Four changes to watch out for in January

The new year is set to usher in a string of changes  with respect to your personal finance. From a new format of the customer information sheet (CIS) of insurance companies, to mutual fund trustees having to ensure that fees and expenses charged by fund houses are fair, here are the key financial developments you ought to bear in mind.

Insurance companies to issue customer information sheet in a new format

Effective January 1, insurance companies will have to provide their health insurance policyholders with an updated customer information sheet (CIS).

The Insurance Regulatory and Development Authority of India (IRDAI) has mandated a new format for the CIS, to be provided along with policy documents at the time of purchase and renewal. The purpose is to provide a quick summary of the crucial policy terms in simple language.

The new CIS will specify the sum insured or cover amount under individual as well as family floater policies. It will contain information on the benefits you are entitled to under your policy and the conditions under which they will come into play. Insurance companies will have to mention the turn-around time for paying out claims and pre-authorising cashless payouts, and it will contain a list of all exclusions, which will ensure that customers do not face heartburn due to non-payment of any expense at the time of claim processing. Lastly, it will have details on grievance redressal, portability, and the moratorium period.

Trustees to ensure fees, expenses charged by fund houses are fair

The Securities and Exchange Board of India (SEBI) has asked trustees of asset management companies (AMCs) to ensure  that fees and expenses charged to mutual fund unitholders are fair. Trustees would also be required to review the performance of the AMC’s schemes versus  those of their peers / benchmarks.

To address conflicts between the interests of unitholders and AMC stakeholders, SEBI has spelt out the roles and responsibilities of the AMC’s trustees and directors.

Per SEBI’s regulatory framework, trustees hold the property of the mutual fund in trust for the benefit of unitholders, and their primary role is to ensure that the AMC acts in the best interest of the unitholders.

Accordingly, any conflict between the interests of the unitholders and an AMCs’ stakeholders needs to be addressed by the trustees.

This new framework comes into effect from January 1, 2024.

While MF regulations already outline guidelines on addressing conflicts of interest, SEBI’s new directives provide additional clarity on specific areas that require the attention of trustees.

Also read | Do not rush to invest blindly in insurance-cum-investment policies

Launch of UPI for secondary market

In January ‘UPI for Secondary Market’ is set to commence in its beta phase for the equity cash segment, with the collaborative support of key stakeholders including clearing corporations, stock exchanges, depositories, stockbrokers, banks, and UPI app providers. Initially, this functionality will be available for limited set of pilot customers.

During this pilot, investors can block funds in their bank accounts, which will only be debited by the clearing corporations upon trade confirmation during settlement. Clearing corporations will directly process payouts to these clients on a T+1 basis.

This Beta launch is facilitated by Groww as the brokerage app, alongside BHIM, Groww, and YES PAY NEXT as UPI apps. Initially, HDFC Bank and ICICI Bank customers will be able to avail this facility.

Submit your proof of investment on time

Most employers require their employees to submit proof of their tax-saving investments in January. That is, if you had chosen the old tax regime while declaring your proposed investments at the beginning of the financial year.

While at times employers do extend the deadline to February or even March, it is best to complete the process as soon as possible. You need to file proof of investments made, insurance policies purchased, or home loans taken to claim deductions under sections 80C, 80D, 24, and so on.

Failure to meet the deadline set by your employer will mean excess tax deduction from your salary. While you can claim a refund from the income tax department, submitting your investment proof on time will eliminate this hassle.