Awesome news item saying that IRDA is cleaning up. Great. The way the financial services sector is structured, it should not be difficult to do it.

There is only one downside. 38 mutual funds and 16 life insurance companies will close down.

So the media being supported by them will shut down.

No more sponsors, no more advertising. I guess about 5000 jobs in the advertising industry will shut down.

A few bloggers like me will have nothing to write about.

A zillion bank relationship managers will not have any product to sell. Of course the recent fad is ‘realty’ – luckily the VIP of the industry does not want a regulator till he goes away. Literally.

What is amazing is the kind of myth that some people are trying to build:

1. Mis-selling is done by Life Insurance agents: Bullshit. Complete bullshit. : Products are designed for mis-selling. I remember a life insurance plan where you could DRAMATICALLY reduce your second year’s premium…from say Rs. 2 million to Rs. 20,000. CLEARLY a product DESIGNED for mis-selling. Not designed by the agent, let me assure you!!

2. Mis-selling is done ONLY by Life Insurance stake holders: The amount of mis selling, switching, IPO (then rechristened as NFO)  – it was a free for all by the big players. Small players copied. Ditto. Ditto. Ditto.

3. Banks: OMG the less said about them the better.

4. Life Insurance business is very profitable / not profitable at all: both are completely wrong.

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  1. Subra Sir

    38 MF & 16 insurance…. Why not 50% of them close down. But the most important is the rest is doing a healthy competition and and also making money for them. A clean up is good if it is done with good intention.

    There can be no sales w/o a good salesmen.
    There can be no good salesman w/o a good commission.
    There can be no good commission w/o a growth in customers.
    There can be no customer growth w/o customer satisfaction.
    There can be no customer satisfaction w/o he gets value for money/ exceed expectation with value products.
    There can be no value for money continiuity w/o economic growth.
    There can be no economic growth w/o reforms continuity.
    There can be no reforms continuity w/o political will.

    It is a continous chain interlinked and the strength of a chain is as good as the strenth of its weakest link. So fixing one and leaving the weak links untouched is not going to boost anything.

    Mis selling will continue so long as proper selling cannot bring out money.

    I always wonder why none propose a market product with a flat rate of say 2% (tax+ commission) where the tax depreciate with holding time and commission appreciate its portion witin this 2% (instead of bringing back the entry load…). Instead of thinking of retrospective tax laws we need forward looking laws.

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