Mis-Selling Saga: Lies Bank RMs Tell You To Meet Targets

Having a dedicated bank relationship manager (RM) is often seen as a privilege, but mis-selling turns that privilege on its head when customers of these so-called premium services end up victims of bad financial advice. We tell you how and why it happens and what you can do about it

- Meghna Maiti

After his retirement, Ajmer-based Prakash Singh, who did not want to reveal his identity, wanted to invest a lump sum of ₹40 lakh at age 60. He intended to put the money in fixed deposits (FDs) to benefit from the high deposit rate for senior citizens.

However, when he approached his private bank's RM with the request, the latter persuaded Prakash to invest in a “special FD” that came along with an insurance coverage. The RM convinced him that the product would give guaranteed returns higher than that offered on regular FDs and also showed him proof of past returns. It was only later that Prakash realised that he was mis-sold a unit-linked insurance plan (Ulip) under the guise of a “special FD”.

Ajmer being a small city, with only one Securities and Exchange Board of India-registered investment advisor (Sebi-RIA), Prakash's financial advisory options are limited. Even otherwise, many investors depend on their RMs, who keep calling them regularly to build familiarity, often with unsolicited offers and financial advice.

Tiruchirappalli-based senior citizen, Aadhavan Narayanasamy, 72, and his wife, 67, who was battling with cancer, and visited their bank branch to renew their existing FDs, had a similar experience. Instead, they were offered a Ulip. They were lured with promises of returns exceeding 15 per cent. Fortunately, he consulted his financial planner before proceeding further, who advised him against investing in a Ulip. Tamil Nadu has a total of 53 Sebi RIAs.