Even the evil Securities and Exchange Board of India (SEBI) cannot dampen my spirits at the end of the year 2009. My client toasted me. He said that when he was staring at the gloom on the 2009 new years eve. And then by January 15th he got my call which changed his life. All of you (my then clients) got my call. If you remember, I said that market cannot go any lower than this. Most of you cut out cheques and signed the forms. You have made money, isn’t it?

The newspapers have made us believe that 2009 was a bad year. But, think about it, did you ever make 75% + on your investments? Have you got brands at such dirt cheap price? Didn’t you figure out if your employer is the one to rely on? Didn’t you figure out how good is your financial adviser?

I am very happy. Many of my guesses, intuitions and analysis proved right. Its gods grace. May 2010 be as good as the last year. God bless us all.

Consumer Affairs today encompass all aspects of consumer welfare and has been Internationally recognized in recent times. Consumer is considered as an inevitable part of the socio-economic-political system, where the exchange initiated and transaction realised between two parties, namely buyers and sellers has an impact on a third party i.e., society. The inherent profit motive in mass production and sales also offers the opportunity to many manufacturers and dealers to exploit consumers. As markets are globalising and consumers are bombarded with too many choices of products and services, purchase decision-making is becoming difficult. New technologies, such as the internet, debit cards, credit cards, ATM’s on one hand are making the life of the consumer easier, but again pose a challenge of safety and security. As consumers we need to separate the chaff from the grains. There is a risk of being cheated when we pay our hard earned money to get a sub-quality product or service. Thus the need for consumer satisfaction and consumer protection has been recognized. According to Philip Kotler, “Consumerism is a social Movement seeking to augment the rights and powers of the buyers in relation to sellers”. Consumers today want value for money, a product or service that would meet reasonable expectations, is safe in use and there is full disclosure of the product specification. These expectations are termed as ‘Consumer Rights’.

Exploitation of Consumers

Problems of defective goods, deficiency in service, spurious and duplicate brands, misleading advertisements are rampant and often the gullible consumer falls prey to it. A majority of the consumers, especially in the rural areas are uneducated and lack awareness and knowledge. Consumers face many risks during purchase and consumption of goods and services.

Moreover, financial risks are involved where the consumers may not get the value for money spent or they may be overcharged or there may be hidden price components which may leave them exploited. Instances abound where a claim on an Insurance Policy takes an unduly long time to be settled, or there may be over-billing, double debit, billing delays, pension disbursement, non-rectification of wrong bills, misleading advertisements and non-adherence to offers made. The granting of possessions of flat may be delayed; cases of wrongful dishonor of cheques, loss of cheques that have been deposited in a bank, cheques with forged signatures, etc.

Instances bound where companies advertise lucrative schemes offering attractive rates of return or make offer for doubling of money in a short period of time, and, after having collected funds, have shut shops and vanished. People have invested money in plots of land only to find later that the plot bought was either already sold or subsequently sold to someone else. Flats are allotted to two people simultaneously, leaving the genuine buyer to fight a protracted legal battle to get something that belonged to one of them. Similarly, consumers applying for shares have faced situations where they have neither been allotted the shares nor refunded payment. In most of these situations, the consumer has to wash his hands off a sizeable part of his investment or hard earned savings. Some of the type of complaints received in credit cards are issue of unsolicited cards, non-despatch of account statements in time, levy of excessive service charges, levy of late fees despite payments being done on time, refusal to cancel credit card, freezing of cards without informing the card holder, and harassment by recovery officer. Consumers also are victims of malfunctioning of ATMs. This year the Ministry of Consumer Affairs theme is to make the consumers financial literate so that they are not mislead by the marketer.

Consumer Protection Act, 1986

India is a country which never fell behind in introducing progressive legislation. The most important milestone in Consumer Movement in the country has been the enactment of the Consumer Protection Act, 1986. December 24th is an important day in the history of India as on this day in 1986 the Consumer Protection Act, received the assent of the President of India. The Act has set in motion a revolution in the field of consumer rights that perhaps cannot be paralleled anywhere else in the World. The Act applies to all goods and services unless specially exempted by the Central Government, in all sectors whether Private, Public or Co-operative.

