ANTECEDENTS OF MIS-SELLING IN INDIAN RETAIL BANKING SERVICES

Abstract

Selling unethically to the customers for personal gain has become a common practice in today's
business world. Existence of unethical sales practices though found to be available in almost
every sector of business but it is more prevalent in financial sectors like banks or insurance.
Financial regulatory bodies are facing significant challenges to deal with such problems as a
substantial number of customers are becoming the victims of such practices and it has serious
consequences on society. Thus it created a need to identify the root cause of such unethical
behavior of the salespersons. Present study attempted to identify the determinants that influence a
salesperson to involve in mis-selling activities. The study has been undertaken among the
employees of leading private sector banks in the southern part of the Indian state of Assam using
a self-administered questionnaire. Multiple regression model was used to investigate the effect of
ten predictive variables measured on the continuous scales or categorical scales on mis-selling, a
criterion variable that was measured on a continuous scale. All the predictive variables are found
to have significant effects on the mis-selling except age. Study revealed the personal attributes of
the salesperson such as Job insecurity, poor ethical values, self-interest, and Inadequate
knowledge as well as organizational attributes such as sales pressure, incentive-based pay
structure, competitive intensity, product complexity, and poor organizational culture influence a
salesperson to behave unethically. This study would be helpful for the managers to perceive the
actual causes of mis-selling and identification of preventive measures to prohibit such practices in
banks.
U.K is one such example. In 2013, Lloyd’s Banking Group launched an incentive plan for their
employees 'sell or be demoted’ and it resulted in the creation of mis-selling environment among
the sales staff of Lloyds, Bank of Scotland, and Halifax. In the fear of demotion, employees
started to sell the products by adopting any possible means for achieving sales targets.