Now File Unresolved Credit Score Complaints With RBI Ombudsman

Customers of registered credit bureaus can now approach the Reserve Bank of India (RBI) for faster resolution of their credit scores and related complaints. Credit Information Companies (CICs), more commonly known as credit bureaus, will be included under the central bank’s integrated ombudsman scheme, RBI governor Shaktikanta Das said on Friday while announcing the outcome of the monetary policy review.
“This will provide a cost free alternate redress mechanism to customers of REs (regulated entities) for grievances against CICs," as per the statement on developmental and regulatory policies.
Moneylife has many times received complaints from individual borrowers who have complained of discrepancies in their credit reports issued by credit information companies, which have led to financial setbacks for them such as  loan applications being rejected or poor credit score making them ineligible for best interest rates from financial institutions. Now, such borrowers can lodge such grievances against CICs with the Reserve Bank-Integrated Ombudsman Scheme (RB-IOS) 2021. 
There are currently four CICs in India - Equifax, Experian, TransUnion CIBIL, and CRIF Highmark. Moreover, these companies will also now have to put in place an internal Ombudsman framework.
The integrated ombudsman scheme was created by RBI in 2021 to allow consumers to file their grievances against registered entities for deficiency in their services if such complaints are not addressed satisfactorily or in a timely manner by the regulated entities (REs).
The scheme covers scheduled commercial banks, including urban cooperative banks, non-banking financial companies (NBFCs) and non-scheduled primary co-operative banks with a deposit size of ₹50 crore and above.
The central bank has also mandated the CICs to have their own Internal Ombudsman (IO) framework to strengthen the internal grievance redressal by CICs themselves. This will be over and above the existing customer redressal system that these companies may have.
With regard to outsourcing, the RBI said REs are increasingly using outsourcing as a means for reducing costs as well as for availing expertise not available internally.
Although outsourcing of a permissible activity is an operational decision of REs, it exposes REs to various risks.
The RBI has, from time to time, issued guidelines on managing risks in outsourcing of certain activities by REs.
"In view of the increasing trend of outsourcing, the framework for REs to manage the associated risks needs to be suitably strengthened. Therefore, to harmonise and consolidate the extant guidelines, a draft Master Direction on Managing Risks and Code of Conduct in Outsourcing of Financial Services will be issued shortly for comments from stakeholders,"Mr  Das said.



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Changes in Our Business Model
25th Sept 2020
Greetings from Moneylife Advisory Services
Between financial years 2019-21, SEBI has come up with extensive changes to investor advisor regulations. On Sep 23, 2020, SEBI had issued new additional guidelines. This comes just two months after extensive changes announced in July 2020. Earlier, in December 2019 there was an ad hoc circular
As a result of these changes, IAs, cannot accept fees through credit cards, will have to sign a 26-clause investor agreement, have to maintain physical record written & signed by client, telephone recording, emails, SMS messages and any other legally verifiable record for five years. IAs were already asked to record the suitability and rationale for every piece of advice given, sign them and store them for five years.
While these extensive and frequent changes, designed to strengthen the conduct of IAs are well-meaning, these have sharply increased compliance efforts and cost. We, being online advisors, find many of changes harder to implement, compared to advisors working in the physical space. We will have to have an army of advisors, administrative and tech staff to be compliant. If we do this, we will have to divert money to these areas and the cost of our service will double. We want to remain the least-cost service in the market to benefit more and more people. In the circumstances, we are forced to change our business model from “advisory” to “research”. This will mean the following:
What remains the same:
  • Recommendations on insurance, investment and Lion stocks, will continue as a part of the MAS premium subscription. Our strength has always been research and this will remain available to you through our recommendations.
  • The magazine and all textual content will remain as part of the service
  • We will have to suspend the restructuring tool.
What changes:
  • The interactions in Ask / Handholding will offer investment advice but not specific to your situation. It will offer information on investment products and also clarify your doubts about various financial products. It will be a forum for information, not for advice. This will be implemented with immediate effect and our guidelines in Ask, reflect this now.
Over the next few weeks our site and our communication to you will reflect these and other additional changes.
We feel this will not affect you much in terms of what really matters in investing: knowing what to buy and when to buy. This is our edge and it will still be available to you.
Debashis Basu