Government of India Volume I: Analysis and Recommendations

CONSUMER PROTECTION
Table of Recommendations 5.9 Composition of the advisory council on consumer protection
1. The advisory council will consist of persons who are consumers or persons representing the interests of consumers.
2. The appointment of members of the council should also:
(a) give a fair degree of representation to experts in the fields of personal finance and consumer rights;
and
(b) take into account the need to ensure proper geographical representation from across the country.
Table of Recommendations 5.10 Composition of the redress agency’s board
The general superintendence, direction and management of the affairs of the redress agency will vest in its board of
directors, which will be comprised of:
1. A chairperson to be appointed by the regulators through a selection process, in consultation with the Central
Government.
2. One official to be nominated by each of the regulators.
3. Four other members to be appointed by the regulators through a selection process.
the insurance ombudsman although retail consumers will continue to have the option
to approach other available forums, such as the consumer courts established under the
Consumer Protection Act, 1986 and regular courts. In the future, if the Government is of
the view that the redress agency has acquired sufficient scale and expertise to be able to
efficiently address all complaints from retail consumers, it will have the power to exclude
the applicability of the Consumer Protection Act, 1986 to retail consumers covered by the
redress agency.
In any case, once a retail consumer opts for a remedy before the redress agency, it
will not be permitted to institute fresh proceedings before another forum, either simultaneously
or after a final order has been issued by the redress agency. Similarly, action
initiated before any other forum will bar any action before the redress agency.
The redress agency will be managed by a board of directors (see Table 5.10 for the
composition of the board). The agency will be funded through a combination of allocations
from the Central Government, standard fees payable by all financial service
providers and a complaint-based fee that will be collected as and when a complaint is
brought against a financial service provider.
An effective dispute resolution body needs to be designed in a manner that ensures
access, convenience, efficiency and speedy remedies. It needs to address two
kinds of difficulties: a scenario where a genuine consumer is not able to obtain redress,
and one where multiple cases are filed against a financial firm as a strategy of harassment.
The Commission envisages the redress agency to function as a technologically
modern organisation that will carry out video hearings, digital handling of documents,
telephonic/online registration of complaints, maintenance of a high quality electronic
database and online tracking of compensation payments. To ensure that the processes
designed by the redress agency are in line with these requirements, the draft Code expressly
requires the redress agency to put in place adequate systems, processes, technology
and infrastructure to enable it to efficiently discharge its functions. The draft Code
also empowers the regulators to impose service level requirements on the redress agency
with measurable targets on matters such as the total cost to parties for proceedings before
it, compliance cost for financial firms and time-periods for each step of the redress
process. The redress agency will be accountable for meeting these targets with a requirement
to explain any failure to do so. These measures will compel the redress agency to
strive towards maximum efficiency in its processes and functioning.
The draft Code allows the redress agency the discretion to open offices anywhere in
the country. The Commission intends that the redress agency will use this power to set up
FINANCIAL SECTOR LEGISLATIVE REFORMS COMMISSION 51