Top Five Ways to Avoid Financial Mis-selling
By Elaine Walker, Director at Legal UK Services
Mis-selling scandals of recent years have opened many consumers’ eyes to the risks of entering into financial products and agreements that they do not fully understand – yet the risks of being mis-sold a product have not disappeared. We are in your corner and the team here at Legal UK Services want to stop you being mis-sold financial products. If you are thinking of taking out a financial product or service, there are steps you can take to protect yourself from being mis-sold an agreement.
Ask the right questions.
Doing some research on the product/service/agreement that you are entering into will help you get to fully understand it, and asking the right questions can ensure that there are no hidden surprises down the line. Some questions you might want to ask could be:
- Is the product approved by the regulator?
- How long will you be tied into this product/service/investment?
- What are the terms? And how much flexibility is there? (For example, if you want to access your money early, can you? Will there be any penalties for this? Can you take a payment break if any unforeseen circumstances arise?)
- What are the risks associated with this product/service?
- Can you afford the product?
- Are there any other products that might serve you better? Ask this question to different providers, as products might vary.
- What level of support does your provider offer? Are there any charges for advisory services during the lifespan of the product?
- Are there any associated fees such as set-up charges, exit fees, platform charges and are prices and quotes inclusive of VAT?
If you are making an investment, you might also wish to ask the following questions:
- Will you be kept informed of your investment’s performance? And how will this be done?
- What are the best / worst results that you can expect?
Do not make decisions in haste.
Even if a financial product is only available for a short period, do not be pressured into a snap decision, as this might cause you more problems in the long run. A reputable provider/salesperson will understand and respect the need for you to do your due diligence and make the right choice. Buy now, pay later is a prime example of this. In a climate where the cost of living is soaring, it is all too easy to click a button and defer payments without fully considering the financial implications. Can you afford the repayments? Will it affect your credit score? Are there any other knock-on effects that you don’t know about?
Only buy a product that you fully understand.
This is a golden rule when it comes to avoiding mis-selling. However, the financial world can be littered with jargon and if this is something that you are not fluent in, then getting a second opinion from a financial advisor can offer you the reassurance that you have selected a suitable product. It will also help to educate you about how to select a product and what exactly you should be looking for. The MoneyHelper website has useful information about how to choose a financial advisor.
Do a background check on the provider.
Some banks, building societies and investment brokers will be household names and you can be confident that you can trust them. However, if you are entering into an agreement with a new or new to you provider, be sure to do your homework. Be sure that they are registered with the Financial Conduct Authority (FCA) and that they are on the Financial Services Register. Also check whether they appear on the FCA Warning List. These can both be checked using the FCA’s online tools.
If it sounds too good to be true, it probably is.
Financial sales representatives will most likely be working on a commission pay model so, it is to be expected that they will want to focus on the positives of the products and services that they are selling. Make sure you explore the potential risks of the product and do not fall into the trap of listening only to what you want to hear.
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