Ur doin it rong: Evil financial products
Ur doin it rong #3: Evil financial products (you see I can bitch about
more things than just those solutions masquerading as green solutions).
There are many financial products in this world which take advantage of
the poorly organized, mathematically naïve, and plain poor or easily exploited.
Example evil financial products:
Reverse mortgages (particularly where targeted at the retired population):
This is where the house is re-mortgaged to provide an income stream in retirement.
Of course when you are dead the problem will be solved with the mortgage company
depriving your children of the majority of their inheritance.
Tax-return loans: Feel like paying a big lump of interest to obtain your own money
that you paid in tax, a little earlier than the government will get around to refunding it?
Then this product is for you. This kind of nasty product can be commonly found by the
likes of accounting firms/tax agents that are financially diversifying their income stream.
Term Deposit/Saving incentive schemes/accounts: I know what you are saying
‘these are ok aren’t they?’. Well they are a nice idea but the way the interest is calculated
should be provided in example form and data should be provided for what percentage of
account holders actually achieves the bonus interest rates on achieving their goals.
Second-hand car dealers selling car loans: The lack of independence should be seen
as a big warning sign. So many things are done by Car dealers to bring about loan
approval that are fraudulent or very close to it. These things should be clearly stated in
all promotional material and stated by the dealer at the time of offer.
Travel agents selling insurance: Again the lack of independence should be seen as a
big warning sign. Travel agents can quite easily hide their extra commission in these
circumstances while providing a product that may not suit your needs as completely as
an independently obtained policy. These things should be clearly stated in all promotional
material and stated by the agent at the time of offer.
Recommendations: If some of these products can’t be banned the provided marketing
information should include several worked examples demonstrating the total cost of the product
and clearly spell out in plain English the penalties and even data on what percentage of
these products incur penalty fees. Mandatory requirements: full and transparent disclosure
along the lines of a combination of that found for mobile phone contracts and on cigarette
packets. Some of these products are detrimental to your health or at least your long term livelihood.
more things than just those solutions masquerading as green solutions).
There are many financial products in this world which take advantage of
the poorly organized, mathematically naïve, and plain poor or easily exploited.
Example evil financial products:
Reverse mortgages (particularly where targeted at the retired population):
This is where the house is re-mortgaged to provide an income stream in retirement.
Of course when you are dead the problem will be solved with the mortgage company
depriving your children of the majority of their inheritance.
Tax-return loans: Feel like paying a big lump of interest to obtain your own money
that you paid in tax, a little earlier than the government will get around to refunding it?
Then this product is for you. This kind of nasty product can be commonly found by the
likes of accounting firms/tax agents that are financially diversifying their income stream.
Term Deposit/Saving incentive schemes/accounts: I know what you are saying
‘these are ok aren’t they?’. Well they are a nice idea but the way the interest is calculated
should be provided in example form and data should be provided for what percentage of
account holders actually achieves the bonus interest rates on achieving their goals.
Second-hand car dealers selling car loans: The lack of independence should be seen
as a big warning sign. So many things are done by Car dealers to bring about loan
approval that are fraudulent or very close to it. These things should be clearly stated in
all promotional material and stated by the dealer at the time of offer.
Travel agents selling insurance: Again the lack of independence should be seen as a
big warning sign. Travel agents can quite easily hide their extra commission in these
circumstances while providing a product that may not suit your needs as completely as
an independently obtained policy. These things should be clearly stated in all promotional
material and stated by the agent at the time of offer.
Recommendations: If some of these products can’t be banned the provided marketing
information should include several worked examples demonstrating the total cost of the product
and clearly spell out in plain English the penalties and even data on what percentage of
these products incur penalty fees. Mandatory requirements: full and transparent disclosure
along the lines of a combination of that found for mobile phone contracts and on cigarette
packets. Some of these products are detrimental to your health or at least your long term livelihood.