The Ministry of Finance has invited comments from stakeholders on the recommendations of Financial Sector Legislative Reforms Commissions (FSLRC) suggestion to set up a Financial Redressal Agency (FRA). This agency will resolve consumer complaints against all financial services companies across regulators. The last date to submit feedback is January 2017.
The committee headed by former Judge of the Supreme Court of India B. N. Srikrishna has also proposed a new financial consumer protection legislation to empower FRA to provide redress and to strengthen preventive regulatory framework on consumer protection.
The government has already set up a task force in June 2015 to implement committees suggestions.
The task force has observed that consumers are put under unnecessary stress as they are required to approach different ombudsman. This stress is further amplified due to varying levels of consumer protection across regulators. Further, there is a lack of powers to award compensation in some cases, pushing consumers to courts/consumer forums, states the press release issued by Ministry of Finance.
The FRA is expected to enable retail consumers in remote locations to resolve their complaints without imposing significant costs on them. Consumers can approach Securities Appellate Tribunal (SAT) if they are not satisfied with FRAs orders.
The FRA is proposed to be set up with an initial budget of Rs. 100 crore. The operational costs of FRA will be funded by collecting fees from different regulators. The regulators will have to collect this fee from their respective regulated entities based on the size of the entities and number of complaints received by them. No fee will be charged to the consumer.
The FRA will be operationalised in two phases. In the first phase, FRA will redress complaints handled by Insurance Regulatory and Development Authority of India (IRDAI), Insurance Ombudsman, and Pension Fund Regulatory and Development Authority (PFRDA). In the second phase, FRA will handle complaints against entities regulated by SEBI and retail complaints handled by Reserve Bank of India (RBI) and Banking Ombudsman.
The FRA would be managed by a Board appointed by the financial regulators, in consultation with the government. It would also have an Independent Assessment Officer to consider complaints against the FRAs redress function arising out of issues related to its standard of service.
This was announced by Finance Minister Arun Jaitley in his 2015-16 budget speech.