30% of products pitched by banks and insurers deemed "unsuitable"
Banks and insurers recommend investment and insurance products that 3 out of 10 times disregard the financial goals of their clients.
This conclusion was made after MAS conducted a mystery shopper survey from October 2011 to December 2011. In total, 126 mystery shoppers made 500 visits to 11 licensed banks and 4 registered insurance companies seeking financial advice from their representatives. The products recommended by the representatives were reviewed for their suitability by a panel of industry practitioners based on the shoppers’ personal profile, their experience during the advisory and sales process, and sales materials obtained from the financial institutions.
The industry panel then judged that 30% of the product recommendations were assessed as "unsuitable" with 40% deemed "may not be suitable" and only 28% were found to be "suitable." The main reasons cited were that the products recommended did not match the shoppers’ financial objective or their stated investment horizon.
"For the industry as a whole, the survey findings suggest that there is significant room for improvement," said MAS in a release accompanying the survey results. MAS will share the results of individual institutions with their respective senior management, and assured that "in areas where they have fallen short ofthe fair dealing guidelines, the financial institutions are expected to take corrective actions."