Bankers are undoubtedly biggest mis-sellers across world. But the latest Rs 400 crore scam by CITI bank manager shows – in mis-selling even sky is not the limit.
Bankers are ‘BHAYANKAR’ Mis-Sellers
Way back on June 6th, 2008, one of the employees of Kotak Mahindra Bank, Jaipur posted a fake letter to the bank itself that the bank is under the target of terrorists and a bomb would explode in next 4 days. When this employee was arrested, he confessed that he was under severe TARGET PRESSURE and he was not able to meet his on time. Hence he thought that since the bank would remain close for a week due to security purpose, he would get time to meet his target. This is the reality as far as Banks and National Level Financial Intermediaries are concerned.
2. Since, the employee carry a SO CALLED BRAND name, they just make Investors fool by making any false commitment.
3. Since the employees get the remuneration and incentives from the Management and any good performance would mean their increment or bonuses, they hardly care for investor.
4. The attitude for the Banker is too short term and hence they don’t feel scared cheating the investors. In fact, we have not seen many banker carrying the same mobile numbers for more than a year.
Must Read: Confession of a mis-seller (Business Today)
Please find the few of the Sales Pitch used by banker to make you fool.
Insurance Mis-selling Tactics
- Selling a Regular Insurance Plan as One time Investment Plan so that he get maximum incentive.
- Selling an Insurance Policy as an Fixed Deposit and misleading investors by saying that it is a Guaranteed Return Product.
- Selling ULIP before you actually avail any other service like Home Loan, Mortgage Loan etc.
Mutual Fund Mis-selling Tactics
- Churning the Portfolio would give you better return.
- Asking Investors to invest in new funds as New Fund is recommended by their so called Research Team.
- We get reports from our Management about the Future movement of Market and hence we can maximize your return.
- Offering Loan so that you can invest in Mutual Funds. Double benefits for Bank.
Banking Product Mis-selling Tactics
- Offering Credit card as you are a “Preferred Customer”.
- Opening Savings Bank account by saying Zero Balance Account. But they don’t disclose that after a period of time, huge charges are levied as Minimum balance is not maintained.
- Selling GOLD Coins which are very expensive in comparison of Market Rate.
- Giving personal loan saying that interest rate is at 9-10% but it turns out to be 18-20%
Must Read –bank locker the games bankers play
Financial Planning Mis-Selling Tactics
- No comments on this as they don’t even understand what is Financial Planning
These are just few tactics which we could list down though the list in endless & everyday it increases. We advise you to deal with such an advisor who can carry long term vision with you and would be happy when you grow rather than being happy when an organization grows.
Also Read: Metlife Monthly Income Plan – Mis-selling
Quotes & Sound Bites on Mis-selling
RBI Bulletin “It is genuinely believed that the recent financial crisis is largely precipitated by rampant financial illiteracy or the lack of transparency that financial literacy is supposed to bring into the model code books of financial service providers. We have a plethora of instances of mis-selling and customers undertaking financial contracts without understanding the risk import of such transactions leading to unforeseen volatility and unsustainable business.”
Romesh Sobti, Managing director and CEO, IndusInd Bank Ltd “There is endemic mis-selling in the system. The issue is that there is no sales culture in banks. As a bank, for instance, we have thousands of people from different institutions. They have different ways of selling. Somebody who comes from a foreign bank has a different way of selling. Public sector banks have a different way of selling. The question is: Do we have a common approach? There must be manualized sales processes with stringent guidelines on what you will sell and what you won’t. You must have guidelines and training. You must have surveillance and you must penalize those who mis-sell. If you are selling insurance, don’t position it as a fixed deposit product. The whole system is based on incentives. The point is that if you sell insurance, you must look at lapsation. Lapsation rates are a clear indication of mis-selling”
Must Read – LIC Wealth Plus NAV – are you feeling cheated?
Mr KN Vaidyanathan, Executive Director SEBI “It’s true that banks alone enjoy the trust of investors and some of them have been abusing that trust. Maybe the fund distribution will be done by a different set of banks, provided the fund companies get their product right.”
HN Sinor CEO of Association of Mutual Funds In India(AMFI) “The most predominant problem is the mis-selling of schemes by distributors. Then you have the AMCs stating that they find it difficult to control them. I have been a victim of mis-selling myself.” 🙁
Be-Aware & Beware
Would you like to share your experience on mis-selling? (Mis-sold or Just Survived)