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RBI issues draft charter of customer rights

In a further push to strengthen customer rights, the Reserve Bank of India (RBI) today released a draft charter comprising of five basic customer rights.

The charter includes right to fair treatment, right to transparency, right to suitability, right to privacy and right to grievance redress and compensation.

The draft Charter of Customer Rights to deal with entities regulated by the Reserve Bank, has been framed based on global best practices of consumer protection as also discussions and interaction with various stakeholders.

The Charter spells out the rights of the customer and also the responsibilities of the financial service provider.

In the Right to Fair Treatment, RBI has said that both the customer and the financial services provider have a right to be treated with courtesy.

“The customer should not be unfairly discriminated against on grounds such as gender, age, religion, caste and physical ability when offering and delivering financial products,” said the banking regulator.

However, the financial services provider can 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 customers.

The Right to Transparency, Fair and Honest Dealing entails that the financial services provider should make every effort to ensure that the contracts or agreements it frames are transparent, easily understood by and well communicated to, the common person.

RBI said that the product’s price, the associated risks, the customer’s responsibilities and the terms and conditions that govern use over the product’s life cycle, should be clearly disclosed.

The central bank said that the customer should not be subject to unfair business or marketing practices, coercive contractual terms or misleading representations.

“Over the course of their relationship, the financial services provider cannot threaten the customer with physical harm, exert undue influence, or engage in blatant harassment,” said RBI.

In its first bi-monthly Monetary Policy Statement (2014 – 15) announced on April 1, 2014, RBI has said that consumer protection is an integral aspect of financial inclusion.

Further, it had proposed to frame comprehensive consumer protection regulations based on domestic experience and global best practices.The draft charter for customer rights has been prepared in accordance with this announcement.

With respect to the Right to Suitability, RBI said that the products offered should be appropriate to the needs of the customer and based on an assessment of the customer’s financial circumstances and understanding.

All customers will also have a Right to Privacy. Here, the customers’ personal information should be kept confidential unless they have offered specific consent to the financial services provider. or such information is required to be provided under the law or it is provided for a mandated business purpose (for example, to credit information companies).

“The customer should be informed up-front about likely mandated business purposes. Customers have the right to protection from all kinds of communications, electronic or otherwise, which infringe upon their privacy,” the central bank said.

The charter also includes the Right to Grievance Redress and Compensation where the customer has a right to hold the financial services provider accountable for the products offered and to have a clear and easy way to have any valid grievances redressed.

The regulator said that the provider should also facilitate the redress of grievances stemming from its sale of third party products.

The financial services provider must communicate its policy for compensating mistakes, lapses in conduct, as well as non-performance or delays in performance, whether caused by the provider or otherwise.

  • Right to Fair Treatment: No discrimination on basis of gender, age, religion, caste and physical ability
  • Right to Transparency, Fair and Honest Dealing: Contracts or agreements between financial service provider and customer should be transparent and easy to understand
  • Right to Suitability: Products offered should be appropriate to the needs of the customer
  • Right to Privacy: Customers’ personal information to be kept confidential. No unwarranted communication, electronic or otherwise, to be sent
  • Right to Grievance Redress and Compensation: Financial services provider accountable for products offered (including third party products). Provider to facilitate easy grievance redressal

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