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6 - Selling financial products and other conduct

Published online by Cambridge University Press:  05 June 2012

Gail Pearson
Affiliation:
University of Sydney
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Summary

They have been accused of being no better than used-car salesmen, thanks to a string of controversies over commission payments.

Information, advice and selling

There can be a thin red line between providing information, advising, and selling financial products. Information, through disclosure, is often accompanied by advice. Intermediaries, such as brokers and planners, assume continuing importance in the distribution chain and in the decisions of financial citizens to buy or acquire. Mandated disclosure is built on the imperfect idea that individuals can make rational decisions in their own best interests. Yet restrictions on advertising and selling recognise that individuals are not always able to do this and may be influenced in their choices by the emotional triggers inherent in advertising literature and selling campaigns. Regulation of advertising and selling practices is another way to protect against bad faith risk. Indeed, the prohibition at the heart of Australian advertising and selling regulation, against misleading or deceptive conduct, is directed squarely at this. The doctrine of unconscionability, concerned with unfairly taking advantage of another's vulnerability also offers protection to persons in the context of the sale and distribution of financial services. Not only are there connections between advice and selling; there are also links between selling behaviour and conduct that goes to preserving the integrity of the market. The prohibition of forms of conduct to preserve the fair and efficient behaviour of the market overall may also work to ensure fair selling practices. Bad selling practices strike at the market itself.

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Chapter
Information
Publisher: Cambridge University Press
Print publication year: 2009

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References

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