Government may announce FRA in Budget 2021 to examine consumer complaints
Financial Redressal Agency will be examining all the consumer complaints against the regulated financial service providers.
The government has been looking to set up a Financial Redressal Agency- FRA which will be examining all the consumer complaints against the regulated financial service providers. The announcement regarding the agency can be made in the budget for FY 2021-22 to be presented on February 1.
As per the official, there is a requirement for a centralized agency that will be a single-window solution for the needs of retail financial consumers. The legislative changes required to empower such an agency will be executed in consultation with all the stakeholders.
The existing consumer redressal system of India has been overseen by the sectoral regulators such as RBI for banks and Insurance Regulatory and Developmental Authority- IRDA for insurance-related grievances.
Previous efforts to establish FRA:
In 2015, the late former Finance Minister of India, Arun Jaitley, had announced in his budget speech a taskforce for establishing a sector-neutral Financial Redressal Agency- FRA, which will be addressing grievances against all Financial Service Providers.
In its report, the task force had pointed out that the redressal forums for consumer complaints have not always been adequately empowered for handling all the categories of complaints. It noted that in some of the cases, regulated FSPs are not even covered under the scope of the redress functions of the regulator.
The task force had further supported the Financial Redressal Agency on the grounds that it will lead to an independent feedback loop for the regulators on complaints, which includes details on unregulated entities.
Recommendations for the roll-out of FRA:
The task force had recommended the two-phase rollout of FRA:
• In the first phase, the agency will look into the complaints regarding the pension and insurance sectors that are currently being handled by Insurance Ombudsman, Irda, and the Pension Fund Regulatory and Development Authority.
• Once this is established, the FRA will look at the complaints filed against the financial service providers which are regulated by SEBI- Security Exchange Board of India. Also, the retail complaints are handled by the Banking Ombudsman and Reserve Bank of India.