RBI Looks to Eliminate Incentive Structures to Curb Mis-selling in Banks

The RBI is now going to ban the sales incentives for reducing the mis-selling in banks, as per the reports. Aiming for this, the central bank is purposes to eliminate incentive programs.

The Reserve Bank recommended on Wednesday that banks refrain from offering any incentives that might result in the mis-selling of any goods or service.

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The central bank’s draft amendment instructions for the advertising, marketing and sale of financial products and services by regulated organizations also recommended that banks should only contact clients with their permission and that they should only do so during business hours, reported by PTI.

“A bank must make sure that its policies and practices do not create incentives for mis-selling, nor encourage employees/DSAs (direct sales agents) to ‘push’ the sale of products/services,” according to the RBI.

If mis-selling is proven, banks will be required by an authorized policy to return the full sum that the customer spent on the product or service and also pay the customer for any losses resulting from the mis-selling. The RBI also stated a list of about a dozen instances of such operations that should be avoided and is contemplating requiring banks to make sure that its user interfaces do not use any dark patterns.