Government of India Volume I: Analysis and Recommendations

CONSUMER PROTECTION
Table of Recommendations 5.11 Outline of the redress agency’s proceedings
The redress agency will follow the following steps while assessing complaints made to it by retail consumers:
1. Receipt of complaint: Complaints against financial service providers may either be submitted directly to the
redress agency (at any of its offices) or be submitted to the regulator, which will then forward it to the redress
agency.
2. Screening of complaints: The redress agency will screen all received complaints and may dismiss a complaint
during the screening process if the consumer has not made a complaint to the financial service provider
before approaching the redress agency; the complaint is prima facie frivolous, malicious or vexatious; or if
the matter is pending before, or has been adjudicated upon by, another competent authority.
3. Mediation: A complaint that is not dismissed during screening will be referred to a mediator who will assist
the parties to arrive at a voluntary settlement. If the mediation process fails, the complaint will proceed to
the adjudication stage, unless it is withdrawn by the retail consumer.
4. Adjudication: The redress agency will appoint independent skilled and qualified adjudicators, who will be responsible
for investigating, considering and determining complaints. Unless an appeal is made, the decision
of the adjudicator will be final and binding on the parties.
5. Appeals: Appeals from a decision of the redress agency’s adjudicators will go to the FSAT and appeals from
the appellate tribunal will go to the Supreme Court.
front-end offices throughout the country where retail consumers of all financial products
and services will be able to submit their complaints. Modern technology would then be
used to connect these front-ends into a centralised mediation and adjudication system
(see Table 5.11).
The redress agency will endeavour to arrive at an amicable settlement in a majority
of the complaints through its mediation process. In cases where a settlement is not
achieved, the consumer may choose to withdraw the complaint from the redress agency,
failing which, it will be referred for adjudication. The adjudicator will hear the parties, examine
the claim and pass a final order on the complaint after taking into account:
◮ the provisions of the draft Code on consumer protection and regulations made under it;
◮ the terms of the financial contract between the parties;
◮ any code of conduct applicable to the financial service provider; and
◮ prior determinations made by the redress agency on similar matters.
An order made by the adjudicator may provide for an award of compensation to the
retail consumer, subject to limits that will be specified by the regulators, or issue any other
directions that the adjudicator considers just and appropriate. A party that is dissatisfied
with the adjudicator’s orders will have the right to bring an appeal before the FSAT and
appeals from FSAT will lie before the Supreme Court.
The Commission sees strong complementarities in the roles of the redress agency
(curing grievances) and the regulators (preventing grievances). The complaints received
by the redress agency will shed light on areas where the problems of consumer protection
are most prominent, and thus suggest areas for improvement in subordinated legislations.
Hence, the draft Code seeks to ensure a feedback loop through which the redress
agency will use the FDMC to share information on complaints with the regulators on an
ongoing basis and the regulators will analyse the information received from the redress
agency and utilise it for improved regulation-making and systemic improvement.
Specifically, the information technology systems within the redress agency must create
a high quality database about all aspects of all complaints that are filed with it. This
database must be analysed in order to shed light on the areas where there are difficulties
and thus feed back into better regulation and supervision. The research program which
studies this database should be a joint effort between the redress agency, regulators and
academic scholars, with release of datasets and research into the public domain. Over
the years, there should be a visible feedback loop where the hot spots of grievance that
are identified lead to modifications of regulation and supervision.
52 FINANCIAL SECTOR LEGISLATIVE REFORMS COMMISSION