Regulatory arbitrage means more mis-selling

While Irdai recently raised commissions, Sebi has been aggressively cutting them for distributors

Priya Nair & Joydeep Ghosh  |  Mumbai 

A typical year-end pitch from a bank relationship manager asks customers to put money in tax-free schemes offering good, often double-digit, returns. A customer who understands financial products will immediately realise there is no mutual fund product that can offer an assured return as well as a tax benefit. Only when questioned more aggressively will the relationship manager or seller admit it is an insurance product and, most likely, a traditional one.   The regulatory arbitrage between MFs and insurance products has existed for a long time. The Securities and Exchange Board of ...

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Regulatory arbitrage means more mis-selling

While Irdai recently raised commissions, Sebi has been aggressively cutting them for distributors

While Irdai recently raised commissions, Sebi has been aggressively cutting them for distributors A typical year-end pitch from a bank relationship manager asks customers to put money in tax-free schemes offering good, often double-digit, returns. A customer who understands financial products will immediately realise there is no mutual fund product that can offer an assured return as well as a tax benefit. Only when questioned more aggressively will the relationship manager or seller admit it is an insurance product and, most likely, a traditional one.   The regulatory arbitrage between MFs and insurance products has existed for a long time. The Securities and Exchange Board of ... image
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