International BusinessPanel may suggest common norms for financial products
The D Swarup committee on investor awareness and protection has reached a tentative conclusion on moving to a no-commission regime for financial products. The committee will submit its report in two-three weeks.
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The committee’s tentative recommendations includes common minimum entry barriers for all financial products and minimum qualification for financial advisors. Swarup said in addition, no commission would be embedded in the price of a financial product and there would be common disclosures related to fees, costs and risks.
Swarup said there would also be a common code of ethics for all financial players in the industry. The six-member committee, appointed by the government, had floated the consultation paper this month. Stating that commission was embedded in insurance products, he said pension had no embedded commission and mutual funds had moved to a no-load structure. He said there was regulatory arbitrage taking place in the country.
Swarup said the average lapse rate in insurance was 20 per cent in 2007-08, mainly due to mis-selling. He said the industry had 3 million financial advisors and 200 million investors.