A Regulatory Roundup of Sebi, Irdai, and PFRDA Recommendations To Protect Customer Interests

Between May 21 and June 20, the government has implemented a number of regulatory measures to safeguard the interests of consumers and to make it simpler to obtain different financial products. To ensure accountability, inclusion, fair competition, quick relief, ease of doing business, and customer protection in the financial markets, government organisations like the Securities and Exchange Board of India (SEBI), Insurance and Regulatory Development Authority of India (Irdai), and Pension Fund Regulatory Development Authority (PFRDA) have implemented a number of changes.
Here, we go through the regulatory changes and their effects on different parties.
Insurance

1. Change: In order to improve customer service, enhance the insurance ombudsman system, and increase policyholder protection, Irdai has reorganised the advisory council that supports the ombudsman.
Impact: The decision is anticipated to boost the insurance ombudsman’s ability to resolve complaints, ensure fair business practises, and provide consumers with better protection.
2. Modification: The regulator has also instructed insurers to submit compliance reports in a specified format with the insurance regulator and the Indian Computer Emergency Reporting Team (Cert-In) within 24 hours of becoming aware of cybercrimes.
Impact: It aims to strengthen current cybersecurity precautions and foster a more secure environment for the insurance industry, empowering authorities to take the required steps to reduce risks and advance the interests of policyholders.
IRDAI has also released rules for enlisting insurance volunteers in all regions, down to the level of gramme panchayats, in order to increase insurance penetration in the nation.

3. Change: As part of a promising project for insurance inclusion and awareness across India, IRDAI has released the instructions to recruit “Bima Vahaks” or insurance volunteers in two categories: Corporate Bima Vahaks and Individual Bima Vahaks.

Impact: In areas of the nation where insurance penetration may still be low, it is anticipated to increase insurance inclusion and awareness. It will enable insurers to customise their offerings depending on the requirements of all demographic groups.

4. Change: In collaboration with general and life insurance companies, IRDAI has introduced the “Bima Trinity” plan, a cost-effective bundled insurance product covering health, life, property, and accident. Additionally, IRDAI has introduced the “Bima Sugam” platform, which unifies insurers and distributors to streamline the insurance process, create a one-stop shop for customers, and enable and expedite claim settlements on a common industry platform.

Impact: It will assist solve the nation’s low insurance penetration by giving consumers a thorough insurance policy, a quicker claim settlement procedure, and value-added services like gym, yoga, etc.

5. Change: The IRDAI has now authorised Go Digit Life Insurance Ltd. to begin operating as a life insurer, bringing the nation’s total number of life insurers to 26.

Impact: This will stimulate insurance innovation to draw in new clients and increase competition in the life insurance market.

IRDAI has released rules to quickly handle registration and insurance settlement claims in order to provide quick assistance to the victims of the Odisha railway catastrophe.
6. Modification: To speed up the registration and insurance payouts of railway accident victims in the Balasore area of Odisha, IRDAI has issued instructions to general and health insurance firms.
Impact: By assuring prompt claim registration and resolution, it will assist in launching urgent actions for the relief of victims.
7. Modification: IRDAI has sent circulars to standalone health insurance firms and general insurers on insurance claims related to Cyclone Biparjoy in Gujarat.

Impact: By assuring the disbursement of compensation and adherence to the designated timetable, it will assist offer prompt relief for damage to property and health of cyclone-affected individuals.

8. Modification: The IRDAI has urged insurers to include a feature that allows policyholders to generate a 14-digit Ayushman Bharat Health Account (ABHA) ID in the proposal form. Additionally, it has given the insurers advice to assist proposers and current policyholders in generating their ABHA numbers.

Impact: By identifying the insured in a digital environment, seamless healthcare and insurance service delivery is made possible.

Financial Market
Sebi has also made a number of modifications in the capital market to safeguard the safety of investors and transaction transparency.
8. Modification: In a revised circular under rule 51A, Sebi has prohibited online bond providers from providing unlisted debt securities, including those supplied without a public offer or unregulated goods and services by subsidiaries and other organisations on their platforms.
Impact: By limiting investors’ exposure to opaque subsidiaries’ and other companies’ unregistered goods and services, it is anticipated to preserve investors’ money by possibly lowering the risk of loss.
9. Modification: In Chapter VII of its previous circular, Sebi outlined a method to address investors’ complaints for online bond platforms under Rule 55 (1) of the 2021 rule governing the issue and listing of non-convertible securities.
Impact: It will support and regulate the securities market while protecting investors’ securities interests. The stock exchanges are required to advise the online bond platforms to post the same information on their websites while also keeping an eye on how things are going there.

10. Change: The Prevention of Money-laundering Act of 2002 now includes significant revisions to Sebi’s anti-money laundering (AML) standards and countering the financing of terrorism (CFT) duties for securities market intermediaries.
Impact: The guidelines for Sebi-registered intermediaries and stock exchanges will aid in improved monitoring of terror-financing operations, eliminate security market vulnerabilities, and provide a secure trading environment for the legitimate players.
11. Modification: Sebi amended its previous “Circular on participation of mutual funds in repo transactions on corporate debt securities” to permit mutual funds to take part in repos in corporate bond securities.
Impact: By ensuring adequate regulation and the growth of the securities market, it will assist safeguard the interests of investors in securities.
12. Modification: The Sebi Mutual Funds Advisory Committee has established a framework for “execution only platforms” for dealing with mutual fund schemes’ direct plans.
Impact: This framework will provide investors a recourse or protection for the risks involved with such transactions since, in accordance with Sebi guidelines, these platforms are often used by investors who are not their customers. This will strike a compromise between investor convenience and investor protection.
Pension
PFRDA has also made several improvements to improve customers’ access to pension schemes.
13. Change: PFRDA has made it possible for Tier I and Tier II NPS customers to download and see account statements using DigiLocker.
Impact: NPS customers now have 24/7 access to and download access to their NPS statement on DigiLocker, giving them convenience and security.
14. Modification: EPFO clarified the methodology for calculating greater pensions. The average wage for the last 12 months of employment for individuals who retired before to September 1, 2014, and the average compensation for the final 60 months of employment for those who retired after that date, will be taken into account.
Impact: Retirees whose pension is determined by their average pay over the last 60 months may get a smaller pension than retirees who are just taken into account for the prior 12 months. It aims to lighten the financial strain on the Indian government.

Note that this list is not all-inclusive.