Relationship managers: Do they misuse their access to customers and their accounts
There have been several reports of relationship managers misusing their
proximity to clients to meet their sales targets. So, one needs to be cautious while dealing with relationship managers
Relationship Managers (RMs)
have the potential to either strengthen the relationship with clients or they
can erode it by their unscrupulous behaviour. They have to reach a target so They operate in
motivated blindness, therefore, indulge in such an exaggerated description
of the product that it puts a mask on the risk inherent in the product and are
able to sell toxic dubious products. Cases of misconduct on the part of RMs are
not uncommon. There are many incidents of RMs misusing access to accounts and
their proximity to clients to meet their sales targets. It has on many
occasions, come to light, that the Wealth & Relationship Managers did get
authorizations from their clients on blank papers with the promise that they
will get maximize returns.
A few illustrative cases (picked up
from media reports) are described here below?
* A few years ago, a fraud in a leading foreign bank
was detected, where a relationship manager had forged signatures of many widows
whose children were staying abroad and diverted funds into his/her account.
Probes revealed that the manager identified targets carefully and by using
forged signatures, changed addresses of clients on his/her list so that they
didn't get their bank statements. Instead, what they received were forged
statements printed by their relationship manager.
* Mr P who was
a relationship manager in multinational banks 's retail banking operations, had
illegally promised high returns under a sham deposit scheme and managed to
convince about 20 high net worth bank customers to park their funds in that
scheme. Puri got a forged circular in SEBI's name, which claimed that the
high-returns scheme was only available at this particular branch. After getting
big deposits, Puri generated forged bank slips and statements to the duped
customers. He then siphoned off the money into the stock market.
* A young techie with an information technology
company in Pune, says he was cheated of Rs 4.5 lakh by his brokerage firm,
thanks to the aggressive intra-day trading advised by his relationship manager. That's a huge amount for an ordinary person like me. The relationship manager
wiped out all my money in months,? he says.
Misguidance or even mis-selling on
the part of RMs in banks and elsewhere is a matter of concern.
*A few years
ago, only experts would have functioned as relationship managers in Indian
banks. But now the position has been sort of degraded ? people who are not
really experts in the field are being recruited as relationship managers for
retail or consumer banking in India. And they are making a lot of mistakes.
On 18 April 2013 Moneylife Foundation
presented a memorandum to RBI Governor on unchecked
mis-selling by bank relationship managers. It says, Banks' relationship
managers have been particularly brazen in recommending financial products to
their customers while completely disregarding their financial situation. It is
commonplace to hear of senior citizens being conned into investing in a mutual
funds, unit-linked insurance plans or a hybrid-derivative products on promise
of higher returns. In many cases, private bank executives go to their homes and
persuade them to break secured fixed deposits and invest the money in Unit
Linked Insurance Products (ULIPs) with the false assurance that these are as
safe as fixed deposits and offer a higher return and security.?
Moneylife had highlighted the case of
Suchitra Krishnamoorthi, a well-known singer and actor, who was taken for a
ride by HSBC Bank for over five years. The modus operandi for HSBC in this case
has been a combination of toxic churning of the portfolio management system (2%
entry load on every purchase made by it on behalf of client), insurance
products promising 24% returns, insisting her on taking a loan instead of
withdrawing funds without even disclosing that the client was entitled for a
smart loan.
A strong campaign by Moneylife
through its website and its social media properties got quick justice for a
79-year old man with his ailing wife. IndusInd Bank officials had deceitfully
persuaded him to break his bank fixed deposit and invest in a wrong product.
After Moneylife wrote about it, the bankers came at 11.30 in the night, bearing
a demand draft of Rs7 lakh and returned him his investment. They had made him
invest in DWS?s mutual fund scheme with a five-year lock in period.
Whether they are dangerous or
not depends on which side of the fence you are. If you are a victim then
definitely you will label them as dangerous but if you've had a delightful
experience with them, you may not. That does not mean you may not become a
victim of their ?charisma?. It is in your best interest to be on your toes when
you deal with them.
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