Financial watchdog hunts for insurance agents
Hungary’s financial watchdog PSzÁF is paying extra attention to insurance companies selling life insurance policies via multi-level marketing (MLM). PSzÁF will examine whether consumer rights to prudent information was violated while marketing insurance policies. Violators will be seriously punished, promises PSzÁF in its most recent newsletter.
In the authority’s experience, questionable sales techniques are getting increasingly popular among insurance companies. In MLM systems buyers’ and sales agents’ roles are mixed, furthermore commissions are payed according to a “Ponzi scheme” which might make sellers liable to neglect consumer rights.
According to PSzÁF, MLM techniques are not welcomed in the marketing of financial products. It well might happen that under-informed clients agree to make a deal that they would have refused if they had learnt enough about it. This comes as a distortion of consumer behavior which is punished by law.
PSzÁF promises to control whether insurance agents warn clients that monthly fees of an insurance policy might even accede “Ponzi scheme” commissions.
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