Financial Mis-selling is more common than we think and despite regulators taking stringent action
continues to thrive. It refers to action when you get unsuitable advice, concealing the risks
involved, and don’t get enough information to make a prudent choice.
However, you can avoid the traps with these tricks and prevent yourself from being a victim. Let’s get
Don’t Believe Everything That’s Said to You
Agents and relationship managers are expert in cooking stories that please the ear. While not
everyone is the same; it’s better to adopt due diligence and do your research before investing.
Be it an insurance solution, mutual fund, or any other financial instrument; you need to take time to
understand the product, understanding its working, the associated risk, and then commit. Note that
every financial instrument serves a specific purpose, and it must align with your needs. Proceed if it
meets your requirements.
Read the Fine Print
Another essential tool that can help you keep the menace of financial Mis-selling at bay is to
thoroughly read the terms and conditions. As they are written in small letters constituting many
jargon, most tend to ignore them. However, this can be a cause of significant heartburn later.
If you cannot understand any clauses, terms, or jargon, it’s better to seek professional help. Working,
fees and risks are well-written in this section. However, as people tend to omit it while investing,
they couldn’t help but rue their decisions later.
Don’t Sign Blindly
Your sign is your consent, and therefore, it’s essential to adopt caution while signing on forms. It’s
assumed that you have signed knowing well the terms and conditions of the product and its
associated risk. Contesting that you have been mis-sold can become pretty difficult later with your
authorised signature on the paper.
It’s common to sign on spaces marked by agents and advisors without actually reading the entire form. You must avoid it at all cost and make sure whatever is being promised to you is given in writing.
Check if the Claims is Too Good to be True
If any claim is too good to be true, then in all probability, it’s a false one. Find out how relevant is the claim and the rationale behind it.
For instance, if a claim is made that an HDFC equity fund offers a 20% annualised return, then in all
the probability it’s not true as equities tend to deliver returns in double-digit only if they are held for a
long period, 7 to 10 years. At the same time, expecting an equity fund to deliver 20% returns is
nothing but a fallacy.
Note that while these measures can mitigate the risk of financial Mis-selling, they don’t completely
eliminate them. Patience, coupled with discipline, can help you make an informed choice. Also, if you
feel if you have been mis-sold, approach the concerned authorities, intimate them about the
problem and seek recourse.