Mis-selling by your banker is one scenario which can arise if you are not careful with your finances. Trusting your banker blindly is a strict no-no, particularly when it comes to your financial planning and investments. Actor Suchitra Krishnamoorthi’s story is a case in point.
Suchitra Krishnamoorthi got married to Shekhar Kapur in the year 1997 and they divorced after about a decade. She got a few crores as part of the alimony for generating income for her daughter and herself. The bank lured her by offering returns of 24% per annum and Krishnamoorthi, blindly trusting the banker, signed a POA, handing over Rs. 3.60 crore and this effectively gives sanction to the bank to use the money of the client as it pleases. The money was now made available for both investment and insurance purposes and a majority of it was deployed via ULIPs and there was constant shifting between multiple schemes in a bid to enhance the commissions.
After about 5 years, there was a direct loss of a whopping Rs. 83 lakhs from the investment and the bank had already got Rs. 29 lakhs as commission while Rs. 8 lakhs was lost from one insurance policy. There was a decline of valuation by Rs. 10 lakhs in another insurance policy. There was Rs. 58 lakhs interest on the home loan earned by the bank and Rs. 4.5 lakhs in STCG tax which included the IT department’s penalty of Rs. 1.85 lakhs on account of non-disclosure of gains to the client by the bank. The bank did not go ahead when she desired the closure and surrender of her insurance policies, stating that they did not have tie-ups with Tata AIG any longer. Her appeal was not entertained at the lender’s economic offences wing. SEBI, the market regulator, then intervened and discovered that the client’s money was deployed across 38 different funds, most of them not being in sync with her risk profiling.
HSBC received a show-cause notice from SEBI, seeking an answer on why it should not be banned for fraudulent churning from the securities market based on Krishnamoorthi’s complaint. Eventually, HSBC settled the client’s losses through an amicable settlement after she fought for 4 years. If this is the way a major celebrity can be harassed with her money, imagine what could happen to any of us? Lack of financial awareness can cost you hugely as Krishnamoorthi found out and HSBC merrily cheated her for 5 years by promising returns that were too good to be true.
Mis-selling by bankers is more common than you think with even investment gurus like Ravi Subramaniam, the author of If God Was a Banker and I Bought the Monk’s Ferrari, concurring that relationship managers and banking firms often resort to cross-selling in a bid to boost their commissions and revenues and hence it is necessary for customers to be very careful in their dealings. Customers who are vulnerable and gullible are often sold products on which banks and agents earn higher commissions. Due diligence is a must and so is alertness while dealing with bankers. Also, do not trust your banker to be a good financial planner who has your best interests at heart. Go for someone experienced who already handles finances for people you know and trust instead.
And in case you too are a victim of mis-selling; you can reach out to Insurance Samadhan. Our experts from the insurance industry will represent you with the insurance companies and will help you to find adequate redressal for your grievances.
At Insurance Samadhan, we find solutions to any insurance-related issue that include lapsed insurance policy, assistance in case settlement, claim recovery in case of insurance fraud, assistance to NRI's in servicing their policies, and much more.