Ritika
If you are planning to invest in mutual funds or buy an insurance policy, then there is good news for you. Banks cannot sell you the wrong fund or policy by luring you. Market regulator SEBI has increased strictness on banks for this. The market regulator has sought data from banks on sales of their mutual fund and insurance products.
This step was taken after receiving complaints
The market regulator has taken this step after receiving several complaints. In fact, many public and private sector banks have their own mutual fund asset management companies (AMCs) with majority stake in them. It has come to the notice of SEBI that banks sell mutual fund schemes of their subsidiaries by giving wrong information to the customers. In view of this, SEBI has sought various types of data from banks.
Sell forced investment products to customers
Financial advisors say that Sebi has asked banks for sales data from their own mutual funds and insurance products. If banks sell the product of their mutual fund company or partner company to their customers by telling them better, then the sales figures will reveal its entire pole. If the sales of that mutual fund are higher than the other offices of the banks, then it means that the banks sell them by luring the customers. This is against SEBI rules.
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Also asked for details of fee and commission
The provision of maximum 2.25% fee in mutual funds has been made by SEBI. This also includes the agent’s commission. It has been seen many times that in the greed of hefty commission, the concerned employees of the bank sell the products of the mutual fund company or insurance company associated with the bank to their customers. Whereas they are harmful to the customers.
What is selling products by swindling
The process of selling a product at a loss to the customer or investor as advantageous is called misselling in financial language. Shares are considered a long-term investment and carry high risk, but if the agent or bank employee sells it in the name of higher returns in the short term, then it is called miss selling.
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Similarly, if customers are asked to invest money in shares or mutual funds with the allure of higher returns than FDs, then this is also a miss selling because FD is a safe category investment product and shares are very risky. There can be no comparison between these two.
How to avoid choosing the wrong product
- If the bank asks you to buy only its linked mutual fund schemes or insurance products, consider it a danger signal.
- If there is a claim of waiving commission or not charging any kind, then be alert as the fee is hidden in your investment
- FDs offer fixed interest and offer higher returns than any other investment. Risk on your investment is indicative of higher risk.
