Money does not come easy, so it is understandable for anyone who is not financially stable to try and make ends meet. However, the finance industry is no stranger to scams; while most people would opt to earn money honourably, there are a few who prefer to make a quick grand by conning people into investing in superfluous products or services.
In 2015, a British retail and commercial bank got involved in a PPI mis-selling scandal that cost them billions of British pounds. The said financial institution mis-sold Payment Protection Insurance (PPI), which was supposed to be sold to cover for payments that a borrower is not able to make due to some unavoidable circumstances like illness or unemployment. Instead of sticking to the rules, the bank surreptitiously sold the insurance through lending products such as credit cards, car loans, and home mortgages.
What is financial mis-selling?
Mis-selling is a fraudulent act on the part of an agent, seller, or institution that insists a customer should buy their products and services because these have the features or functions the latter needs. It’s the act of providing advice or information about a product or service that is actually unsuitable for the customer/the customer has no use for.
A good example for mis-selling is when you are looking for an insurance product that includes hospitalisation as one of its benefits. An insurance agent will tell you that their product has everything you are looking for and successfully sells you such a product. Then, once you have given the initial payment, gone home, and checked the documents, you realize that there are no hospitalisation benefits at all. The agent mis-sold you the insurance policy. This is one of the most common types of financial mis-selling.
Payment protection insurance mis-selling
PPI is mostly offered in banks, by insurance providers, and third-party brokers. With the institutions providing hefty incentives to drive the sales of this financial product, the brokers would earn more from the commissions and profit-sharing compared to just selling a standard loan.
For them to sell the product, the brokers would not be as detailed about it when providing information to customers. So, they would often leave out the actual cost of the insurance and only offer such information when asked. They would twist the truth and inform the borrower that the product comes with the loan that the customer needs—even if it does not.
Mortgage and endowments mis-selling
Mortgage mis-selling happens when the borrower is encouraged to switch lenders without being told about the penalties and costs they might incur during the process. The borrower could also be advised to get refinanced later on after being granted a fixed-rate mortgage.
There are also instances when the broker advises a borrower not to provide any proof of income, or to declare a higher income in order to get a bigger loan amount.
Investment product mis-selling
Even though the customer would discuss their view of the risks involved when investing, the broker will still sell them an investment product that they are not completely knowledgeable about and does not match their needs. This is what happens in investment product mis-selling.
Self-invested personal pension mis-selling
A SIPP is a retirement savings plan that provides opportunities for individuals to invest in mutual and exchange-traded funds, stocks, and bonds. Retirees can have multiple products and investments and can manage their own pension fund, and have control on their investments. However, SIPPs are risky and the fees are more expensive than the usual. So, they aren’t usually recommended, especially to vulnerable, inexperienced investors.
In one incident, some individuals were ill-advised to transfer their company-sponsored retirement savings into an SIPP without being informed of the possible risks. They were not told that SIPPs are ideal mostly for experienced investors.
If you’ve had a similar pensions mis-selling experience, contact your provider’s internal complaint department. As required by law, they should respond within eight weeks. Should the firm fail to send a reply, you can file a complaint with the Financial Ombudsman within six months from the time of the mis-selling occurrence. SIPP or pension complaints to the Pension Ombudsman must be done within three years of when you became aware of the mis-selling.
Do not hesitate to make a claim for what has been unrightfully taken from you through mis-sold investment or any other mis-sold transaction. The financial claims solicitors at https://www.claimexperts.co.uk/ can guide you and help you to take back your investment or your pension. Contact them to know what complaints you can file against the broker or provider who mis-sold the financial product or service to you.
