THE NATION November 26, 2012 1:00 am
The central bank met with the Securities and Exchange Commission and the Office of the Insurance Commission last week to beef up supervision of sales of securities and insurance products through commercial banks. The regulations will take effect next year for all commercial banks authorised to sell securities and insurance products.
The complaints included offers of life insurance policies bundled with safe deposit boxes and credit extensions together with a sales pitch for securities and insurance products without clear information of the risks.
The regulations enforce basic consumer rights, including the right to be informed, right to choose, right to be heard and right to redress.
Commercial banks also have to follow the rules, procedures and conditions for consumer rights' protection. They are required to show the difference between securities and insurance products and bank deposits, and their risks. Information on returns must be disclosed.
The report said the regulations prohibit commercial banks from forcing purchases of securities and insurance products tied with bank products or setting conditions for sales or services or main products. Commercial banks must let consumers decide on whether to purchase products or refuse to make purchases. Under the regulations, commercial banks are prohibited from promoting sales with rewards.
"Commercial banks must have measures to ensure customers have product knowledge and understanding. They have to provide product information on risks, returns, consumer protection, past performance and taxes," the report said.
Commercial banks are also required to separate the counter for sales of securities and insurance products and the counter for cash deposits and withdrawals with clear signs. Connected transactions for such products like money transfer after securities purchases can be made at the counter for sales of securities and insurance products.
Commercial banks, under the new regulations, have to set up after-sales procedures and a complaint system to facilitate customers. If commercial banks are proven to have breached the regulations with intent or through carelessness and caused consumers any damage, the banks are liable for proper compensation. Consumers' confidentiality must be maintained.
Weidt Nuchjalearn, a senior executive vice president of Krungthai Bank, said the regulations would make it harder for banks to cross-sell products. In cross-selling, the banks do not force customers to buy other products but just recommend them other products besides the main ones they intend to buy. However, if these recommendations make consumers feel annoyed, this might risk being deemed as violating the regulations.
Some banks might sell products in a manner that is in the blurred line between cross-selling and forced-selling of products, he added.
Regulations for sale of commercial bank products
- Must clearly identify the different characters of the products to consumers
- Must fully disclose product details
- Must not force consumers to buy securities and insurance products tied
with bank products or set sales conditions
- Must not promote product sales by giving buyers a chance to enter a lucky
draw for other items
- Must not promote products in a manner that annoys consumers or
infringes on their privacy
- Must not use misleading advertisement messages
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Source: http://www.nationmultimedia.com/business/Sales-rules-to-be-tightened-30195017.html
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