base as much as possible. In doing so they try to missell investment products which may not be suitable investment options for the customers.
Selling or Misselling Pressures
Another root cause of misselling investments, such as missold investment bonds, is the constant pressure by bank and financial institutions on their agents to sell, sell and sell. This selling pressure is ever increasing on personal bankers and branches resulting in bank employees and financial agents approaching more and more customers. In many cases, agents approach their own friends, relatives and family members, to get their sales figures meet their monthly/yearly targets and inevitably they resort to misselling them investment bonds and other financial plans.
Less Administrative Staff
Already under financial burdens, some banks and financially institutions try to cut expenses by delaying hiring their own staff and instead hire independent financial advisors on commission basis thus eventually passes on the selling pressure to them. It would be wrong to say all financial advisors resort to misselling however those looking to earn quick money and lot of commissions try to sell financial products which have high commissions leading to missold investment scenarios.
These financial advisors and agents have varied professional and educational backgrounds and even banks and financial institutions neither having inclination nor time for providing basis marketing training and strategy except related to selling their portfolios. To earn higher commissions, agents and financial advisors avoid suggesting low commission financial products and pushes investment products which have higher commissions attached.
In conclusion, the best method to avoid having missold investment bonds is to be not only aware of investment risks but also be updated on latest investment plans available in the market. Financial Conduct Authority, regulatory body in the United Kingdom, is very active in this field and have even fined companies in the past such as recent fine of £30m to a company for misselling to its customers.