By Vishnu Prasad, IFMR Finance Foundation
Financial Customer Protection in India has traditionally hinged on the caveat emptor or buyer beware principle, which places the onus of customer protection on the customer. As the financial sector rapidly evolves to meet the complex financial needs of households, it becomes apparent that the caveat emptor approach is an unsustainable approach to customer protection. In addition, India follows a sectoral approach to ex-post customer grievance redressal with each regulator having set up its own grievance redressal architecture. As customers increasingly face an integrated portfolio of services, it is unclear whether this sectoral approach can guarantee speedy and effective redress of complaints. The fragmentation and lack of coordination between the multiple surveillance and monitoring mechanisms further compounds this problem. From this, it is clear that there is an urgent need to create a sustainable and effective architecture for financial customer protection in India.
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