Understand workings of product: Be clear about the product and why it is suitable. Find out what the benefits and risks are, and shop around and compare other products.
Product warnings: Look out for warnings indicating that a product may be complex or that you may lose some or your entire investment.
Do not buy the product if you do not fully understand it or are not comfortable with the risks.
Product guarantees: Be careful of verbal promises and guarantees of high returns.
Remember: If something sounds too good to be true, it probably is. Understand its risk-reward features and ask for the relevant clauses in the product documents that describe the verbal representations made.
Worst-case scenario: Find out how your investment could be affected in various scenarios, especially in the worst possible case.
For example, ask what conditions could affect your returns or cause you to lose part or all of your cash.
In the case of life insurance plans, check out the exclusions and conditions that could result in a claim not being payable.
Product updates: Find out where you can get timely updates on the product and its prevailing value.
Ask what are the avenues for providing feedback and lodging complaints and how the financial firm ensures that all complaints are handled independently, effectively and promptly.
Measures to ensure fair dealing: Ask the financial firm to explain the measures it has put in place to achieve the five fair-dealing outcomes.
For instance, you can ask the firm to explain how its remuneration structure aligns your interests with their interests, what checks have been conducted to ensure that investment products are marketed only to suitable customer segments and how the company ensures that its representatives are properly trained to provide quality advice to customers.
It is okay to walk away: Remember that you have every right to decide not to buy a product.
While financial firms must have a reasonable basis to recommend an investment product to you, you also need to consider the advice and recommendation carefully.
Do not be induced by gifts or discounts, or be pressured to make a decision.
Say 'no' if you do not fully understand the product, disagree with the advice or have doubts about the product or your dealings with the financial firm.
How to seek redress if you feel that a financial firm has failed to deliver the fair dealing outcomes
Approach the firm. This gives it the opportunity to obtain the relevant information, assess the matter and explain itself. It should have a robust process to handle complaints independently and effectively.
If you are dissatisfied with the firm's reply, you can approach the Financial Industry Disputes Resolution Centre (Fidrec).
It is an independent institution providing consumers with a one-stop avenue for resolving disputes between financial institutions and consumers.
Where possible, Fidrec will give you an assessment of your case and mediate to resolve your dispute as an alternative to a legal recourse.
Filing a complaint at the centre is free, but if its mediation efforts fail, you will be charged a fee of $50 per claim if your case proceeds to adjudication at Fidrec.
If you are still dissatisfied, you can take legal action.
