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Willfinancialredressagencyhelpconsumers?|BusinessStandardNews

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Willfinancialredressagencyhelp
consumers?
JehangirGai
March8,2015LastUpdatedat23:24IST

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TheFinancialSectorLegislativeReformsCommission(FSLRC)has

BumpsaheadforFinancialCode
future

givenshapetoadraftlawIndianFinancialCode.Undertheproposed

Letters:NocountryforPSBs

regulator.Itproposestosetupafinancialredressagency(FRA)for

Regulatorsneedtoreengineer
toimprovegovernance:Ajay
Shah

resolvingconsumercomplaints.

Reworkingthefinancialsector
Enablinginflationtargeting

legislation,aunifiedfinancialauthority(UFA)willbeconstitutedasa

TheproposedFRAwillhaveitsheadquartersinMumbai.Itmayalso
establishbranchoffices.TheBoardofMembersofthisagencywill
compriseofamaximumofsevenpersons,halfofwhomwouldbe

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executivemembers,twoofwhomwouldbenominatedbytheReserve

IntradayTipforTomorrow

consumerissues.TheFRAwouldbeabodycorporate,whichcouldsue

KnowwhichIntradayTipwegive
Tomorrow,onlyProfitabletips
www.premiumstocktips.com/to

andbesuedinlegalproceedings.

BankofIndia(RBI)andUFA.Thememberswouldbeexpertsin

TheFRA'srolewouldbetoredressthecomplaintsofretailconsumers
offinancialservices.Itsregulationswouldincludestipulationofthefees
payableforfilingcomplaints,theamountofcompensationwhichcould
beawarded,thetimeframeformediationandadjudication,etc.and
wouldbesubjecttoreviewwithinthreeyears.
AnaggrievedconsumercannotdirectlyapproachtheFRA.Hewouldfirsthavetoapproachhisserviceprovider
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09/02/2016

Willfinancialredressagencyhelpconsumers?|BusinessStandardNews

withacomplaint.Ifhisgrievanceisnotresolvedorheisnotsatisfiedwiththeresolution,hecanlodgea
complaintwiththeFRAdirectlyorthroughtheregulator.TheFRAcantakeupthecomplaintprovideditisnot
beforeanycourt,tribunalorotherauthority.
Onreceiptofthecomplaintfromtheconsumer,theFRAwouldtrytomediateavoluntarysettlementthrougha
mediator.Ifmediationfailsorincaseitcannotbecompletedwithatimeboundperiod,orifapartyallegesthe
settlementrecordedinthemediationwasobtainedthroughfraud,coercionormisrepresentation,thecomplaint
wouldhavetobereferredforadjudication,tobeconductedbyanindependentadjudicatorappointedbytheFRA.
Theadjudicatorswouldbepersonscapableofdealingwithconsumerprotectionissuesandtheabilitytoredress
consumerdisputes,orbypersonsknowledgeableinfinanceorlaw.
Theadjudicatorhastodecidethecomplaintonthebasisofthefinancialcontractbetweenthepartiesandthe
applicableprovisionsoflaw.Theadjudicatorwouldalsohavethepowertoawardcompensation.Theadjudicator
hastogiveareasonedorder,whichwouldbeenforceablelikeadecreeofacivilcourt.Theordermustalso
informthepartiesoftheirrighttoappealagainstitwithinaperiodof60days.
TheappealwouldbebeforethisFinancialSectorAppellateTribunal,tobeconstitutedunderthenewlaw.The
tribunalwouldhaveitsmainbenchatMumbai,andmayconstitutebenchesatotherplaces.Itwouldcomprisea
presidingofficerandtwomembers.Thepresidingofficerwouldbeasittingorretiredjudgeofahighcourtorthe
SupremeCourt.Themembersshouldhavequalificationsandexperienceinlaw,finance,economicsor
accountancy.Thetribunal'sorderwouldalsobeenforceable,likeadecreeofacivilcourt.
Apersonaggrievedbythetribunal'sorderwouldbeentitledtochallengeitinasecondappeal,tobefiledwithin
90daysbeforetheSupremeCourt.

WhenacomplaintismadetotheFRAandreferredformediation,thedisputecannotbetakentoanyothercourt,
tribunalorauthority.ItmustfollowthechannelprovidedundertheIndianfinancialcode,viz.mediation,
adjudication,firstappealbeforethetribunal,andsecondappealtotheSupremeCourt.Alternatively,the
procedureundertheIndianfinancialcodecouldbegivenagobyandtheconsumercouldinsteadoptforfilinga
disputeundertheConsumerProtectionAct.
Thus,theconsumerwouldhavetheoptionofchoosinghisremedyundertheIndianFinancialCodeorunderthe
ConsumerProtectionAct.Hecannotchooseboththeremediesorswitchfromonetotheother.Whilethe
remedyundertheIFCwouldbeeithercentralisedorlocatedincertainimportantcities,theconsumerforum
wouldbemoreaccessible,asthereisadistrictforumineachdistrict.

Thewriterisaconsumeractivist
READMOREON
FSLRC

CONSUMERISKING

INDIANFINANCIALCODE

FINANCIALREDRESSAGENCY

FRA

CONSUMERPROTECTIONACT

PF

PREVIOUSSTORY

FINANCIALSECTORLEGISLATIVEREFORMSCOMMISSION

UNIFIEDFINANCIALAUTHORITY
RBI

UFA

FINANCIALSECTORAPPELLATETRIBUNAL

OTHERS

NEXTSTORY

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