Consumers should be on a constant vigil to safeguard their financial investments
Consumers International (CI), a federation of consumer groups from throughout the world, of which CAG is also a member, serves as an authoritative global voice for consumers. Founded in 1960 and celebrating its golden jubilee this year, CI acts as a watch-dog and continues to promote an international movement to empower and protect the interests of consumers. The World Consumer Rights Day, which was first observed in 1983, is celebrated on March 15 every year and CI, over the past few years, has capitalised this occasion to mobilise citizen action in various areas of consumer protection. This year's theme is “Our money, our rights”— the fight for fair financial services.
When we look at the larger, positive picture, financial services in urban India have increased manifold and several services such as investment services, mutual funds, car, home and personal loans, credit cards, equity market, mobile banking, insurance, etc. are available and customers have multiple choices to choose from. However, CI's current theme has more relevance considering the numerous problems defenceless consumers face from financial institutions, credit rating companies, pawn brokers etc.
We recently received a complaint where the consumer had deposited Rs. 5 lakh with a NBFC. Since the company was also involved in portfolio management, the consumer had requested in writing not to invest in the share market. But, the company had done exactly that without his knowledge and at the end of the term, when the customer decided to withdraw his money, he was refunded only Rs. 2 lakh. Shocked on losing more than half the principal amount, the consumer approached the company and the only response was — recession. When the consumer demanded why they traded with his money when he had told them not to, there was no answer. If their business involved only investing in the share market, the company should have very clearly explained this to the consumer at the initial stage itself and refunded the amount.
Similarly, we come across many instances where the consumers face innumerable problems with credit card companies. The most common issue is the company demanding an annual fee despite assuring that there would be no such charges. Several written complaints later, the issue has not been sorted out and the company keeps adding interest and late payment charges on the annual fee. Consumers refute this, hold back this amount, and settle the balance payment due on the card. Eventually, consumers get vexed and surrender the card. After a year or so, the company starts sending statements and agents to collect a huge sum which is the supposed due from the consumer when actually, it is the so-called annual fee that has multiplied. The consumers are also enlisted as defaulters with the credit rating company. There are umpteen such issues where consumers are penalised and their rights flouted.
Though financial services are available to the urban masses, it is surprising to note from a recent study done by CI that even today 82 per cent of rural masses in India have no idea of insurance and 73 per cent of farmers do not have access to formal sources of credit. They usually approach pawnbrokers who quote high interest rates. We have heard of instances where the families are at the mercy of such money lenders for generations due to their inability to settle such huge amounts.
Therefore, it is crucial that financial services, be it credit or insurance or savings, be available throughout the country and that consumers are aware of the same. It is also important for companies involved in the business of financial services to provide a fair deal so that consumers do not suffer.
(The writer works with CAG, which offers free advice on consumer complaints to its members. For membership details/queries, contact 24914358/24460387 or firstname.lastname@example.org)