Mis-selling

It takes several forms: exaggerating benefits, hiding charges or risks, recommending a product that does not fit the customer's needs or means, bundling unwanted extras, or pushing vulnerable people into a purchase. Incentives often drive it, for example when pay depends on sales volume. Well-known cases include payment protection insurance in the UK, which led to compensation of tens of billions of pounds, and mis-sold pension and unit-linked policies in several countries. Detection relies on call recordings, customer surveys, complaint trends, early policy surrenders and unusual sales patterns. Responses include suitability checks, better scripts, incentive reform and redress to the customers affected. A single mis-sold product can generate years of claims, and the redress bill can exceed the profit the sales earned.

A bancassurance sales team sells a savings-linked insurance product to older customers, telling them it works like a fixed deposit. After a rise in early surrenders and complaints, compliance reviews recorded calls and finds the product's risks and lock-in were not explained. The firm stops sales, refunds the surrender charges, retrains staff and ends the sales target linked to the product.