As you climb the stairs of Parisrama Bhavan in Basheer Bagh to reach the Insurance Regulatory and Development Authority (Irda) office in Hyderabad, you are greeted by a billboard in the stairwell that asks: Is your insurance company listening to you? If not, the billboard goes on, you can register your complaints online and track their status through Integrated Grievance Management System, IGMS, or call at 155255.
This in fact is the first board you see before you enter the office. Its placement is indicative of the regulator’s focus and its effort to reach out to aggrieved customers directly. And Irda is not alone in this regard. Capital markets regulator Securities and Exchange Board of India, Sebi, too has taken some institutional measures in the form of Sebi Complaints Redress System or SCORES to effect speedy disposal of complaints. In fact, SCORES is a step ahead because it also claims that it adjudicates on a case to case basis to ensure fair settlement. The mandate for IGMS, however, is to ensure speedy settlement of complaints and not adjudication. This is true even for the Standardised Public Grievance Redress System or SPGRS, that the ministry of finance has put in place only for the public sector banks (PSBs) for now.
With regulators taking a keen interest, consumer grievance management seems to be getting institutionalized and companies are beginning to create dedicated departments to have a focused approach towards consumer complaints. But given the fact that it’s still early days and the systems are yet to become popular, it maybe too early to judge their efficacy. But if the regulators are using the help of technology to reach out to you, you should also know how to reach out to them with your complaints. Read on to understand the processes of consumer grievance redressal set up recently in the financial sector.
Capital markets and mutual funds
Sebi set up SCORES in June 2011. So if you have a grievance with your investments that come under Sebi’s jurisdiction, such as mutual funds (MF), equity shares, depository participants (DP) and brokers, you can complain directly to Sebi through SCORES.
Visit Sebi’s website (www.sebi.gov.in) or www.scores.gov.in, fill in your basic details like your name, address, email id, register your complaint, submit any documents that you may have as evidence and sit back. Sebi, then, forwards your complaint to the firm and keeps a track of it. You could, alternatively, send your complaint to Sebi by post.
To ensure that the company against whom the complaint is filed actually receives the complaint, Sebi has made it mandatory for every listed company, MF, stock exchange, depository and so on, to nominate one person in charge of investor complaints. When Sebi gets a complaint, it sends an alert message to this official within seven days; he is then mandated to look into it. Though Sebi has not specified a fixed time limit within which the firm must respond, it mandates the company to send its first response within seven days of receiving the complaint and then about another 30 days generally to resolve the complaint. If the firm fails to respond, Sebi sends one to two reminders to the firm. If you have submitted the complaint online (on Sebi’s website), your firm will email you the response and will also update Sebi. If you complain by post, the firm sends you its reply by post, and it is mandated to mark a copy to Sebi.
If you are unhappy with the company’s response, you can go back to Sebi and tell them to take a relook at it. Further, there have been instances where Sebi, on its part, is not particularly satisfied with the firm’s response. In such cases, Sebi gets back to the company itself. “There was an instance where the investor did not get dividends for the shares he held of a bank. When the firm said that it sent duplicate dividend warrants, we got back to the company and told them to send this investor, two more reminders with a gap of seven days. We did this to ensure that if an investor misses one response from the company, the follow-up reminders should catch his attention,” says a senior Sebi official who did not want to be named.
Wait for about 30 days after you complain. If you don’t hear anything, you can quote your Unique Complaint Registration Number (UCRN)—a number you get after you first lodge your complaint on Sebi’s website—and send Sebi a reminder. Sebi penalizes those who fail to respond. The penalty varies and is subject to Sebi’s decision. Such actions taken against firms are also periodically listed on Sebi’s website here (http://tinyurl.com/mblgx3n).
While Sebi claims that its process is robust, an investor association we spoke to, is not impressed. “Over all it is very unsatisfactory. There are areas of concern. Firstly, the communication between Sebi and the complainant, after the complaint has been filed, is absent. At best, the investor gets a response “in process” when he gets in touch with Sebi to check the progress, but that sort of reply is not enough. These are automated responses and don’t mean much. Secondly, if grievances are just not resolved, despite Sebi’s intervention, nobody knows what happens to such complaints. In such cases, where Sebi can’t can’t do anything, they still should be able to take some action. Which they don’t do. I raised this query and asked them what they do in such cases. They didn’t have any answer to that,” says Virendra Jain, founder and president, Midas Touch Investors Association.
IGMS was set up by Irda in 2011. It works like a central repository of all the consumer complaints received by life insurance and non-life insurance firms. In that sense it’s a handshake between Irda’s grievance management system and the insurer’s individual grievance management system. The way it works is like this. You can register a complaint either through mail, phone or even verbally with an insurance company and the insurer will register that complaint in its grievance management system. In fact it is mandated that every insurer must have a grievance redressal policy approved by Irda and a grievance cell that will be presided over by a nominated person from the board.
