reserve Bank of India
The Reserve Bank of India has issued a major guideline to stop mis-selling related to financial products, in which RBI has given strict orders to the banks to stop mis-selling. If you also take insurance from the bank or invest in NPS, mutual funds, then this news is for you only. Let us tell you in detail about the complete guidelines.
RBI has said in its guidelines issued to prevent mis-selling that agents selling financial products and bank staff inside the bank branch should be clearly separated. Banks will have to implement a sales code of conduct, violation of which may result in punishment. Along with this, consent will have to be taken separately for many products and services, they will not have to be mixed together. Banks will have to design the user interface in such a way that customers cannot give consent without reading the terms and conditions. Banks cannot market third-party products as their own. Agents cannot remain as bank employees. Also, staff and agents cannot call or meet customers without prior approval.
Dangers of mis-selling
Mis-selling means selling a product that does not match the customer’s profile, age, income, financial information or risk appetite. This includes providing incomplete or misleading information, selling services without obtaining explicit consent from the customer, making it necessary to purchase a second insurance policy to extend an offer, and using dark patterns to defraud customers online.
There is a strict ban on these
Banks will not be able to sell products that are not suitable or suitable for the customer’s profile, even if they are clearly approved. This closes the escape routes for erring banks. They cannot use the customer’s signature in the agreement to refute claims of mis-selling.
Sometimes, bank relationship managers try to sell unit-linked insurance policies as mutual funds to gullible customers. Now banks may have to use different application forms and may have to clearly mention the type of product like insurance, mutual fund, hybrid in their application form.
What happens in case of mis-selling?
If mis-selling is proved, banks may have to refund the customer’s payment and cancel the transaction. Additionally, additional compensation may also have to be paid for financial loss. According to the proposed rules, banks will have to collect customer feedback through surveys without any discrimination within 30 days of sale. Banks will be required to prepare a report on outcomes every six months to help review existing policies and service practices.
What should the customer do?
File a complaint of mis-selling with the bank as per the timeline of the concerned financial sector regulator or within 30 days of receiving the signed agreement. These are the draft guidelines issued by RBI for public feedback. After reviewing the comments of stakeholders, the final rules will be implemented from July 1.
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