Case 1:

Ms. Ip maintained a long standing customer relationship with a bank. She invested in bonds only as she preferred fixed income products. A few months ago, Ms. Ip discovered that one financial product she purchased was not a bond but an insurance product with no guaranteed return. She claimed that the bank staff had told her that the nature of the product was similar to bond and that she would receive a return of 6% of the principal amount at maturity. However, when the product matured, Ms. Ip found that the return was less than 6%. She thought that the bank staff had misled her. She lodged a written complaint to the bank and claimed the difference between what she believed had been promised by the bank staff and the actual return.

After internal investigation, the bank replied to Ms. Ip that the staff has explained the product nature clearly to her and there was no mis-selling. Ms. Ip and the bank could not come to an agreement on the case. Ms. Ip then made an application for mediation at the FDRC.

The mediator facilitated communications between both parties. The bank representative stepped into Ms. Ips shoes and tried to understand her concern with genuine sincerity. Ms. Ip appreciated the bank representative for his sincerity in listening to her and his efforts to try to resolve the dispute.

Ms. Ip revealed that she was a pet lover. The bank representative generated a very creative settlement option which incorporated the figures 23 and 8 which, when pronounced in Mandarin, resembled the pronunciation of the words pet (love for pet). Ms. Ip praised the bank representative for having such a sweet and creative idea and the case was settled to the satisfaction of both parties.

Case 2

Ms. Wong, a housewife in Mainland China, frequently travels to Hong Kong for shopping. She opened a personal account in Bank A and deposited HK$500,000 when she was 7 months pregnant. On the same day, she also subscribed to a financial product for her unborn child with a view that she could withdraw money from that financial product freely.

One year later, however, Ms. Wong found that the financial product was in essence a retirement insurance plan with fixed investment tenure when she failed to withdraw money from it. She was surprised and lodged a complaint to Bank A requesting refund of her contributions.

However, Bank A denied any liability. It explained to Ms. Wong that she had the right to cancel her investment during the cooling off period but the bank did not receive any cancellation request from her in the said period and thus no refund could be arranged.

Ms. Wong claimed that she had not gone through the sales documents in details because she was in a rush for her prenatal care on the sale day. Moreover, she claimed that the policy of that financial product was not delivered to her address in Mainland China so that she could not discover the discrepancies between its product features and her expectation timely.

During the mediation process, the mediator encouraged both parties to treasure their relationships, whilst assisted them to identify the critical issues in dispute and explore for all options. The mediator then conducted an alternative analysis to identify the best option for them. Eventually, a settlement was reached. Both parties appreciated for the efforts of the FDRC and the mediator.

Analyse what ethical issues in marketing mix of case 1 and 2 that were complained by customers as indicated in the above case studies. Use the relevant information from the case studies to support your analysis.