The Reserve Bank of India (RBI) has proposed stricter rules to control the mis-selling of financial products by banks. The central bank has suggested banning incentives from outside companies for selling insurance, mutual funds,
and other third-party products. This means bank employees will not be allowed to receive rewards or commissions from external companies for selling such products.
According to the RBI’s draft amendment guidelines, marketing and sales staff must not receive any incentives, directly or indirectly, from third parties.
This step is meant to stop the practice of selling unnecessary products to customers or misleading them with false information.
Ban on Dark Patterns and Forced Bundling
The RBI has also proposed banning the use of “dark patterns” in banks’ digital services.
Dark patterns are misleading designs or techniques that push customers into buying products or making decisions without their clear understanding. The RBI has called these practices a violation of consumer rights and unfair trade practices.
In addition, the RBI has issued strict rules on bundling of products. Banks will not be allowed to force customers to buy third-party products along with their own services.
Even if a third-party product must be bundled with a bank product, customers must have the freedom to buy it from any other service provider.
Refunds, Complaints, and Customer Protection
If any case of mis-selling is proven, the bank will have to give a full refund to the customer and also pay compensation for any loss, as per the prescribed policy.
Customers will be able to file complaints 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.
Monitoring, Feedback, and Rules for DSAs
The RBI has made feedback and monitoring systems mandatory. Banks must collect customer feedback within 30 days of a sale to ensure that customers understand the product’s features and risks.
Based on this feedback, a report will be prepared every six months and bank policies will be reviewed. The RBI has also said that sales contests or target-based schemes should not push employees to force products on customers.
The RBI has also introduced a Code of Conduct for Direct Selling Agents (DSAs).
Calls and visits to customers should normally take place only between 9 a.m. and 6 p.m. Any contact outside these hours will require the customer’s prior consent.
