Aug. 2: The very public spat between the two regulators, Sebi and Irda, on the Ulip issue may have embarassed the government, but it benefitted the consumer. The fight over Ulips focused a lot of public attention on the high charges customers had to pay and the mis-selling — which IRDA finally acted on.
No wonder then, that investors are not very excited about the brand new Securities and Insurance Laws (Amendment) and Validation, Bill 2010, that replaced the Ulip ordinance. The bill seeks to preempt such turf wars between various regulators in the future.
“This does not mean anything to an investor,” said Mr Virendra Jain of Midas Touch Investors’ Associ-ation. “The important thing is for the government to see that the investor/consumer is protected. For several years, the insurance regulatory body turned a blind eye, as on its watch the unit linked insurance scheme was grossly misleading. The policyholder was a victim of flagrant mis-selling violations and the IRDA did nothing about it. It was only because the Securities and Exchange Board of India (Sebi) under its chairman, Mr C. Bhave, took the unprecedented step of questioning the jurisdiction of the IRDA over the ULIP schemes that IRDA finally woke up and came out with a host of amendments or regulations that the ULIPs became more investor friendly.”
IRDA brought in all the changes that put a stop to the mis-selling and cheating of the policyholders that Sebi had been pointing out.
“If the regulators now on the new body headed by the finance minister as chairman and the RBI governor as vice-chairman take up issue relating to investors as aggressively as Sebi did in the case of Ulips then to that extent the investors will be protected,” said Mr Jain.
The issue of jurisdiction is not important. What is more important is that the investor gets a fair deal, he added.