In a radical effort to curb misrepresentation of financial products, India's insurance regulator has introduced tough guidelines on telemarketing that will come into force in October.The rules by the insurance regulatory and development authority (Irda) require insurance agents to record all calls while soliciting new customers by telephone.
If an insurance policy is bought, the agent must disclose his commission from that transaction. The customer will be entitled to a copy of the recording at any time until the settlement of the claim."Full disclosures shall be made to the clients under all modes of distance marketing, and the requirements of confidentiality, privacy and non-disclosure shall be complied with," Irda said. The rules are the latest tough regulations introduced in recent years to bring about transparency in India's fast-growing insurance sector, in which malpractice such as the misrepresentation of financial products is common.
In recent weeks, Irda has also run large advertisements in newspapers warning the public against fraudsters masquerading as insurance agents. "BEWARE" screams a signboard held by a comic character dressed as Superman in an ad. "There are certain fraudulent phone calls by persons claiming to be employees of Irda trying to sell insurance policies," it says, advising readers to report such calls to the nearest police station.
India's financial services sector contributes 15 per cent to the country's GDP. The sector's contribution is expected to exceed 17 per cent this year as the country's high savings rate - 34 per cent and expected to reach 35.3 per cent next year - offers the financial markets new opportunities to grow.