Faculty of Economics and Business Administration Publications Database

Misselling (Financial) Products: The Limits for Internal Compliance

Volume: 106
Number: 1
Pages: 35 - 37
Month: January
ISSN-Print: 0165-1765
Link External Source: Online Version
Year: 2010
Keywords: Advice; Financial services; Commissions
Abstract: A firm advises customers through an agent, such as a mortgage broker, who is incentivized through commissions and the threat of firing. We show that this implies an upper boundary for the feasible “standard of advice”, up to which the standard increases with commissions.