The Department of Financial Services (DFS) has warned public sector banks against mis-selling insurance products to customers, urging them to protect the interest of account holders.
DFS has been getting regular complaints regarding fraudulent and unethical practices being adopted by banks and life insurance companies for procuring policies from customers, said Financial Services Secretary Vivek Joshi
"Banks have been asked to give utmost importance to the interest of account holders," PTI quoted Joshi as saying.
His remarks came as some banks allegedly make customers buy insurance products when they approach for loans or term deposits. In some cases, life insurance policies were sold to customers aged above 75 years in tier-II and tier-II cities.
What should you do if banks mis-sell insurance products?
If you have found that your bank mis-sold you an insurance product withing the free-look period of 15 to 30 days, you can complain to the bank and the insurance firm, following which they will cancel your policy. They are bound to refund the premium amount you have paid.
In case you realise that the product was mis-sold after the free-look period, you can still complain to the bank. If the bank doesn't resolve the issue within 30 days, you can directly approach the banking ombudsman with the proofs, as per a June 2017 notification by the RBI.
The banking ombudsman could award up to Rs 20 lakh with additional compensation of up to Rs 1 lakh for loss of time and money, harassment and mental anguish suffered by the victim.
There is no fee involved in filing the complaint with the ombudsman. If the complaint is time-barred or already heard in another court, the ombudsman could refuse to hear the complaint.
Customers can write to the insurance regulator IRDAI (Insurance Regulatory and Development Authority of India) regarding the grievances or register complaints under the Bima Bharosa system (bimabharosa.irdai.gov.in)
