The next para states that “there is nothing wrong with the actuarial funded products (AFP) and they are not detrimental to the interests of policyholders”. Why tell us this? The answer lies in the third para that goes on to say that companies “having AFPs have been asked to withdraw them over a period of time. They can continue to sell the products till then.”

If there’s nothing wrong with a product, why ask companies to withdraw it and kill innovation? If there’s something wrong with it (there is — to know what read today’s Express Money), why allow them to continue to sell even one more policy? So far, the regulator can be accused of being financially illiterate, spineless, consumer-insensitive and encouraging opacity. This letter shows there could be worse charges.

Here’s what IRDA needs to do. One, end the sale of AFPs. Now — not “over a period of time”. Two, investigate similar structures in all other investment products pretending to be insurance and throw them out. Three, get companies to tell us, in writing, the exact cost of the policy they’re selling — one, repeat just one, number that encapsulates all FECC and that can be compared, as IRDA says, “across products and across companies”. In other words, look at and serve the first part of its grand mission statement.

Learn from Sebi

In contrast, the August 22, 2007, proposal of the Securities and Exchange Board of India (Sebi) is clear, unambiguous and investor friendly: “Sebi is now considering giving a waiver in entry load for direct applications received by the AMCs (asset management companies), ie applications received through Internet, submitted to AMCs or collection centres/ investor service centres that are not routed through any distributor/ agent/ broker.”

... contd.