TREATING CUSTOMERS FAIRLY (TCF) - RBI Guidelines (Novembe !

"#$)

B%& M ' B'(')ed

Treating Customer Fairly (TCF)

BACKGROUND
Cobrapost Fallout - Country s -!- pri"ate se#tor ban$s %ere en#ouraging money laun&ering an& %ere "iolating K'C norms (or t)ir& party pro&u#ts su#) as sale o( gol& #oins* #apital mar$et* insuran#e pro&u#ts an& mutual (un&s+ RB, also s#rutini-e& internal #ontrol pro#esses o( !. ban$s bet%een /ar#) an& /ay 012! 3 issue& s)o% #ause noti#es to !4 o( t)ese on (in&ing lapses an& t)en impose& a monetary penalty on -!2- ban$s+ Re#ently in mis-selling by 56BC* 67B, (oun& t)e unne#essary #)urn in #lient s mutual (un& port(olio to earn more #ommission+

Treating Customer Fairly (TCF)

BACKGROUND (#ontinues8)
TCF norms %ere (irst intro&u#e& by t)e UK s Finan#ial 6er"i#es Aut)ority 9,t is not enoug) (or ban$s to merely sti#$ to rules* t)ey must pro"e t)at t)ey )a"e a#te& in t)e best interest o( #ustomers: T)e intent o( basi# stru#ture (or TCF is in pla#e in ,n&ia (or ban$ing pro&u#ts (or s#)e&ule& ban$s+

Treating Customer Fairly (TCF)

;)at is TCF<
TCF is #onsumer prote#tion poli#y &esigne& to a&&ress t)e problem o( asymmetri# in(ormation in (inan#ial ser"i#es se#tor to pre"ent money laun&ering an& "iolation o( K'C norms in respe#t o( t)ir& party pro&u#ts+ Gui&elines on ;ealt) management ser"i#es* mar$eting an& &istribution o( t)ir& party (inan#ial pro&u#ts* K'C norms an& A/C stan&ar&s+

Treating Customer Fairly (TCF)

;)at is TCF< (#ontinues8)

TCF is regulatory an& super"ising inter"ention an& #ustomer #entri# initiati"e by RB, 3 To treat #ustomer (airly at all stages o( pro&u#t li(e #y#le* in#lu&ing &esign mar$eting* a&"i#e* point o( sale an& a(ter sale stages o( t)ir& party pro&u#ts+ 7=ten&ing Ban$ing Ombu&sman 6#)eme (BO6) to non- s#)e&ule& ban$s+

Treating Customer Fairly (TCF)

;)at is TCF< (#ontinues8)

RB, )as pro"i&e& a list o( a#tionable issues to ban$s+ ,nspe#tion s#rutinis s)oul& be more targete& an& (o#us s)oul& be results rat)er t)an t)e mere pro#ess+ Customer #an no% submit a #laim or ma$e a #omplaint+

Treating Customer Fairly (TCF)

RB, Con#lu&es
,t is not enoug) (or a ban$ to obtain t)e signature o( a #ustomer on t)e appli#ation (orm* it also bears t)e onus to ma$e sure t)at it pro"i&e& #orre#t a&"i#e+

Treating Customer Fairly (TCF)

Treating Customer Fairly (TCF)