Just when all market players thought that the dust was finally settling down in the spat between the Securities and Exchange Board of India (SEBI) and the Insurance Regulatory and Development Authority (IRDA) over unit-linked insurance plans (ULIPs), the market watchdog has fired yet another unexpected salvo in this turf war between the regulators.
SEBI has said today that any ULIP launched after 9th April would require its approval, and ULIPs launched before this date would continue to operate as per the earlier norms.
But this recent SEBI diktat is all the more surprising because yesterday (12th April) finance minister Pranab Mukherjee had clearly stated that the status quo would be maintained with regard to ULIPs. SEBI’s order clearly goes against the finance minister’s statement.
Sources in the know also confirm that Mr Mukherjee has not yet read SEBI’s latest circular.
According to SEBI’s circular (dated 13th April): “This is to bring to the notice of investors that SEBI has decided to keep in abeyance, till further notice, the enforcement of the above directions (in accordance with the order dated 9th April) with respect to the ULIP schemes /products existing on the date of the order, i.e., 09.04.10. However, with respect to any new ULIP schemes/products launched after 09.04.10, the directions mentioned in the said order will be enforced as indicated therein.”
“SEBI’s order is in abeyance, it’s not cancelled. The FM could have said that it (regulation of ULIPs) comes under the purview of IRDA. (The) IRDA lobby was so strong that the government could not take action against IRDA directly,” said an insurance expert, preferring anonymity.
“It’s a jurisdiction issue and will be taken up by the courts; legally, it should be under IRDA’s jurisdiction. SEBI feels that (market) investments need to be regulated by it; SEBI always wanted to do it. If they succeed, it will be against the principle of natural justice and against policy holders,” says a source from Reliance Life. —Moneylife Digital Team