Misselling is a term describing a legally dubious and ethically questionable way of offering and sale of financial products. Unfair sales can consist of both behavioral acts as well as sales procedures and marketing activities, which are aimed at misleading consumers (e.g. activities of an insurance agent who intentionally or not, misleads the consumer as to the mechanism of functioning of the product offered, its function and use; advertising brochure omitting material information about a particular financial product).
The concept comes from the UK, where it occurs in the legal system as a grave violation of market rules and is subject to sanction.
Assessment of customer needs
Assessment of the consumers’ needs at the stage preceding making the offer is the obligation of the entrepreneur. Therefore the Office for Competition and Consumer Protection does not assess the needs of consumers, but a way of offering and selling financial services. It is unacceptable a violation of specific provisions governing the obligations of the entrepreneur towards the consumer or good customs. It is also forbidden to offer services that are inadequate to their character (e.g. proposing complex financial services by phone). The new provision does not impose to make extensive analyzes in each and every case. In determining the needs of consumers it is expected only to take account of such consumer characteristics that relate to the proposed type of service (e.g. by granting of short-term consumer loan in a low amount it is not necessary to determine the state of health of the consumer – it is not allowed even).
„Proposing” financial services
The new practice also applies to marketing activities outside the headquarters of the entrepreneur. Consumer protection against unfair sales must include all kinds of entrepreneur’s activities, not limited to activities consisting in proposing financial services to consumers in a standard way at its headquarters. Otherwise, the primary objective of the new instrument – the effective elimination of misselling – could not be achieved.