How to spot a mis-sold financial product

Are you concerned about someone trying to missell a financial product to you? Have you been on the wrong side of a financial mis-selling and want to avoid it happening again?

Then you need to know how to spot mis-sold financial products and how bad actors, through poor or downright negligent advice, can lead to major financial strain if you’re not careful.

This Spencer Churchill Claims Advice guide will equip you with the know-how to spot – and avoid – dubious mis-selling practices so your financial future stays protected for life.

This guide covers:

• What are the common forms of financial mis-selling?
• Recognising the red flags pension mis-selling
• How to avoid a mis-selling claim

What are the common forms of mis-selling?

Unfortunately, many financial products can be missold to you through poor advice. Avoid a mis-selling claim altogether by learning more about the types of financial mis-selling that you could come across.

1. Pension mis-selling

Pensions, particularly Small Self-Administered Schemes (SSAS) and Self-Invested Personal Pensions (SIPP), are common mis-selling claims.

Millions of people in the UK are impacted every year by mis-sold pension claims (UK Parliament). This happens when they are wrongfully switched into inappropriate pension schemes that come with risky investments and do not align with their risk profile.

You can apply for a mis-selling claim for breach of financial advice. What’s better, this often results in compensation claims that address short- and long-term financial losses.

Spencer Churchill Claims Advice specialises in providing professional help with mis-sold pension claims. Our expertise in handling these claims means we understand the intricacies of the claims process and can offer the support and guidance necessary to get the compensation you deserve on your mis-sold pension.

If you’ve been mis-sold a pension, get the compensation you deserve with Spencer Churchill Claims Advice. Contact us today here.

2. Investment mis-selling

Investments are a common financial product often associated with mis-selling through the promotion of unsuitable or risky investments. Financial advisors provide poor advice that leads to mis-sold investment product purchases, causing substantial financial detriment. These scenarios commonly occur when the risks of certain stocks, bonds, or managed funds are not fully disclosed, misleading investors about potential outcomes.

3. Insurance and protection products

The most infamous example of insurance mis-selling is the widespread mis-selling of Payment Protection Insurance (PPI), which highlighted how insurance can be pushed onto consumers without full disclosure of terms or relevance to the buyer’s needs.

Recognising the red flags of financial mis-selling

When it comes to identifying mis-sold financial products, understanding the red flags of mis-selling can protect your investment. Here are the most prominent signs of financial mis-selling practices:

1. You’re being offered unsuitable products

One of the most telling signs of mis-selling is when you find yourself tied into financial products—like investment bonds—that do not match your financial situation or goals. A product that seems overly complex or doesn’t align with your risk tolerance might be unsuitable.

2. Forced time limits and pressure tactics

Be wary of financial products with unnecessary time limits or pressure to make quick decisions. These tactics can prevent thorough consideration and lead you toward unsuitable choices under duress.

3. ‘Can’t-miss’ opportunities

Investments presented as ‘can’t miss’ but carry a high risk or have resulted in significant losses will likely have been mis-sold. Look for investment bonds where the risks were unclear, or the returns were overly exaggerated.

4. Unexpected additional charges

Unexpected fees or additional charges not disclosed upfront can also indicate mis-selling. Cost transparency is fundamental in financial advice to ensure client trust is not compromised.

5. You’re given incorrect advice

Advice that later turns out to be incorrect, such as guarantees of a return that are not met or details about untrue product features, points to potential mis-selling. This is often a clear case of either intentional misrepresentation or negligent misinformation.

6. Breach of duty

When there is a breach of duty, such as failing to disclose all relevant information or providing advice that does not consider your financial circumstances, it can erode trust with customers and is a significant indicator of mis-selling.

How to avoid a mis-selling claim

Here are some preventive strategies to help you avoid becoming a victim of mis-selling and ensure that the financial advice you receive is sound and reliable:

1. Understand the tools at your disposal

Gain a basic understanding of the financial instruments you are interested in or are being advised to purchase. This includes knowing the level of risk associated with different types of investments and how they should align with your financial goals and risk tolerance.

2. Assess the level of risk of the investment

Before committing to any investment, critically assess the level of risk it entails. This is especially important during periods of financial uncertainty, such as a financial crisis, where mis-selling might increase as bad actors push higher-risk financial products to offset business costs.

By applying these preventive measures, you can better safeguard your investments and ensure that the financial advice you rely on is compliant with regulatory standards and genuinely tailored to your needs and financial goals.

Protect your financial future with Spencer Churchill Claims Advice

If you suspect your pension has been mis-sold, seeking expert advice is essential. Don’t hesitate to protect your financial future. If you suspect you’ve been mis-sold on your pension, reach out to Spencer Churchill Claims Advice for a free, no-obligation consultation, and take the first step back towards your financial future.