Greetings to you from Circle Wealth Advisors…

Are you left with an experience of being forced by your bank to invest in an unsuitable product, or that bank is taking an unfair advantage of your data and giving it to tele callers? Most people wonder how to tackle this stop banks in getting into these unfair trade practices. Earlier this month the RBI released a Charter of Customer Rights specifying five basic rights that bank customers enjoy.

Although other grievance mechanism like Ombudsman exist, we feel that a direct intervention from the RBI is a more robust step and easier for customers to make use of it. In case a bank violates any right as laid down by the RBI, customers can approach the customer services division of the apex bank.

Here are the 5 rights as mentioned in the charter

1. Right to fair treatment

This right prohibits banks from discriminating against customers on grounds of gender, age, religion, caste and physical ability while offering products and services. Banks can, however, continue to offer differential rates of interest or products to customers. “The financial services provider may, however, have certain special products which are specifically designed for members of a target market group or may use defensible, commercially acceptable economic rationale for discriminating between its customers,” the central bank had elaborated in the draft charter released in August.

2. Right to transparency, fair and honest dealing

You can expect language in bank documents to be simplified and transparent. The charter requires banks to ensure that all contracts are transparent and easily understood by the common person. The onus of sending out effective communication will rest with banks. Information on the product’s price, customer’s responsibilities and key risks will have to be clearly disclosed. “Any features that may disadvantage the customer should be made known to him. Important terms and conditions should be clearly brought to the notice of the customer,” the charter says.

3. Right to suitability

Despite several regulations, complaints related to mis-selling continue to plague the distribution space, particularly in case of life insurance policies. Lured by higher commissions, sales officials tend to push products without ascertaining their suitability for the customer. The charter has now made it mandatory for banks to sell products after keeping in mind customers’ needs, financial circumstances and understanding.

4. Right to privacy

Banks are duty-bound to keep customers’ personal information confidential, unless the disclosure is required by law or customers have given their consent. “Customers have the right to protection from all kinds of communications, which infringe upon their privacy,” the charter states. Banks cannot pass on your details to telemarketing companies or for cross-selling.

5. Right to grievance redressal and compensation

The right to grievance redressal is at your aid if your bank fails to adhere to basic norms. The charter makes banks accountable for their own products as well as those of third parties like insurance companies and fund houses. They will no longer be able to wash their hands of the responsibility once the product is sold. Banks will have to communicate the policy for compensating for mistakes on their part, lapses in conduct and non-performance or delays. The redressal and compensation policy will have to state the rights of customers when such events occur.

Happy Investing!!! 

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