Beware of Banksters

Beware of Banksters

Just came across an article giving details about the shocking behaviour of Banksters:

• Will this 79 year old man's protests move the Government & RBI to stop mis-selling by banks? - MoneyLife

At the outset, I must reaffirm what ought to be obvious: The incident described in the above article is a very clear case of mis-selling, virtually bordering on cheating.

This is yet another sad instance of the rampant mis-selling that is going on in the Financial Services industry. I've repeatedly heard instances of mis-selling by banks, mutual funds, insurance companies, share brokers, etc. And all this happens right under the noses of the regulators!

However, the focus of my blog post is something far more fundamental: What are you and I supposed to be doing in order to avoid becoming a victim in this manner?

Here are a few suggestions:

• When any service provider approaches you without any request from your side, ignore / ask him/her to get lost. You must not entertain unsolicited advice.
• If you choose to listen, ask the person concerned to give anything he says in writing on an official letterhead, with his/her signature, name and designation affixed.
• Never complete a financial transaction on the day on which the service provider approaches you - Postpone it by at least a single day.
• Check out as to which regulatory authority "regulates" the product that is being sold.
• Get to know about key details such as:
• Return OF Capital
• Return ON Capital
• Risk
• Liquidity
• Tax implications
• Nomination facilities
• Likely loss on trying to get out of the investment at a time of your choice

• A rather useful query will be to find out if the guy making the sales pitch has bought the same product (or at least ask him to give references of a couple of other customers of your profile who have bought the product). 

Thankfully, the original story has a happy ending - For all the hue and cry that ML Sharma came up with, after all, he did end up getting his money back:

• ML Sharma gets back his money!

That leads us to a couple of nice tips to recover money once you have goofed up:

• Approach all possible authorities - officially, in writing, with all relevant documents
• Use social media and generate publicity
• Generate publicity by directly going over to the place where the customers of the service providers are likely to congregate
• Approach the media with full details.
• Keep up the fight.

Regards,

N