Once your complaint gets registered, it will automatically flow in the IGMS which is monitored by Irda. Irda gives the insurer 15 days to settle the complaint. “Regardless of the nature of grievance, insurers have 15 days to settle the matter. However, 15 days start from the day of receiving all the necessary documents and proof,” says Yateesh Srivastava, chief operating officer, Aegon Religare Life Insurance Co. Ltd. If your complaint is not settled within 15 days, the system will raise a red flag so that Irda can take note of the delay and direct the insurer to settle the complaint. You can also approach IGMS by logging into www.igms.irda.gov.in or calling up the toll free number 155255. However, Irda encourages you to approach the insurer first.
The mandate of IGMS is restrictive because through it, Irda does not adjudicate on individual complaints. The basic idea of IGMS is to effect speedy disposal of complaints and have a repository that would help Irda track the nature of complaints in order to make systemic corrections. “We used to submit data on complaints even earlier but it was post-facto. So, the idea of IGMS was to track complaints and the effectiveness and timeliness of response on a real time basis. The regulator, however, depending upon the trends that complaints throw up, can always question the insurer,” says T.R. Ramachandran, CEO and managing director, Aviva Life Insurance Co. India Ltd.
In other words, Irda could go beyond the mandate. “Even as the regulator’s role remains directive, it can track complaints and even penalize the insurer for a glaring mistake,” says Srivastava. Irda also publishes data on complaints on its consumer awareness website www.policyholder.gov.in. According to this website, Irda in FY12 logged in about a lakh complaints on unfair business practice in the life insurance industry. This is 32% of all the complaints received. Irda on its website, www.irda.gov.in, also warns companies who violate regulations to fall in line. For instance in March, based on various compliants, Irda issued 15 warnings to Oriental General Insurance Co. Ltd and National Insurance Co. Ltd.
The industry feels that IGMS has led to speedy disposal of complaints. However, some feel more needs to be done. “Customer complaints are definitely being taken more seriously since Irda has a constant watch but what action the insurer takes is still work in progress. Irda should also think about taking action on complaints because approaching the ombudsman is very time consuming and they are short staffed,” says Kapil Mehta, founder, Securenow.in.
So if you want arbitration on the complaint, you will still need to go to the insurance ombudsman. Ombudsman are divided according to the regions and you will need to approach the one in your area. The verdict of the ombudsman is usually binding on the insurers and the ombudsman is supposed to issue a verdict within three months from the receipt of the complaint.
Except for PSBs, the banking sector lacks a similar integrated redressal system. In case of the PSBs, the department of financial services under the ministry of finance has put in place an online complaint redressal facility and inked guidelines on SPGRS last year. This SPGRS forms needs to be uploaded on the website of the PSBs. For instance, in the Bank of Baroda website you can find the form at http://tinyurl.com/kda93kl.
The idea was to meet the rising expectations of customers for prompt redress of their grievances. This system again works like a repository in the sense it integrates complaints received from multiple channels into a common digital platform. The bank in question is expected to solve grievances within three weeks or 21 days. The system has an inbuilt management information system for analysing performance. Says V.N. Kulkarni, chief counsellor, Abhay Credit Counselling Centre, “The SPGRS is one of the new ways to send complaints. However, the issue of resolving consumer complaints faster still remains. The move is in the right direction, but number of days to resolve the grievance should have been reduced further.” He adds that, “Only banking related issues can be addressed through the existing system. For complaints related to third party products such as insurance and MFs sold through a bank, you will have to approach the respective industry and regulators. This is because banks only acts as an agent while selling the third party products.” SPGRS is still being introduced in the banking system. We will have to wait and watch to see how it works out. You should remember that if the grievance is not solved via SPGRS, you can then approach the banking ombudsman.
Banking ombudsman is one of the last recourses to address banking related complaints. The ombudsman will look into complaints against all banks. As a customer you can approach the ombudsman only after he has exhausted all the options of customer redressal services of his bank in 30 days. For approaching the banking ombudsman, you need to first check under which jurisdiction you fall (see http://tinyurl.com/aqkhmwc). Usually, the banking ombudsman gives ruling within 30 days. If you are not satisfied with the ruling of the banking ombudsman and you have been unable to get your money back, the next thing is to approach the appellate authority, who is Reserve Bank of India’s deputy governor; currently, K.C. Chakrabarty.
The second layer of consumer redress is being put in place, although with some restrictions, but it seems like it still has to cover some ground. You as a customer should, however, actively make use of these systems to get your complaints settled in a timely manner.