NEW DELHI: With the Government pushing forward several economic reforms, one of the gaping holes in the nation’s financial infrastructure consistently highlighted by experts is the cumbersome customer grievance redressal mechanism for financial services.
On Wednesday, the Finance Ministry said in a statement that the government is initiating an exercise to set up a unified body which take care of all such grievances.
Currently, there are separate grievance redressal mechanism for insurance, banking services, pension and securities market.
The newly envisaged body, called the Financial Redressal Agency (FRA), will be designed to offer a simplified resolution process, allowing retail consumers in distant and remote locations to pursue effective remedies against financial service providers (FSPs), without imposing significant costs on them.
The Government had already moved toward examining the viability of such a body and the ways in which it could be implemented by setting up a task force early in 2015 headed by former chairman of the Pension Fund Regulatory and Development Authority (PFRDA) D Swarup to look into the aspects.
According to Finance Ministry, the task force had come out with a list of recommendations which it presented in June this year. Comments from stakeholders and the public are now being sought on the report, which was made public on Wednesday.
According to the report, the FRA, as envisaged by the task force, will try to resolve all complaints through mediation and discourage court-like processes and in cases where the parties are unable to reach a settlement, would be resolved through a light-touch adjudication process.
“It (the taskforce) highlighted the need for basic protections (articulated by FSLRC) to be provided in law through a new financial consumer protection and redress legislation to empower FRA to provide redress; and strengthen preventive regulatory framework on consumer protection for implementation by the regulators,” the Ministry said.
The path to implementation will first enable the FRA to redress complaints handled by Insurance Regulatory and Development Authority of India (IRDAI), Insurance Ombudsman, and Pension Fund Regulatory and Development Authority (PFRDA).
In the second phase implemented after a year, it should be given power to redress complaints against FSPs regulated by Securities and Exchange Board of India (SEBI) as well as retail complaints that are handled by Reserve Bank of India (RBI) and Banking Ombudsman.