Missold insurance or mutual funds by your bank?
MUMBAI: If you have been to a bank branch to rent a locker, nine out of 10 times, you would have been asked to either open a fixed deposit with the bank or take out an insurance policy. If you visited the bank to deposit money in your PPF account, it is probable that a pushy bank official tried to wean you away to an insurance product, claiming the latter is better than PPF. Over the years, many bank customers have fallen victim to such tactics and ended up buying unnecessary financial products from their banks.
According to the RBI’s amended banking ombudsman scheme, which will come into effect on July 1, complaints relating to misselling, as well as mobile and electronic banking will be included in the ombudsman scheme. Here is a look at what has changed for you:
INSURANCE AND MFS
So far, the banking ombudsman only accepted complaints about banking products and services. Third-party products sold by banks, such as insurance and mutual fund products, were kept out of its ambit. Now the banking ombudsman scheme will include sale of insurance, mutual funds and other thirdparty investment products.
Under the amended scheme, any person can file a complaint with the ombudsman against a bank for nonadherence to the central bank’s guidelines on parabanking activities such as sale of insurance, mutual funds and other third-party investment products in case of improper, unsuitable sale of such products; non-transparency or lack of adequate transparency in sale; non-disclosure of the grievance redressal mechanism that’s available; delay or refusal to facilitate after-sales service by banks and any other matter relating to the violation of the directives issued by the central bank in relation to banking or other services.
ELECTRONIC AND MOBILE BANKING
The RBI has, under the amended scheme, has allowed you, in case of any grievance, to lodge a complaint against any bank for non-adherence to the central bank’s instructions on mobile banking and electronic banking services.
The banking ombudsman will now look into complaints related to delay or failure of online payments or fund transfers and unauthorised electronic payments or fund transfers. However, do remember that banks get a certain minimum time to resolve customers’ complaints in case transactions fail to take place. For instance, banks are mandated to resolve customer complaints regarding failed ATM transactions by re-crediting the customer’s account within seven working days from the date of complaint. These existing timelines will also be considered by the banking ombudsman.
CHANGE IN COMPENSATION AMOUNT
The central bank has also amended the compensation limit. It has now been increased from ₹10 lakh to ₹20 lakh. The compensation excludes the amount involved in the dispute. For instance, you have a complaint about a transaction amount of, say, ₹15 lakh. The compensation will be over and above this amount. The banking ombudsman will also give up to ₹1 lakh to the complainant considering her loss of time, expenses incurred, and the harassment and mental agony suffered. However, in the past, the number of individuals who received such compensation has been low.