Minibonds and High Notes - Any mis selling?
It is difficult to find an acceptable definition of mis selling or fit a case under it unless it is an obvious one. What could be more reasonable to ask is whether a toxic product is sold to customers that obviously have no stomach for high risk. The Financial and Securities Acts have provisions to prevent selling high risk products to inappropriate customers. Some customers, especially the old, retirees, the uneducated, unsophisticated, people who are living on their lifesavings, are clearly not the type of risk takers that such toxic products like minibonds and high notes are meant for. The risk of losing everything is simply unacceptable to these people. These are people who are trying to earn a little better interests to live the rest of their lives without bearing the risk of losing their capital. And at 5%, even savvy investors would think very hard to want to risk losing everything. So, why were these retirees targeted in the first place? It seems that there is a pattern of execution, that when someone is about to renew his fixed deposit, regardless of risk profile, he will be approached to switch to these high risk instruments. Were these moves the initiatives of the relationship managers? Or was there a systematic plan to target these investors who are clearly not appropriate for such instruments?