The term is used to describe the partnership between a bank and an insurance company where the insurance company uses the bank’s sales network (usually branches) to sell insurance and pensions products to the bank’s customer base. This was popular until 2002 when, after aggressive selling by Abbey Life, the subsequent mis-selling scandal cost Lloyds TSB £1bn.
The practice of a dishonest salesperson misrepresenting or misleading an investor about the characteristics of a product or service. For example, selling a person with no dependants a whole-of-life policy. There have been notable mis-selling scandals in the past, including endowment policies tied to mortgages, employees persuaded to leave final salary pensions in favour of money purchase pensions (which paid large commissions to salespeople) and payment protection insurance. There is no legal definition of mis-selling; rather the Financial Services Authority (FSA) issues clarifying guidelines and hopes companies comply with them.