Mis-selling of financial products by banks is on the rise. There has been an increase in the number of complaints filed with the banking ombudsman on mis-selling by banks. Mis-selling refers to selling a financial product which doesn’t match customer’s financial needs or not disclosing all relevant facts to make a wise decision. Many people not knowing if a financial product meets financial goals or not, end up making an unwanted investment. In this blog, we will discuss what you must do if you are mis-sold financial products by banks.
Financial mis-selling is an unfair business practice where banks and financial institutions sell financial products, which do not meet financial needs.
Mis-selling of insurance products by banks is very common. The main reason why insurance is being mis-sold by banks is because they have tie-ups with insurers called bancassurance. To help the victims of insurance mis-selling, IRDA has a free look period. During the free-look period, if you get to know that the insurance plan which you have bought does not meet financial goals, you can return it. Usually, the free-look period is for 15 days. Free- look period starts from the day you receive the policy documents. If you are mis-sold insurance by a bank, you can return it within the free look period and get a refund.
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Along with insurance, banks also mis-sell fixed deposits. The best thing to do when you have been mis-sold fixed deposits is premature withdrawal. You will be charged a small penalty on premature withdrawal. But, premature withdrawal is not possible if you are mis-sold fixed deposits from non-banking finance companies (NBFCs). This is because most of the NBFC's don't offer the facility of premature withdrawal. The NBFCs which offer premature withdrawals will allow this only at quarterly intervals and you will be charged FD closure penalties of 1-3%.
Balanced mutual funds are also known as hybrid funds. Balanced mutual funds invest both in equity and debt. If you are mis-sold balanced mutual funds, you can opt for immediate redemption. There is a problem as most of the balanced funds charge an exit load of 1%. If your exposure to equity has increased with balanced funds and if you are not ready to take the risk on investment, a better option would be to redeem and bear the exit load.
See Also: How to File a Consumer Complaint Online?
If you are mis-sold gold bars or coins by the bank, do not sell immediately. Immediate selling has a huge impact. Banks will not buy back the gold coins or bars sold by them. If you sell to jewelers, they offer 5-10% less than the market price.
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