For a variety reasons, such as
- increasing diversity of financial products
- their increasing complexity
- reluctance among people to become financially literate
- mental block against finance
- and, of course, human greed and fear
a common person becomes an easy target for unscrupulous agents, advisers, banks, brokers and other financial companies / intermediaries.
End result : Huge profits to banks / financial companies and Unreasonable commissions / fees to agents / intermediaries at the cost of poor and hapless investors.
And this problem assumes serious proportions when you are mis-guided by the very bank that you have trusted the most.
It is the job of the regulators to protect ordinary investors against such financial sharks. One such initiative was 'Treating Customers Fairly (TCF)' by the Financial Services Authority (FSA), UK in 2006. RBI proposes to introduce the same in India too.
While the basic structure for TCF is in place in India for banking products, the scope of the same may be expanded to cover the third party products such as mutual funds, capital market and insurance products; which are now being actively sold by banks to earn fee-based income.
Treating Customers Fairly is a consumer protection policy. Its aim is to address the problem of consumer not having access to the desired information about a financial product, which is otherwise known to the financial service providers. It is a regulatory initiative by which firms are required to consider their treatment of customers at all the stages of the product life-cycle, including the design, marketing, advice, point-of-sale and after-sale stages.
As per FSA, the desired outcomes of the TCF programmes are:
(i) Consumers can be confident that they will get fair treatment;
(ii) Products and services are designed to meet the needs of identified consumers;
(iii) Consumers are provided clear information and are kept appropriately informed before, during and after the point of sale;
(iv) The advice is suitable taking into account their needs and circumstances;
(v) The product's performance and the associated service is matching to what the consumers were let to expect
(vi) Consumers do not face any problems in changing product, switch providers, submit a claim or make a complaint.
RBI also makes a "crucial" observation - policies by themselves do not solve the problem; there has to be the "right intent" too.
Well, my argument is that if the intent were right, we would not have witnessed the mis-selling seen nowadays and logically there wouldn't have been any need for such an initiative. Therefore, in all likelihood, the TCF too may remain just on paper. It is unlikely to bring about any path-breaking improvement in real life.
Therefore, as I have repeatedly mentioned, YOU have to LEARN to take care of your money. Do not take anyone's word for granted. Cross-check every statement. Cross-verify every promise. This, I believe, is the ONLY protection against being scammed.
