India, Feb 12 : The Reserve Bank of India (RBI) has proposed prohibiting incentives paid by third parties to bank employees for selling insurance, mutual funds, and similar products, in a bid to curb the mis selling of financial services.
In its Draft Amendment Directions on Advertising, Marketing and Sales of Financial Products and Services, the central bank stated that employees engaged in marketing or sales must not receive any direct or indirect benefits from external product providers. The move is aimed at ensuring unbiased advice and protecting consumer interests.
The RBI has also barred the use of “dark patterns” on banks’ digital platforms deceptive design practices that manipulate users into making unintended purchases or decisions classifying them as misleading and a violation of consumer rights.
Additionally, banks have been instructed not to bundle third-party offerings with their own products. Customers must retain the freedom to purchase such services from any provider, even when linked to a bank product.
To strengthen accountability, the regulator has mandated full refunds and compensation in cases where mis-selling is established, in accordance with approved policies. Customers can file complaints within timelines specified by financial regulators, or within 30 days of receiving the agreement if no timeline exists.
Banks will also be required to seek customer feedback within 30 days of a sale to confirm that buyers understand the product’s features and risks. These responses must be compiled into half-yearly reports for policy evaluation.
The draft further cautions lenders against internal practices such as sales competitions that may pressure employees or agents into aggressively pushing products.
Conduct rules for direct selling agents have also been outlined, restricting customer calls and visits to between 9 am and 6 pm unless explicit consent is provided for contact outside these hours.