Customer protection should be given highest priority by all financial institutions since it is vital for overall financial stability, Deputy Governor of the Reserve Bank of India, Mr Anand Sinha, said here today.

“Consumer protection is not only important to attract more people into the fold of financial system, but also vital for maintaining the financial stability of the economy,” Mr Sinha said at the Financial Planning Congress 2011 organised by Financial Planning Standards Board of India here.

He also said that there should be appropriate changes in the legislation to empower the central bank to take appropriate measures to improve the level of consumer protection.

“Issues relating to management of banking institutions and secrecy of consumer information among others should be addressed in the legislative process,” he added.

Justice B N Srikrishna, chairman of Financial Sector Legislative Reforms Commission (FSLRC) said concerted action should be taken up by various regulators to protect the customer from mis-selling and frauds.

“A financial product should suit the socio-economical and educational qualification of a customer, so that he gets optimum benefit of his investment,” he said.

He also said that the FSLRC would look into all matters relating to consumer protection in its report.

Other speakers at the event also emphasised on the importance of financial literacy for protection of investors’ interest.

“Financial literacy is another area on which regulators and financial institutions should work upon,” Chairman of Pension Fund Regulatory and Development Authority (PFRDA), Mr Yogesh Agarwal said.

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