I wrote about the removal of key consumer rights by the insurance regulator in my previous column. You can read it here: bit.ly/2njjAI1. Insurance Regulatory and Development Authority (Irdai) responded with a letter. In the interest of fairness, I’m using key arguments of the letter here and putting the rest online at: bit.ly/2nAhs2H. I will also respond to Irdai’s letter.
It took 10 years but it has finally happened. On 22 August, the Reserve Bank of India (RBI) released a draft charter of customer rights (http://goo.gl/clycrO) that enumerates and explains a set of five customer rights. These are: Right to fair treatment; right to transparency, fair and honest dealing; right to suitability; right to privacy; right to grievance redress and compensation. What I like about the draft is that it is finally out after much delay. I don’t think we need to stress the point that bank branches are now the places where a customer goes to get trapped into toxic financial products. The draft is important because in it RBI formally accepts that the sale of third-party products (not the ones manufactured by banks but others such as mutual funds, insurance and car loans) comes under its regulatory umbrella. My fight with RBI for a decade has been the unforgivable attitude of “not-my-problem”. It has actually been said to me: this is not our problem; the other regulators need to deal with it. But with this draft, third-party product sale, advice and due diligence is firmly the bank’s responsibility.