DIY. How to get your money back

Expense Account, Mint

I’ve long thought about how to handle the barrage of mail and calls from readers, viewers, friends and family asking for help to deal with a financial problem. The most worrisome are those that complain about a case of mis-selling, that is, the sale of a financial product by a banker, agent or planner, through deception about the product’s features, what it can do for the investor, its costs and its ability to solve an articulated problem of the investor.

The temptation to pick up the phone and get the problem solved is high. But that makes it good for just one person, leaving the deeper problem intact. And the messy issue of becoming a power broker yourself in the process—and a part of the problem. The regulatory change will happen but it will take time. Is there another way to crack it for somebody who has been hit by a wrong financial product and is in financial distress? The good news is that there is a way out. I find that the people who complain fall into two buckets. One, those who want somebody else to fight their battles. Two, those who are willing to engage with the problem but are uncertain of what to do. This piece is for those who find themselves sitting in bucket two. Want to do, but don’t know how. Chances of redress are highest for those in bucket two. And the feeling of empowerment is something the entire refunded money can’t buy! I’ve now seen a few people who have had their money refunded by banks, insurance companies and art funds that used verbal lies to sell these products. Here’s a three-step guide to a Money Back do it yourself (DIY).

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9 billion pounds: UK banks’ compensation for mis-selling insurance

Expense Account, Mint

Last week just as my Twitter feeds got active with links to the British Lloyds Banking Group blinking in its fight with the regulator, the Financial Services Authority (FSA), and agreeing to a £3.2 billion (Rs 23,427 crore) provision to meet insurance mis-selling claims, we at Mint were following the PricewaterhouseCoopers story.Mint reported that while global investors (including pension funds from the US, the UK, Norway and Denmark) in Satyam were to be compensated by the auditor found guilty of not following basic rules of an audit, Indian investors will get not a paisa (http://bit.ly/j9Zbg2). The Indian story was about a lack of clear regulatory jurisdiction, archaic laws and the inability to take tough decisions against large corporations. The British story was about consumer agencies active enough to push the regulator into action, the legal system providing the platform to do this and the institutional will to actually go ahead with a decision to punish that will make markets fall.

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Of human shields. And the bank savings deposit rate

Expense Account, Mint

You and I are really important to the country. Did you know that we are the human shields that protect the nation? Against bank failures, against financial exclusion, against insurance exclusion, and against starvation of insurance agents.

While working on the Swarup Committee Report a couple of years back, I had reason to go fairly deep into the arguments presented by many parts of the retail financial market—the product people, the sellers, the regulators, the government itself. It was then that I realized the value of each one of us who finally has to pay for badly constructed financial products, skewed markets, one-sided contracts and regulatory gaps. If we were not going to buy the cost-heavy life insurance policy, for instance, how would India’s insurance penetration rise? The meat on the bone left for the industry and the sellers was meant to encourage penetration. Of course, we won’t go into why, after 50 years of meaty bones, the penetration is still nearer zero than 100. If we were not going to pay the obese commissions, how would lakhs of agents run their homes? If we were going to protest mis-sold products by our bank that never sleeps, some poor relationship manager was, gasp, going to see his career run aground. He would carry a lighter bonus sack home. Oh! My! God! (Yeah, I’ve been watching Friends on the 3G stick.)

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