Private Banks Selling Financial Products: An Ethical Outlook

Abstract

Ethics are the norms or standards that distinguish between what is right and what is wrong. Be it a business or any other profession ethics play a vital role. Considering the banking sector it has been observed that the private banks are much more aggressive in selling financial products than the public sector banks. With the advent of umbrella/universal banking, all the banks have increased their operations and started to sell third party products (TPP) under their banner. Third Party Products (TPP) are the financial products that the banks sell under their banner which are originally the products of another organization. Mis-selling of financial products is defined as the act of selling financial products without providing proper information or push selling any financial products which are not required by an individual. Mis-selling is a serious ethical concern but sadly is a common practice that has been going on in the market. It has been found that in spite of strict guidelines by the regulatory authorities’ banks, agents and private companies dealing with financial products make mis-selling. This is happening primarily due to the low salary offered to the sales officials with a lure to earn more and more revenue by way of commission. Considering all the issues this paper aims to study the customer’s perception on private banks selling third party products. The study uses primary as well as secondary data collected from 384 respondents using TPP.