The Reserve Bank of India (RBI) has proposed stronger rules to prevent the mis-selling of financial products by banks.
The central bank has suggested that bank employees should not receive incentives from outside companies for selling insurance, mutual funds, or other third-party products.
According to the draft guidelines, marketing and sales staff will not get any direct or indirect incentives from third parties.
This step is meant to stop banks from selling unnecessary products to customers or misleading them with wrong information.
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Ban on Dark Patterns in Digital Banking
The RBI has also proposed banning the use of “dark patterns” in banks’ digital services. Dark patterns are misleading designs or techniques that trick customers into buying products or making decisions without their full understanding.
The central bank has called such practices unfair and a violation of consumer rights.
Rules on Bundling Products
The RBI has clarified that banks cannot force customers to buy third-party products along with their own products.
If bundling is necessary, customers must be given the freedom to buy the third-party product from any other service provider of their choice.
Full Refund in Case of Mis-selling
If mis-selling is proved, the bank will have to refund the full amount to the customer. The bank will also need to compensate the customer for any loss, according to the prescribed policy.
Customers can file a complaint with the bank within the time limit set by the relevant financial regulator. If no time limit is mentioned, customers can submit a complaint within 30 days of receiving a signed copy of the terms and conditions.
Mandatory Feedback and Monitoring System
The RBI has directed banks to collect customer feedback within 30 days of selling a product. This is to ensure that customers clearly understand the product’s features and risks.
Based on this feedback, banks must prepare a report every six months and review their policies. The RBI has also warned that contests or target-based schemes should not push employees to force product sales.
Code of Conduct for Direct Selling Agents (DSAs)
The RBI has introduced a code of conduct for Direct Selling Agents (DSAs). Calls and visits to customers should normally be made between 9 a.m. and 6 p.m.
Any contact outside this time period will require prior consent from the customer.