As the date for embracing new ULIP guidelines come closer insurance industry and customers are vary of each other as no one knows how the other will react. While a section of the population is rejoicing on the directives of IRDA as they have been victim of rampant misselling by insurance companies others are confused that what shape one of their most preferred investment tool will take.
Though in the name of Aam aadmi IRDA has come out with the new set of guidelines for ULIPs, which comes immediately after the new set of guidelines issued by SEBI for Mutual Fund industry which were also in the name of Aam Aadmi. Apart the concern for aam aadmi the other common things between these guidelines are that, they are threatening not only the growth of these industries but also their very existence and also aam aadmi is being used as the façade to fulfill the directives of the khas aadmi i.e their political master, which is Finance Minister of this country.
If both the regulators are so concerned for the aam aadmi then they should have acted against the customer complaints more effectively. Can these regulators tell what concrete steps have they taken to stop misselling may be some thing like canceling the licenses of insurance/mutual fund agents or asking the concerned company to stop operations for some days or even canceling the license of an organization if really things were so bad. Why have these regulators not taken a single strong step against any organization which was involved in misselling and turn it into an example for others? The reason is simple, these regulators are not interested in the benefit of aam aadmi.
We all know that ULIPs are more transparent than traditional products because in ULIPs we know what are the charges and what amount will be invested. But can we say same thing about traditional plans? As a customer you are clueless about the charges and investment in traditional plans.
How can one be sure that there will be no misselling in case of traditional plans? Well the argument will be that returns are fixed hence there is no chance of misrepresentation on returns, which is half true as fixed return are only half of the total return, other half is bonuses which can not be guaranteed and there is every chance of misrepresenting it.
There has been a lot of hoopla and hype on the commission charges in ULIPs which are in range of 15-50% and in some cases it goes upto 80% but then charges in traditional plans are also in the range of 40-50% with corporate agents now asking for their commissions to be pegged at 80% (as per media reports) and IRDA has declined to intervene as it finds traditional plans to be matured.
In case of mutual fund industry the case is even more curious. Where misselling was largly restricted to selling of an existing plan and investing the amount in NFO and commissions were in range of 2-5%. There is no sense in making lakhs of agents redundant.
So then why so much tamasha and nautanki by these regulators? Only reason for these steps is that government wants cheap money to flow in its coffers for its various aam janta centric development programs. If government borrows money from RBI then it squeezes money from the system and push the interest rates higher which are already high and hence impact economy negatively. If government prints the currency to cover the deficit then it would push inflation higher which is already very high. So this is the only means left to raise the funds for government programs. We know traditional plans invest in government bond and securities so this money will directly go in government coffers and not in stock market also with no commissions in selling mutual funds the numbers of agent will dwindle drastically hence less FOS to sell Mutual Fund so again less money will flow in stock market and more investment in government schemes like PPF/NSC/KVP etc.
Welcome to the mean and dirty world of politics where on our money, governments wants to win elections by putting our jobs at risk. let’s not forget, a section of media was also hand in glove with government and played an active role in creating negative atmosphere and impression in the minds of investing public.
