The government is evaluating options to set up a Financial Redressal Agency (FRA) to examine complaints against the regulated financial service providers like banks, insurance firms and other companies. The announcement could be made in the upcoming Union Budget 2021 on February 1.
A government official mentioned that there is a requirement for a centralised agency that needs to be a single-window solution for retail financial consumers' complaints, The Economic Times reported.
"The legislative changes required to further empower such an agency will be done in consultation with all stakeholders and accordingly pursued," added the official.
Currently, the consumer redressal system in the country is overseen by the sectoral regulators like Reserve Bank of India (RBI) in case of banks and Insurance Regulatory and Development Authority of India (IRDAI) in case of insurance grievances.
In 2015, the late Arun Jaitley, former Finance Minister, had announced a task force for establishing a sector-neutral FRA. The task force had recommended the two-phase rollout of FRA.
In first phase, the proposed agency was meant to look into the complaints regarding the pension and insurance sectors that are currently being handled by IRDAI and PFRDA. Once this is established, the FRA would look at the complaints filed against the financial service providers which are regulated by SEBI, as well as the retail complaints handled by the RBI and Banking Ombudsman.
The task force, in its report, had pointed that consumer complaints' redressal forums haven't always been adequately empowered for handling complaints. It also added that in some of the cases, regulated financial service providers are not even covered under the scope of the redress functions of the regulator.
The task force had further supported FRA because it will lead to an independent feedback loop for the regulators on complaints, including details on unregulated entities.