Ethical & Legal Issues in Personal Selling

Guest Speaker: Mr. Michael Lee from Cornerstone Planner

5 Important Points Highlighted by Mr. Michael Lee

1. Misrepresentation

Misrepresentation is defined as a false statement of a material fact made by one party to another which had included the other party to enter into a contract. There are 3 types of misrepresentations illustrated by Mr. Michael Lee. Fraudulent Misrepresentation happens if the maker knew it was false or did not believe in the truth of the statement or was recklessly careless whether the statement was true or false. A misrepresentation would be negligent if it is made without reasonable grounds for its belief. And lastly, a misrepresentation would be innocent if there are reasonable grounds for its belief.

2. Unlicensed

Unlicensed is defined as having no official license, not authorized or no official government approval. In the context of Financial Advisor, it is important that Financial Advisor have the capability and competency to provide financial advisory services to their clients. This will help to ensure that Financial Advisor provide the relevant and correct information clients, preventing complaints from customers.

3. Misselling

Misselling is described as an attempt by a salesperson to convince a customer to purchase a good or service that is not appropriate for that client. For instance, the Financial Advisor persuade a risk-adverse client into purchasing a high risk investment product. Ultimately, customer dissatisfaction will arise as they are tricked into purchasing investment products which are not suitable for their risk appetite.

4. High-Pressure Selling

High Pressure Selling is defined as a extremely aggressive behavior by an salesperson to convince a consumer to purchase the product or service without due regard for the consumer’s ability to pay and/or needs for the product or service. Hard selling may also eventually deter customers from purchasing the product.

5. Cheating

Cheating refers to immoral way of achieving a goal. It is generally used for the breaking of rules to gain advantages in a competitive situation. For example, to meet one sales target, the salesperson forged her applicants’ pay slips, inflating their salaries so that their annual pay would appear to meet the minimum income requirement laid down by the bank.

With the above mentioned factors, complaints from customers is likely to surface due to customer dissatisfaction. Hence it is important for companies to ensure that their staffs comply with all the standard operating procedures and does not violate the above mentioned factors as complaints will affect a company adversely in terms of sales and reputation.


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