There are several fundamental things you can do to ensure you protect yourself when using financial services. By following these simple steps, you can help avoid many of the common problems that can occur when dealing with financial institutions:
READ Read documents properly - whether it's the terms and conditions of opening a bank account, buying an insurance policy or investing in a mutual fund, read through all the information beforehand and ensure you understand the details before signing anything. Read updates sent to you to make sure you stay abreast of changes and understand their implications.
ASK Not everyone is a financial expert. If you're not sure about something, ask. Before you invest in a product, research it first and read the prospectus. If the information you have been given is not clear, ask for clarification to ensure you're aware of both the benefits and potential risks of a transaction or investment.
CHECK Also make sure that the investment company has a license and that the salesperson has the adequate credentials/experience. Look at the full range of services an institution offers to determine if it really can be a good fit for your needs.
Dishonest practices and exploitation
It's an unfortunate truth that fraudulent and dishonest activities do occur in the financial world. However, a little awareness and common sense can go a long way to protect yourself and your money from such behaviour. Before entering into any financial situation, make sure to take the following into consideration:
Think hard before parting with your cash or personal details
If the deal on offer feels unofficial then consider why that is - remember that institutions should never email you looking for account details or personal information. Emails requesting such information should be ignored and deleted.
Are you being asked to give unnecessary or inappropriate details?
Does the offer sound like you could be doing something illegal?
Does the offer sound too good to be true?
If the answer to any of these questions is yes, think carefully before you act.
Don't be tempted by offers where you have to pay in advance for something
One increasingly popular form of fraud involves a vague or obscure third party promising a 'prize' or some kind of significant reward if you send them money. Their pretext for asking for your money may vary from scam to scam, but the right course of action stays the same: don't give them your money!
Be wary of firms insisting you pay in cash
Any legitimate business should accept payment by a credit or debit card, a cheque or bank transfer. And always ask for a full receipt - if you don't, you'll have no record of the transaction.
Seek independent financial advice if you're unsure about an investment or financial product
It's important to understand the risks involved in making investments, and getting good advice from a qualified and independent source is a great way to do so.
Think carefully before making an investment solely on the recommendation of an organisation you belong to
Be wary if you're told that the investment opportunity will only pay out significantly to early investors.