misselling credit card – My Money Streets

Step by step guide to buy ULIPs
Few days back I came across a news report on Rahul Dravid being conned by an entity on investments. A firm promised him more than 40% return on investments and duped him of crores. While I don’t feel surprised when I hear my housemaid or my neighbor aunty are miss-sold a chitfund or endowment plan, Rahul Dravid, the ace cricketer known for his perfect calculation on field being conned, came as a big shocker to me. Shocked to know that a person who is a millionaire or even a billionaire on his own right who can afford a personal Charterd accountant or even a team to take care of his finances can fall in this trap. The point to note here is anybody can fall into this trap. These frauds in the name of ponzi, misselling wrong products and false promises has been existing since long. It is likely to continue in some form or the other. The point we should focus here is to catch it before it traps us. These wrong investments have a patern to it. If we learn the pattern and ask few questions, we can save ourselves from being cheated and a lot of mental agony along with it. Let me give you some points to ponder over.

It should strike if someone guarantees you high referral bonus, guarantee high returns, or kickbacks on your investments etc. The best way to identify and handle these, is stick to wellknown finanicial products, well known financial advisors and brokers and well known financial institution. Though there are numerous online frauds available, these fraudster may knock your door and call on your cell-phone, to give you a more genuine feel to it. Financial fraud is not limited to running away with money, it inculdes misselling as well. Be clear about investment objective and expected return. Do little bit of calculation and follow few steps to safeguard yourself.

These are the traps, however, there is no harm in double checking and being assured of you are not duped. Whoever is the seller few points you definitely need to check before you say “yes”

So, take few steps and varify –

1. Google it – if it is a genuine company, or even false, it will have a website or some online listing. If it doesn’t have no internet presence, don’t even bother looking at it.

2. Do a little search – if you find the company name, check for the results its throwing up. Check for reviews. Reviews will guide you a bit.

3. Ask for the business model – no, you are not getting personal. If you are asked to invest 1 lakh rupee and assured of a 50% return in one year, you must know the source of the return. Any fixed deposit in India will not give 10% return if bank rates are hovering around 7%. Equity related investments have a potential of giving higher return.

4. Dont be emotional fool – last week my young cousin had a query that if I would like to buy an insurance product from her, a specific product which is her target. She was told by her bosses that it was the best seller product. Mind you, I am talking about a very very reputed company. I felt helpless. I was astonished to see it was a high cost endowment plan. I really wanted to help my little sis. And she wasnt working with the insurance company, but the retail broking wing. So, I offered to buy some mutual funds worth 4 times her target, incase it helped her. But to my surprise, the company refused to consider it. If I were not aware of the product features, I would have simply bought the insurance to make my sister happy, which is nothing but highest level of misselling. My sister is matured and understanding 🙂 but dont comit this mistake.

5. Call on that toll-free no. – It takes few minutes. Whichever financial product you are buying, in the brochure you will find a customer care no. Call up and verify the commitment s your broker made it you. Tally the benefits. If it suits you and if it completely match, you are quite safe.

Read, google, compare and ask experts on forums like Quora etc to make an informed decision. This financial year has brought in many changes, look forward to sharing updates and insights on them. Stay invested Stay happy.

#Mis-selling is rampant in financial services and it spares none! Beaware and take decisions rationally. Here in this post we would focus on how they sell you wrong financial products and how can you fight it.

Financial literacy is important. Even more important is to know how to manage own finance. Be it loan, insurance, stocks, or simple savings account in banks, on a regular basis we need to deal with some decision making with our finances which defines our financial habits and saving behaviour. Many people are averse to discussing this important aspect “money” as they dislike numbers, or even hate to keep a check untill a major decision needs to be taken like tax saving, taking housing loan, or god forbid some medical emergency. The sales representatives of various forms like advisors, brokers or plain simple sales executives of the financial industry mints money during these emergencies without providing the right guidance for which they are paid for. Not only the less educated people, even financially aware people fall in the trap lured by bonus, rewards and false promises. Let us look at what are the common methods are used for misselling the products. Surprisingly in many cases the buyer is partially aware that product is not right for them. Let us look at 5 common ways of getting conned.

1. Buy an insurance to open new bank account – without taking the name, this is a common feature in India’s largest public sector bank. Public sector bank account pass book is often used as a address proof. So, when somebody especially new in the city tries to open an account in the branch of this Bank, he/she is politely directed to the branch manager, where the applicant is almost forced to buy a life/health insurance in exchange of a savings account. It has been a personal experience in large city as well as smaller towns. Besides account opening this method is openly encouraged by seniors in the system for any work/favor a customer asks for (within the scope of banking services )

2. Hiding the hidden charges – This is also common, cold callers luring potential customers with half information. It is seen that despite probing multiple times, the executives dont give out details. And, the customer only comes to know once he start using the product, hence, trapped for short time or for ever. It is common for life insurance and credit cards.

3. Emotional black mailing by family and friends – Rampant in life insurance industry, driven by incentive model, the large number work force is part-time advisors, highly crowded by house-wives, retired professionals or somebody looking for an extra income. They often sell highly incentivised product for quick buck without bothering about the need of the person. Being family or friends, buyers often give-in to save the relationship or motivate them. This emotional buying cost them dearly. They mostly don’t even go back and complain even unsatisfied.

4. The vanish act – Selling a product takes the seller closer to his target. Spilling the beans about the risks involved or fee structure can take them one step back and a 10 pitches back. To avoid the hassle, they simply sell the product to never return to service their customer.

5. Not explaining the complex products – They are in a hurry or simply they don’t understand the product. Often, they sell complex products like ULIP plans, endowment plans even pension plans without taking out time to explain the details unless asked for.

Take accountability

Though regulatory bodies like SEBI, IRDA doing their bit, it is important for every individual to basic research on the product you are buying. The basic Google search on the product can throw up a lot of information on the product. The aggregator sites on insurance, loans, deposits can further help with additional information and best rates.

Ask the broker for written guidelines on product usage and costs involved , especially on insurance and credit cards. Do read the terms and conditions, however pathetically time consuming it may feel. It is your duty to do double check as much as it is the with the sellers. And don’t buy the product if you find discrepancy in what the seller said and mentioned in the written document.

If any official/broker/advisor sell you wrong products, do reach out to consumer grievance cell.

Beware. Take charge!

Category: misselling credit card

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