The pesky cold calls selling credit cards and personal loans, as well as unsolicited SMSes providing stock tips may soon become history. Starting August 1, the new National Do Not Call (NDNC) regulation will impose hefty fines on telemarketers who call or send SMSes to mobile phone numbers registered with the NDNC.
Banks, brokers and insurers may be the hardest hit by the new regulation as about 50% of telemarketing calls and SMSes come from the financial services industry, said industry observers. Of this, 60% of the calls and messages are directed at selling credit cards and personal loans, while housing loans, broking and insurance products contribute to the remaining 40%.
It is common knowledge that the financial services industry uses unethical means to market its products. Individual companies may deny the practice but they are 100% responsible for it,? said Sanjiv Swarup, co-director, Direct Marketing Association, India. According to him, a majority of customers who receive such calls or SMSes ignore the product or service offered entirely. ?The new rules will force companies to adopt a more targeted approach towards marketing. This will help the industry in the long run as the conversion rate will improve,? added Swarup.
Banks mostly resort to cold calling to sell credit cards and personal loans, while brokers use a combination of calls and SMSes. According to the CEO of a telemarketing company, bulk SMS rates can be as low as 3-5 paise per message and are a cheaper option for firms that do not want to advertise through print or electronic media. ?SMS has truly become a mass communication tool,? he said.
Unsurprisingly, SMSes offering discounted brokerage or stock tips have become quite common. ?It?s the independent researchers or fly-by-night operators that mostly resort to bulk SMSes. The idea is to get investors to use their services and charge them for a certain number of stock tips per month,? said Alok Churiwala, director, Churiwala Securities.
Most large brokers call investors who already have a demat account and whose references are provided by existing clients, said a senior broking official: ?A large portion of the sales for brokers comes from referencing. The idea is to get the business of a rival broker and, in that sense, the call may be unsolicited. But we don?t make random cold calls.?
Starting August 1, telemarketers flouting the new norms could be fined anywhere between R25,000-2.5 lakh. There will be a separate numbering series starting ?140? to make these calls easily identifiable.