Banks frequently receive complaints about mis-selling schemes to customers. The RBI has now taken a strict stance on this issue. If it is proven that a customer was mis-sold a product, banks must refund the full amount and compensate the customer for any losses incurred.
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New Delhi: Banks often force schemes on customers without their need. To prevent this mis-selling, the RBI is introducing stricter regulations. The Reserve Bank of India (RBI) proposed on Wednesday that banks should avoid any “rewards” or “incentives” that could mis-sell products or services to customers.
In a draft of new regulations for advertising, marketing, and sales by financial institutions, the central bank stated that banks should not call customers without their consent. Furthermore, phone calls should be made only during office hours. If it is proven that a customer has been mis-sold a product, banks must refund the entire amount paid by the customer and compensate the customer for any losses incurred.
Customer Compensation
The RBI stated, “Banks must ensure that their policies and procedures neither create incentives for mis-selling nor encourage employees/DSAs to promote the sale of products/services. It will be specifically ensured that employees engaged in marketing/selling third-party products/services do not receive any direct or indirect incentives from third-party products or services.”
The draft also proposes that a bank should not be permitted to bundle the sale of any third-party product or service with its own product or service, and customers should be given the option to choose from a variety of options. In the event of proven mis-selling, banks must refund the full amount paid by the customer for the purchase of the product or service and also compensate the customer for any losses incurred due to mis-selling, as per the approved policy.
Use of Dark Patterns
The RBI is also asking banks to ensure that their user interfaces do not use any dark patterns and has listed about a dozen such instances that should be avoided. It is noteworthy that Reserve Bank Governor Sanjay Malhotra had announced rules to curb mis-selling. The draft was released following that announcement. People have until March 4th to provide their feedback on the draft.
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