Now customers will be prohibited from forcibly selling insurance or mutual funds along with loans. The Reserve Bank of India (RBI) on Wednesday released draft rules to prevent mis-selling. These rules strictly prohibit dark patterns, forced bundling and selling without the customer’s express consent.
These rules will be applicable to all regulated entities, including general banks, small finance banks, payments banks, local area banks, regional rural banks, urban and rural cooperative banks, financial institutions, NBFCs and housing finance companies. RBI has sought suggestions on this draft till March 4. Final rules will be issued after considering the suggestions. The new rules will come into effect from July 1, which will change the way financial products are sold.
Big changes from July
1. Prohibition on forced bundling: No bank will be able to forcibly sell insurance, mutual funds or other third-party products along with the loan.
2. Separate consent required: If multiple products are being sold to a customer, separate consent will have to be obtained for each product. Consent cannot be taken for everyone at once.
3. Clear information is important: Promotional material should be clear and correct. Complete details of fees and all other charges must be informed in advance.
4. 30-day feedback required: Banks and financial institutions must collect customer feedback within 30 days of every sale.
5. Dark patterns prohibited: Apps and websites will not be allowed to use pre-ticked boxes or misleading designs.
6. Sales calls only during scheduled hours: Bank employees or sales agents can make calls or meet only between 9 am to 6 pm, and that too only with the customer’s permission.
Refunds and compensation for misinformation: If it is proven that a product was sold to the customer by providing false information or without their consent, the entity will be required to refund the full amount and provide compensation. RBI observed an increasing number of complaints regarding mis-selling through third-party products, activities of agents and dark patterns on digital platforms.
Therefore, it was considered necessary to make uniform and comprehensive rules for all banks and NBFCs. The new rules will provide more transparency to customers. Banks will have to provide an updated list of agents on their website and display distinct identity of the agents at the bank’s location.