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Investment mis-selling is a global phenomenon, and it has caused a worldwide financial meltdown. Investment mis-selling directly contributed to the worldwide financial meltdown, even if it was not the main cause.

The U.S. government can learn a lot from taking a look at what other countries are doing to address their financial crises, both for what the countries do right and for what the countries do wrong. Germany's banks have let its investors down horribly, for example. So how have these bad financial practice impacted people around the globe?

First of all, banks are businesses and need to create profit. Mis-selling was huge in the German marketplace. There was an article published called "Advised and Sold Out" which talked about the state of financial advice in that country. There were a lot of horrible and unethical practices that were going on in that country. Various reports and news media agencies confirmed these problems over several months afterward.

Basically, brokers were selling high-risk products that had high commissions instead of selling lower-risk ones that would have been a lower risk to their clients. What's worse is that when the losses showed up and investors complained about it, the banks claimed to have done nothing in error.

One of the reasons for this though was that banks put so much pressure on their staff to sell products. They had to go to their friends and neighbors just to get their numbers up to the required amount. They wouldn't have normally sold them, but they had to in order to please their superiors. This practice also took place in the UK and as a result the FSA has ruled that financial products should have no commission attached, to prevent pressure selling from staff.

Furthermore, they had so much pressure on them to sell that they didn't promote low-commission, fixed-income products and instead they promoted high-risk, exotic products.

Clients were also urged to buy and sell with extreme frequency. The main goal of bank employees was to generate commissions.

Many investors were offered risky products because the banks were putting so much pressure on brokers to sell high-risk products, and whatever had the highest commission. Unfortunately, this led to a lot of problems with investors that were shammed out of their money. The banks showed an appallingly bold lack of care for their investors, and they didn't even wait for certain events to transpire before pushing investment products on people. For instance, marketing timing and events would have been sufficient criteria to assess before promoting a product, but bankers just promoted products that would yield the highest commissions in lieu of giving the clients the best options for their age, status, and income.

The banking sector is undergoing a huge change now because investment mis-selling helped to create the global financial crisis being felt today. This week in the UK has seen one of the largest banks fined by the FSA for actually mis-selling investments to the elderly, showing a complete lack of moral compass.

PPI Claims have damaged banks profitability and reputation, mis sold investments are likely to play a further role in this.

By Timothy Capper
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