There have been instances where life insurance policies were sold to customers aged above 75 years in Tier II-III cities. Usually, branches of the banks push products of their subsidiary insurers. The department has already issued a circular wherein it has been advised that a bank should not adopt restrictive practices of forcing customers for getting insurance from a particular company
New Delhi:
Concerned over rising incidence of mis-selling, the finance ministry has directed heads of public sector banks to put in place strong mechanisms to avoid unethical practices for selling insurance policies to customers.
The Department of Financial Services has received complaints that fraudulent and unethical practices are adopted by banks and life insurance companies for procuring policies from the bank customers, a letter addressed to chairpersons and managing directors of public sector banks said.
There have been instances where life insurance policies were sold to customers aged above 75 years in Tier II-III cities. Usually, branches of the banks push products of their subsidiary insurers.
When resisted by customers, branch officials would sheepishly convince that they are under pressure from top. Insurance products are pushed when customers go to seek any kind of loan or buy a term deposit. In this regard, it said, the department has already issued a circular wherein it has been advised that a bank should not adopt restrictive practices of forcing customers for getting insurance from a particular company.
It is also conveyed that the Central Vigilance Commission (CVC) has raised objection, as incentives for selling insurance products bring not only pressure on the field staff but the core business of banking also gets affected and quality of advances may get compromised in the lure of commission and incentives for staff.
“In keeping with these guidelines, you are requested to issue suitable instructions to the concerned vertical of your bank for putting in place a robust mechanism for avoiding any unfair and unethical practices adopted by bank and the franchise life insurance company for procuring life insurance policies from bank customers,” it said.