News | Consumer Issues

Now File Unresolved Credit Score Complaints With RBI Ombudsman

MAS Team 13 August 2022
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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. 
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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:
 
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Debashis Basu
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