Consumer think tank CUTS on Sunday said the stalemate between regulators SEBI and IRDA over administration of ULIPs should have been resolved by the Finance Ministry itself and not been referred to courts.
“Why can’t the Finance Ministry call both the regulators and resolve the matter across the table? Does it really matter whether it is the IRDA (insurance regulator) which regulates ULIPs or the SEBI (market regulator) does?” CUTS International Secretary General Pradeep S Mehta said.
He said all that the consumer and the investor want is a clean and transparent system that reduces chances of arbitrage or unfair practice.
The issue over Unit Linked Insurance Products (ULIPs) turned controversial after SEBI banned 14 life insurers, including SBI Life, ICICI Prudential and Tata AIG, from raising further money from these schemes.
However, IRDA asked insurers to ignore the directive. To resolve the impasse, the two regulators met Finance Ministry officials after which it was decided by the watchdogs to jointly seek a legally binding mandate from court over who regulates ULIPs. Till then, status quo ante was restored.
Subsequently, SEBI amended its previous order and banned the companies from launching any fresh ULIPs, which was also ignored by IRDA.
CUTS said such disputes were not healthy and wherever there are overlapping issues between the authorities, the government should mandate mutual consultation through policy directive.
“The Finance Ministry should tell IRDA to consult SEBI as a mandatory exercise, rather than do it without such direction,” Mehta said.
He said, “In future, we may see similar spats between the Competition Commission of India and sector regulators like telecom or electricity on anti-competitive practices or mergers.”
Unit-Linked Insurance Products (ULIPs) are insurance products, which combine insurance policies with investment in capital markets.