The mis- selling of insurance products by banks is now increasingly on the rise and one of the reasons for them is the lack of understanding about the products in the bank employees themselves. In other cases, the consumer is deliberately mislead into believing something that will never come to fruition.

There have often been cases where a consumer might have wanted to make a onetime investment in Equity Linked Savings Schemes for tax gain and had only come to realize that they have been sold a ULIP instead for which premiums in hefty amounts were also deducted in the in the second year. Most of the time when the consumer wants to file a complaint or tries to seek proper answers, they are told that the relationship manager concerned no longer works there. What gives rise to the problem is that the consumers are giving into aggressive marketing techniques and everyone is too busy with their individual lives and just do not cross check facts before investing.

Moreover, this often comes from banks with which the consumer has had a long term working relationship and they often take advantage of the trust bestowed on them. Cities like Mumbai, Kolkata, Chennai and Ahmedabad are the ones among others where the number of such complaints is definitely on the rise. The products are often loaded, they are either sold to the wrong person and there are often promises of higher returns, which is what makes the consumers so gullible.

The reason behind such rise in such activity, according to industry experts, is the competition among privatized banks to gain more and more consumers as much as possible and it is the relationship manager on whom the task falls to meet the targets. Or else, his job is on the line, he would miss out on incentives and there would a number of other repercussions as well. The bank employees have to be equipped with proper infrastructure and they should be provided proper knowledge about the products.

Moreover, banks are now under the open architecture model, or the bancassurance model- and in such cases the bank is allowed to have tie ups with three insurers, pertaining to life, non- life and health insurance segments. Industry experts have opined that this open architecture model will definitely throw up more challenges. This is because having multiple tie ups is definitely going to require a specific skill set and not all bank employees will have them, leading them to make mistakes wittingly or unwittingly. They should first know about all the products across all the segments, and know how they are interlinked and what results they yield, before they interact with the consumers.

Also it has been seen that banks have still not understood the magnitude of the responsibility they take when they sell insurance and this is still a side business of sorts for them and it is just a fee based income. Thankfully, the IRDAI has issued guidelines pertaining to open architecture and banks and insurance companies have been told to comply with them.