This is how bad misselling is in overseas property investment

Posted on September 4, 2012 · Posted in Rob Pelling - Blog

The article below is a very accurate explanation of why misselling was rife in the regulated areas of financial products, however it also highlights why it is even worse in the unregulated area of overseas property investment.

Canary Warf

Image by RaK’n’RoLL via Flickr

Martin Wheatley, managing director of the Financial Services Authority (FSA), has announced that he wants to see an end to mis-selling created by sales incentives.

Mr Wheatley said that poorly designed incentive schemes too often result in customers being sold products they do not need or cannot use, while boosting the earnings of the salesperson.

Which? calls shake-up of banking culture

Richard Lloyd, Which? executive director, said: ‘The findings from the FSA confirm our own view that most banks have incentive schemes that prioritise sales over service. This has driven mis-selling and has led to serious failings for consumers. As the FSA themselves say, this must change.

‘It is clear that the light touch regulation of the past has not worked. We want to see the FSA rigorously enforcing the rules and taking tough action against those banks that continue to let their customers down.

now set to be the biggest financial scandal of all time. There must now be a fundamental shake up of banking culture and a return to banking for customers, not bankers.’…More at FSA targets bank incentives that lead to mis-selling

So why is it worse in property investment overseas?

We do believe that the conditions for misselling in overseas property investment are rife compared to even these regulated problems which are seen as severe.

These instances of misselling were in regulated environments where the salespersons had salaries and careers. In overseas property sales, a lot of sales reps have no formal training, no salary, regulation or careers. They are often commission only sales forces trained only by product providers.

How we are different

At Davenport, it is our regulated approach that seperates us as a company and ensures that our customers have clarity and after sales service.