When planning a loan or using another financial service, you probably assume that before you will be thoroughly presented all the terms of the offer and the best solutions. Unfortunately, you may find a dishonest seller who will talk you into a service that completely does not suit your situation or even expose you to serious financial losses.
What is misselling?
The word misselling comes from English and literally means misplaced sales. This concept appeared in Great Britain in the 1990s and initially concerned the sale of loans combined with insurance policies. Such policies were very expensive and in many cases did not provide any protection.
The sale of such products was therefore misguided because it did not meet the customers’ needs and in addition exposed them to unreasonable costs. Today, however, in response to the question of what misselling is, there are many more irregular actions taken against consumers. This phenomenon may consist of:
- sales of financial products that are not suited to the needs and capabilities of customers,
- deliberate misleading customers,
- lack of reliable information on the sale of financial products, e.g. on all costs of the loan.
The above practices are on the verge of law and can be described as unfair behavior towards clients in order to achieve the highest possible profit.
Misselling and legal issues
The problem of misselling has been noticed in Poland many years ago, among others on the basis of numerous customer complaints about the activities of financial institutions, which they reported to the courts and the Office of Competition and Consumer Protection.
In order to provide them with better protection, amendments were introduced in 2016 to the Act of 16 February 2007 on competition and consumer protection. They relate to the phenomenon known as misselling – the Act in Art. 24 expressly prohibits the use of so-called practices infringing collective consumer interests such as:
- offering consumers financial services that do not meet their needs,
- sale of financial services in an inadequate manner to their nature,
- failure to comply with the obligation to provide clients with reliable, true and complete information about a financial product.
Financial institutions are subject to specific sanctions for violating the above prohibitions, even fines up to the equivalent of 10% of turnover.
How does misselling work in practice?
We can talk about misselling when the seller intentionally misleads the customer or hides important information from him in order to effectively sell him a product that does not meet his actual needs. In the case of financial services, it is not difficult to persuade you to use a given offer.
Sellers use here insufficient knowledge of customers about the principles of operation of individual solutions, especially those that are new and still not sufficiently widespread on the market. It is also quite easy to sell an unnecessary product to people who are in a difficult situation and are looking for a way to solve their problems.
A client who needs cash for rape will probably agree to use an additional service to increase his chances of getting a loan. In practice, you can meet with misselling both in a small financial intermediary office and in a branch of a reputable bank.
Unfortunately, the financial institution itself is not always behind dishonest practices, but simply a person who wants to earn the highest commission will do everything to achieve this goal, even by committing unethical actions.