Regulatory arbitrage means more mis-selling

While Irdai recently raised commissions, Sebi has been aggressively cutting them for distributors

A typical year-end pitch from a bank relationship manager asks customers to put money in tax-free schemes offering good, often double-digit, returns. A customer who understands financial products will immediately realise there is no mutual fund product that can offer an assured return as well as a tax benefit. Only when questioned more aggressively will the relationship manager or seller admit it is an insurance product and, most likely, a traditional one.
 
The regulatory arbitrage between MFs and insurance products has existed for a long time. The Securities and Exchange Board of India (Sebi) has been aggressively pushing for