MIS-Selling of Financial Products: A Review

Abstract

This paper describes the mis-selling of financial products as it has been documented in the literature. The evidence pointed out that agents are maximising their own income at the cost of selling unsuitable financial products to retail investors. It is well documented that non-transparent product structures encourage mis-selling by agents and advisors. To structure the discussion, literature review is segregated into three parts: (1). Mis-selling & Misconduct in Financial sector. (2) Commission structure & Impact on the quality of advice. (3). Impact of Regulatory reforms: Commission and Disclosure. After reviewing the literature it is clear that there is a requirement to study the regulatory reforms like changes in the commission structure & advisory model and their impact on the retail financial sector. It will help to curb the large scale mis-selling of the financial products in India.