Financial sector reform on course

‘One-stop solution’ has become a new mantra in the modern business world. The convergence of activities that follow in its wake, however, often put consumers in a piquant situation. A consumer of a financial product especially can easily get confused, and end up buying the wrong product. Oftentimes, the aggrieved are pushed from one place to another to seek redress. The reasons are not far to seek. Though a single agency may sell multiple financial products, the regulators for these may be different. In this scenario, avoiding responsibility has turned that much easier for sellers, and the aggrieved consumer is often treated as a football. Seeking to right this wrong, Budget 2015 has made the consumers of financial products the focus of all laws. A properly functioning capital market also requires proper consumer protection, Finance Minister Arun Jaitley said while presenting the Budget. His proposal to establish a unified financial redressal agency may well redefine play in the financial services field. The glamour of providing universal banking has seen the mis-selling of products acquire some sort of an institutional blessing. With competition turning fiercer in the financial services field, there seems to be a focus, blinkered as it might be, on pushing products at any cost. In such an environment, a consumer can never be the proverbial king. A single complaints resolution agency is the core of the non-legislative component of a host of recommendations made by the Financial Sector Legislative Reforms Commission. What Mr. Jaitley has done now is to initiate action on this. Once it becomes a reality, any aggrieved consumer can just knock on the doors of this single-point grievance-resolution agency. An independent agency would command greater trust among consumers and create a sense of responsibility among sellers. More important, it could clean up the financial services field, and usher in healthy practices.

This consumer focus is the critical part of the move to overhaul financial sector regulation. The Finance Minister did indicate in his Budget speech that efforts in this direction are on track. Even as the implementation of the recommendations of the Justice Srikrishna-chaired FSLRC is being studied by independent task forces, Mr. Jaitley is confident of placing the Indian Financial Code before Parliament sooner rather than later. But hurdles, especially of the legislative kind, are aplenty. Removing them will put the government’s resolve to the test to get assorted pressure elements out of its way. It may need some administrative tweaking as well. Putting in place the IFC is a gargantuan task, and could trigger a transformation in the financial sector.