Refund customers in case of mis-selling: RBI, Pg15

Key Highlights:

• The Reserve Bank of India (RBI) proposed that regulated entities (REs) obtain explicit customer consent before offering financial products and services.
• RBI guidelines mandate compensation for customers in instances of mis-selling.
• The final directions regarding Responsible Business Conduct will be effective from July 1, 2026.
• Lenders are barred from deploying dark patterns that mislead or coerce customers.

Detailed Insights:

• The proposed framework includes norms for advertising, marketing, and sales of financial products and services by Regulated Entities (REs).
• Banks should refund the entire amount to customers where mis-selling is established and compensate for any losses incurred.
• Dark patterns, which use deceptive design to mislead users, are prohibited to prevent creating a false sense of urgency.
• These guidelines aim to promote responsible business conduct and protect consumers from unethical sales practices in the financial sector.

Key Concepts Involved:

• Mis-selling: Selling financial products or services unsuited to the customer's needs or understanding.
• Regulated Entities (REs): Banks, financial institutions, and other entities regulated by the RBI.
• Dark Patterns: Deceptive user interface designs that trick users into unintended actions.