A day after Finance Minister Pranab Mukherjee said that unit linked
insurance plan (ULIP) sales can go on for now, capital markets
regulator Securities and Exchange Board of India (SEBI) on Tuesday
passed another order according to which SEBI's April 9 order,
restraining sale of ULIPs, will remain applicable on new ULIPs launched
after April 9.
"SEBI has decided to keep in abeyance, till
further notice, the enforcement of the above directions with respect to
the ULIP schemes," SEBI's quasi-judicial order said. "However, with
respect to any new ULIP schemes launched after April 9, the directions
mentioned in the said order will be enforced as indicated therein."
Insurers
are hurting. "On an average, life insurance companies launch three to
four new ULIPs every year and this will impact our fund raising and
continuous activity in the market," said a senior official at an
insurance company on condition of anonymity.
SEBI on Friday had
passed a quasi-judicial order restraining 14 life insurance players
from receiving money from investors for any product that has an
investment component attached to it till the time they get registered
with it.
The next day, insurance regulator Insurance Regulatory
and Development Authority (IRDA) directed insurance companies to ignore
the order and go ahead with the sale of ULIPs.
While IRDA and
insurance companies continue to resist SEBI's quasi-judicial order,
Mukherjee on Monday said that he expects all financial sector
regulators to work towards the goal of no load model for the entire
financial sector.
Earlier, the government-appointed High Level
Co-ordination Committee on Capital Markets (HLCCM) headed by Dhirendra
Swarup, former chairman, Pension Fund regulatory and Development
Authority (PFRDA) submitted a report to the finance ministry, where it
recommended eliminating upfront commission in a phased manner by April
2011.
Mukherjee on Monday strengthened that idea. "SEBI decision
to make mutual fund advisor an agent of customer other than that of the
company whose products they sell would go long way in protecting the
small investor," he said.
"India could set global model for a
no-load fee model for entire financial sector to ensure fair deal to
all market participants. I hope all financial sector regulators would
work towards this."
source: HT