The Act enshrines all the consumer rights which are internationally accepted. As per the Act, the consumer protection councils have been established at Central, State and District levels to promote and protect the consumer rights. Further adjudicatory bodies which are commonly known as consumer courts have been established for easy redressal of consumer complaints.

Consumer Guidance and Education

An aware consumer is an asset for any society. Whenever a consumer takes an insurance policy he should read the fine print carefully, gather full policy details, engage a reputed agent, know the policy’s insurance cover and the process of filing a claim.

Further while applying for a bank loan the consumer should read the fine print carefully, confirm the Interest Scheme applicable, know the repayment plan and timeline and compare other loan options / plan. One should always check the hidden charges and penalty clause, always check the rate of interest, penalty etc and read terms and conditions and other details and check bill carefully before subscribing to a credit card service. For problems relating to banking and insurance Ombudsman is a free, fair and fast method of seeking redressal.

One should never be swayed by advertisements which violate consumers’ right to information and choice and thereby have the potential to cause financial loss and mental agony. Always be careful about slick advertisements such as “double your money”, etc.

Thus, a balance has to be made between free market forces and consumer protection. Any consumer movement can be successful if the consumers are satisfied; they receive value for their products and services. This in turn requires a synergy and support of the government, judiciary, traders, and consumers.

[Dr. Sheetal Kapoor is Associate Professor and Convenor Consumer Club, Department of Commerce, Kamala Nehru College, University of Delhi.]

Disclaimer : The views expressed by the author in this feature are entirely her own and do not necessarily reflect my views.

Normally, when you fill a mutual fund or insurance or any other form for financial transactions, you find a column for nomination. By nominating a person, you make him/her the trustee to whom the financial instrument can be liquidated in the unfortunate even of owners death. Nomination does not necessarily means the nominated person is a “legal hire.” You have to create a will in order to specify who is the legal hire.

If you do not have a will, then the legal hires can recover the money from the nominee.

Making a will is very cheap. If you know how to form the words, just write it down in a piece of paper and get signatures from 2 witnesses. You can also get your doctor to sign on the will that you were in stable mental health when you made the will. You need not get it registered. But, if you want to get it registered and engage the services of a lawyer, it might cost you little amount of money, for example Rs. 1000/-.

Risk-return profile, (Monthly Income Plan) MIPs fit between a bond fund and a balance fund. Both equity and fixed income portfolios are managed in a dynamic manner to generate superior risk-adjusted returns. The asset allocation and individual security selection are done keeping in mind the investment objective with a particular focus on containing volatility. These funds have a predominant fixed income portfolio for generating stable income while marginal exposure to equities is taken to generate capital gains. The fund has potential to generate higher returns compared to a bond/income fund, albeit with a slightly higher level of risk compared to a bond fund.

Equity: Maximum exposure to equities is capped at 15% to 30% (depends on fund aim). The objective is to maximize returns through a well-diversified equity portfolio with tightly defined internal guidelines. As a risk management tool, concentration in holdings is avoided and normally, maximum exposure in a single stock is capped at 1-3% of the portfolio value. Booking of profits is regularly done once price target has been achieved.

Debt: Fixed income part of the portfolio has a mix of government securities, high grade bonds and money market instruments.

Is the Monthly Income Plan for me?

If you are risk averse or on retirement it will work in your favour. I advice it for a different reason. Normally, even if a person is insured, he should have MIP in portfolio too, so that he builds a “near” monthly (or quarterly) income for his family. You could do that with bank fixed deposit too. Just that the MIP dividends are tax-free. You could choose how risky your MIP should be. This can be done looking at the equity exposure of the MIP.

You would have heard a lot of times T + 1 days or T + 2 days. What is it? Usually heard in settlement of money by banks.

T is defined as the day of intimation regarding the completion of transaction.

So logically; T + 1 = day of intimation + next day