Abstract
Retail consumer protection has always been one of the guiding factors for financial regulation in India. Access to a simple and effective consumer grievance redressal mechanism has been considered vital in this pursuit of consumer protection. The financial sector regulation in India has witnessed a major reform with the conceptualization of the Indian Financial Code (IFC) based on the recommendations of the Financial Sector Legislative Reforms Commission (FSLRC). The setting up of the Financial Redressal Agency (FRA) that would serve as a one-stop redressal machinery spanning all the financial entities in India has been the upshot of the recommendations of the FSLRC. The present study provides a narrative on the case for setting up of the FRA by synthesizing the extant literature in the nature of policy reports. The findings of this paper may serve to provide the base for further thought on the subject of unified financial regulation.
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Notes
- 1.
A reference in the literature is always made to the RBI Act enacted in 1935 during the colonial rule.
- 2.
This has been evident in case ULIPS, equity-linked insurance investment products which have come under the purview of SEBI and IRDA.
- 3.
Ponzi schemes that have periodically surfaced in India and for want of regularity clarity have been able to operate in the system unregulated.
- 4.
The study estimates that consumers have lost Rs 1.5 trillion over a 7-year period from 2004 to 2012 due to miselling of ULIPS, an investment-linked insurance policy.
- 5.
See Report of the Task Force (2016) under the “Complaints received and their disposal” at p. 151.
- 6.
The earliest reference to market integration can be found in the report of the committee on “Making Mumbai the International Financial Centre” (2007). The other committees include the Committee on Financial Sector Reforms (2008) led by Raghuram Rajan and the Committee on Investor Awareness and Protection (2009) led by Dhirendra Swarup, Former Secretary, MOF, and the Chairman of the Task Force on Financial Redressal Agency.
- 7.
The committee chaired by UK Sinha, Former Chairman SEBI, worked on reviewing the policies regulating foreign direct investment in India. The committee recommended rationalizing the capital account regulation aligning the regulations for foreign investment in India in line with the international practices.
- 8.
The IFC as drafted on the basis of the FSLRC recommendations has been initially submitted to the Government on March 2013. Subsequently a revised IFC code has been submitted for review and awaits legal sanctions.
- 9.
The task force has adopted a consultative approach while conceptualizing the design of the FRA by reviewing the redressal practices of the UK Financial Services Ombudsman and the Australian Financial Ombudsman Services which have moved toward the unified way of redressal.
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Veluvali, P. (2018). Grievance Redressal in the Indian Financial Regulatory Space: The Unified Approach. In: Dwivedi, Y., et al. Emerging Markets from a Multidisciplinary Perspective. Advances in Theory and Practice of Emerging Markets. Springer, Cham. https://doi.org/10.1007/978-3-319-75013-2_2
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