Complaints related to mis-selling of financial products on the rise
1 min read . Updated: 17 Dec 2019, 10:45 PM IST
Premium- RBI received 1,115 complaints related to mis-selling of financial products in 2018-19 compared with 579 in 2017-18
- Mis-selling is a practice in which a product or service is misrepresented or a customer is misled about its suitability
Despite repeated warnings by the Reserve Bank of India (RBI) to banks on mis-selling of financial products, customers are seeing no end to their plight, data cited by the regulator showed on Tuesday.
The banking ombudsman received 1,115 complaints from bank customers related to mis-selling of products in 2018-19, close to double of what it received in the previous year.
“The number of complaints pertaining to mis-selling has gone up from 579 complaints in 2017-18 to 1,115 in 2018-19, an increase of 92.57%," said RBI.
Mis-selling is a practice in which a product or service is misrepresented or a customer is misled about its suitability.
The banking ombudsman scheme (BO Scheme) was introduced in 1995 as an expeditious grievance redressal mechanism for customers of banks. Two grounds, non-adherence to RBI instructions on mobile or electronic banking and non-adherence to RBI guidelines on para-banking activities like sale of insurance, mutual fund and other third-party investment products by banks’ (mis-selling), were included from July 2017.
According to the data, total complaints received at offices of the banking ombudsman rose by 32,311 taking the total to 195,901 complaints in 2018-19 over the previous year (163,590), a year-on-year (y-o-y) rise of 19.75%. Of these, 72.2% were received electronically—through the online portal and by emails—as against 63.61% in the previous year.
The report said that the resolution rate for complaints in 2018-19 was 94.03% as against 96.46% in 2017-18.
“The reduction in disposal rate is largely due to rise in volume of complaints with resource remaining the same," the report said.
While non-observance of fair practices code accounted for maximum number of complaints, its share came down from 22.1% in 2017-18 to 19.17% in 2018-19. Complaints on ATM and debit card issues increased from 15.08% in 2017-18 to 18.65% in 2018-19.
“The number of awards and appeals issued by banking ombudsmen in 2018-19 stood at 98 and 78, respectively, as compared to 133 and 125, respectively, in 2017-18. The average cost of handling a complaint came down from ₹3,504 in 2017-18 to ₹3,145 in 2018-19," it said.
