Right to Choice of Consumers of Financial Services, with special focus on the issue of Mis-selling and Financial Incentives in Indian Banks’

Consultation on RBI’s ‘Draft Charter of Customer Rights’ on 18th September, 2014 to earmark the launch of CUTS new project on ‘Advocacy on the issue of Sales Incentives/Mis- selling of Financial Products, Affecting Consumers’ Rights Under Right Choice Fund

In the context of Reserve Bank of India releasing a ‘Draft charter of customer rights’, CUTS organised a consultation on ‘Draft charter of customer rights on 18th September 2014 at Jaipur.

The following are the customer rights as per the draft code.

  • Right to Fair Treatment: No discrimination on basis of gender, age, religion, caste and physical ability.
  • Right to Transparency, Fair and Honest Dealing: Contracts or agreements between financial service provider and customer should be transparent and easy to understand.
  • Right to Suitability: Products offered should be appropriate to the needs of the customer.
  • Right to Privacy: Customers’ personal information to be kept confidential. No unwarranted communication, electronic or otherwise, to be sent.
  • Right to Grievance Redress and Compensation: Financial services provider accountable for products offered (including third party products). Provider to facilitate easy grievance redressal.
  • Right to Fair Treatment: No discrimination on basis of gender, age, religion, caste and physical ability.

This charter of customer rights is framed by RBI based on global best practices and also in discussion and interaction with various stakeholders. The Charter spells out the rights of the customer and also the responsibilities of the financial service provider (FSP).

Mis-selling of products has been a serious issue in Indian financial system and that has led to fundamental flaws in the customer protection architecture and has created large welfare losses for customers. As per RBI, the charter is mainly to discourage lenders from mis-selling of products.

The purpose of the consultation was to discuss and to gather the feedback of various stakeholders on the charter and to consolidate the recommendations for submission to RBI.

Press Release

  • “Stop Mis-selling of Financial Products to Maintain Trust in Banking System” – V G Sekar
    Jaipur, September 11, 2014 << In English | In Hindi >>