Soon, you can get a refund if banks mis-sell insurance and other products. Here's how

If you have been sold an insurance policy, investment product or other financial service by a bank without fully understanding key risks etc., relief is likely on the way. The Reserve Bank of India (RBI) on Monday (June 15, 2026) issued comprehensive guidelines governing the advertising, marketing and sale of financial products and services by commercial banks. The new directions, issued under the Reserve Bank of India (Commercial Banks – Responsible Business Conduct) Second Amendment Directions, 2026, will come into effect from January 1, 2027, and are aimed at protecting customers' interests and curbing the mis-selling of financial products.

Among the key provisions under the new directions is a more precise definition of mis-selling and the measures banks must take to curb it.

As per the directions, the scope of mis-selling now covers:

1. Any sale of a product or service that is not suitable based on the customer’s profile as evaluated at the time of sale, despite the customer’s explicit consent for it.
2. Any sale of a product or service made without providing correct or complete information, or by giving misleading information.
3. Sale of a product or service without the customer’s explicit consent.
4. Any instance of compulsory bundling of another product or service with the sale of the requested product or service.
5. Sale of a product or service involving any other element defined as mis-selling by the concerned financial sector regulator.

Other than defining the scope of mis-selling, RBI has also listed some of the measures it will take to prevent mis-selling. These measures include:

1. Ensuring that no policy or measure creates incentives for the mis-selling of products or services. Prohibiting compulsory bundling of products.
2. No exclusive financing will be provided for purchase of the bank's own or third-party products or services
3. Also, the bank and its direct selling agent or DSA will ensure that their user interfaces do not deploy any dark patterns.

Customers can get a refund for any mis-selling

Keeping customer interest at the forefront, the directions allow customers to lodge complaints regarding the mis-selling of a financial product or service with the bank within the timeline specified by the respective financial sector regulator.

However in a case, where no timeline is specified, customers can lodge a complaint within 30 days of receiving the signed copy of the terms and conditions or agreement.

If an instance of mis-selling is verified and established by the lender, the bank will be liable to refund the entire amount paid by the customer for purchase of the financial product or service and inform the customer about the cancellation of the sale, wherever applicable. Also, as per the bank’s approved policy, the customer will also be compensated for any additional loss arising due to mis-selling.

So, in conclusion, the directions in the days to come may reduce customers' pain concerning mis-selling and even compensate them for any additional loss.