Independent Research and Policy Advocacy

Universal Conduct Obligations for Financial Services Providers Serving Retail Customers

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Customer protection in financial services in India is the domain of respective product-specific regulators, namely the RBI, SEBI, IRDAI and PFRDA2 . The frameworks for customer protection in financial products and services that exist today have been inadequate to protect the interests of households and enterprises. The design of the universe of customer-touch points for the sale of financial products has not sufficiently enhanced the abilities of customers to access unbiased advice and sales practices that keep their best interests in mind. While elements of financial advice are embedded in the sale process, regulators have kept these two offerings separate, and this has resulted in unintended negative consequences. Financial consumers have the freedom to move between institutions for their financial needs but are subjected to differential standards based on the institution-types they engage with. These issues get amplified further with the new waves of disruption happening in financial services and where the distinction between the distributor and the manufacturer is getting progressively blurred in terms of liability for harms and/or losses to the customer. These reasons make it imperative that financial customer protection in India needs a significantly different design and implementation strategy to what is present currently. In this document, we articulated a set of recommendations that financial sector regulators can consider applying on regulated financial services providers in order to improve outcomes for households and enterprises.

Read the full report here.

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