From warnings to regulation: Why RBI ran out of patience with bank mis-selling
Published by India Today
Abhishek Kumar's role: Quoted
Abhishek Kumar said mis-selling costs people trust as well as money, and can cause liquidity problems and unplanned premium payments. He advised customers to ask for written reasons why a product suits them, check charges and lock-ins, and use the free-look period.
What Abhishek Kumar said
What does mis-selling really cost a customer, beyond the money lost?
In my view, the first casualty is trust: once people are mis-sold, they stop trusting financial products. The money damage is real too. Besides losing capital, families can face cash shortages and premium bills they never planned for, which knock long-term goals off course. With regular-premium products such as ULIPs, leaving early can mean steep costs and surrender penalties. Money stuck in the wrong product can leave a family underinsured or short of cash in an emergency, hurting retirement and education plans.
How can I tell whether a bank relationship manager is selling to me rather than advising me?
A clear warning sign is when the relationship manager pitches exactly the same product they would offer anyone, without asking about your age, your income needs or how much risk you can tolerate. When there is no real assessment of what you need, I see it as a sale driven by commission rather than advice that fits your situation.
What should I do before signing up for a financial product a bank offers me?
I advise customers to ask for a written explanation of why the product is suitable for them. Check every charge and the lock-in period yourself, independently of what the seller tells you. And once the policy documents arrive, use the free-look period that the regulator provides to go through them carefully, while you can still change your mind about the purchase.
In our words, from what he said in the piece. General information, not personal advice.
More of Abhishek's views on choosing an adviser
The article traces why the RBI brought in a framework against mis-selling by banks. It cites rising insurance complaints, sales targets for bank staff, and digital tricks such as pre-ticked boxes. It explains the new rules on defining mis-selling, banning forced bundling, requiring explicit consent and compensating customers.
Publisher source
From warnings to regulation: Why RBI ran out of patience with bank mis-selling