The Reserve Bank of India has proposed a ban on incentives paid by third parties to bank staff for selling insurance, mutual funds, and other products to prevent mis-selling of financial services. The central bank also prohibits dark patterns on commercial banks UI, defining them as deceptive design practices that trick users into unintended purchases by impairing consumer autonomy and decision-making. These draft directions on advertising, marketing, and sales of financial products aim to protect customers from unfair trade practices across regulated entities.
Ban on Third-Party Incentives and Product Bundling
Banks must ensure no incentives—direct or indirect—are received by employees marketing or selling third-party products or services from those third parties. Regulated entities cannot bundle third-party product sales with their own offerings, and customers must be allowed to source third-party products from any provider if a bank product sale is contingent on it. The RBI mandates full refunds for established mis-selling cases, plus compensation for losses per approved policies.
Customers can lodge mis-selling complaints within regulator-specified timelines or 30 days of receiving signed terms if none exist. Banks must implement feedback mechanisms within 30 days of any sale to verify customer understanding of features and risks, preparing half-yearly reports for policy review.
Strict Norms for Direct Selling Agents and Competitions
Practices like organising sales competitions among business units must not incentivise mis-selling or pressure employees and direct sales agents to push products. Direct selling agents face conduct rules: telephonic contact and customer visits normally limited to 9 am–6 pm, with prior consent required for other hours.
Enhanced Accountability and Grievance Mechanisms
The draft emphasises proactive safeguards against misleading advertisements and violations of consumer rights. Banks bear responsibility for ensuring compliance in all sales channels, with mis-selling complaints routed through established internal processes. This framework strengthens oversight as financial product complexity rises and digital interfaces proliferate.