Know your rights and protect yourself from your bank’s mis-selling practices

This increase may not be attributable only to the rising awareness after the introduction of the new category.

“The jump in mis-selling complaints could be partly due to re-categorisation and partly on the account of the rise in awareness. Mis-selling is covered under the fair practices code as well the BCSBI code of commitment to customers. It is possible that such complaints, which were filed under these two codes so far, have made their way to this category,” explains Anand Aras, CEO, Banking Codes and Standards Board of India (BCSBI).

From 24.25 per cent in 2016-17, the proportion of complaints under non-observance of fair practices code dipped to 22.1 per cent in 2017-18 – the year when mis-selling was carved out as a separate ground for making a complaint. In 2018-19, the share has dropped further to 19.17 per cent, hinting at the possibility of such complaints being re-directed at the newly-minted category.

Even the increased complaint count, though, does not appear to be commensurate with the magnitude of the malpractice in public consciousness. Unscrupulous bank officials are often accused of selling unsuitable investment-cum-insurance policies to gullible customers. “The complaints related to mis-selling have gone up sharply when we compared on a year-on-year basis; but if you compute mis-selling cases to total complaints, then it’s less than 5 per cent,” says Vikram Babbar, Partner and Financial Services Lead, Forensic & Integrity Services, EY.

Since the annual report does not provide a break-up of complaints covered under non-adherence to fair practices and BCSBI codes, it is difficult to ascertain the scale of the menace in its entirety. These two categories accounted for 19.17 per cent and 3.05 per cent, respectively of the total complaints in 2018-19.

Mis-selling as a new category

However, the introduction of mis-selling as a separate complaint category has brought about clarity, which banking customers can use to their advantage. Industry-watchers believe the rise in awareness is one of the reasons for the higher number of mis-selling complaints.

“They now know how to raise a complaint, where to raise the complaint and the issues with products sold that constitute valid grounds for approaching the banking ombudsman,” says Sunil Khosla, Head Digital Business of India Transact Services Limited.

Yet, a large number of complaints get rejected on technical grounds. Therefore, it is important to adhere to the prescribed procedure for filing complaints. For one, do not approach the ombudsman’s office directly. You must first register your grievance with your bank. Only if your bank does not respond within 30 days from the date of filing the complaint or the response is not to your satisfaction should you escalate the matter.

This year onwards, the process has become simpler, with the RBI launching a  complaint management portal for registering grievances against banks, non-banking financial companies (NBFCs) and digital payment firms. You will need to furnish details including your personal information, bank branch details, account number, and nature of complaint along with relevant documents to support your claim. The banking ombudsman concerned could either reject your complaint or settle it through conciliation or award in your favour. You can also approach consumer courts – either directly or in case you are unhappy with the ombudsman’s verdict.