1. 11 Presentation on Report of The Committee to Recommend Measures for Curbing Mis-selling and Rationalising Distribution Incentives in Financial Products -By S.B. Mathur 24 th November 2015

2. To suggest policy measures that do not favour any particular financial product and prevent mis-selling. The study would address issues with regards to hidden costs and identical financial products across regulators. To suggest measures to rationalize incentive structure across financial products. Mandate of Committee

3. 1- Retired Union Finance Secretary - Chairman 2- Retired Chairman, LIC of India 3 & 4 - Officials (Capital market Division) 5 & 6- Academicians 7 - Retired MD SBI – Capital Markets 8 - Investment Expert 9 - Investment Analyst /financial media Composition of Committee

4. Investment portion and risk portion to be separated in bundled products. Upfront commission not allowed on investment portion- allowed on pure insurance products and in insurance portion of bundled products as these products are difficult to sell. Exit should be simple and less expensive. For similar products, there should be a similar structure with regard to service tax, stamp duty and rural and social sector norms. One page disclosure form explaining key benefits and features to be signed off at point of sale by buyer and seller. Broad Recommendations

5. To bring uniformity and proper oversight -harmonising of regulators. Enforcement to be strengthened to prevent over payment of commissions. Banks tend to oversell. Additional disclosures requirement:- – Group company products to be compared with similar products from other manufacturers. – Respective regulator to regulate distribution of products by banks. Generic Recommendations

6. To bring uniformity and proper oversight -harmonising of regulators. Enforcement to be strengthen to prevent over payment of commissions. Banks tend to oversell. Additional disclosures requirement:- – Group company products to be compared with similar products from other manufacturers. – Respective regulator to regulate distribution of products by banks. Tax benefit only on insurance portion and not on saving. Pure insurance products to be encouraged. Generic Recommendations…..contd

7. Mutual Funds Regulator should consider measures to increase retail participation. Regulator should put in a free look policy and define the period for which it will hold. Extra commission in B15 should be removed and a level paying field created in the country. Regulator should lower caps over period of time. Trail commission to be disclosed at point of sale Specific Recommendations

8. ULIPS Manner of disclosure of mortality costs. Cost of surrender value should be reasonable. Many suggestions relate to disclosures – asset allocation to be disclosed on website. Specific Recommendations …..contd

9. Traditional Products Premium to be split into mortality and savings. Lapsation profit,if any, not to accrue to insurance companies. Costs of surrenders to be reasonable. Current structure of paying commission on single premium should be continued. No trail commission on single premium policies. Specific Recommendations …..contd

10. Thank You