India’s automobile sector has recently seen a surge of incentives aimed at attracting investment, increasing capital expenditure, and boosting domestic value addition in auto manufacturing. These policies, which include tariff reductions, duty waivers and concessions, production-linked incentives, and consumer subsidies, also bring statutory liabilities, increased regulation, and heightened oversight.

This comes amidst rising reports of manufacturing defects. Between 2012 and 2023, India documented over 5 million “moderate to serious” incidents, primarily involving fossil fuel-dependent vehicles. More recently, incidents involving electric vehicle (EV) motors catching fire have raised concerns about the safety, suitability, and adequacy of stress testing new technologies for India’s climatic and driving conditions.

Regulatory Interventions and Their Impact

Key regulatory measures include a new product liability regime with significant implications for original equipment manufacturers (OEMs) and other stakeholders in the value chain, such as component suppliers, dealers, distributors, and service providers. Significant developments include updated technical standards in manufacturing, enhanced safety norms for vehicles, and the empowerment of governmental authorities to initiate investigations, impose penalties, and order product recalls.

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The Motor Vehicles (Amendment) Act, 2019 (MVA), authorizes a designated authority to recall vehicles when a defect affects the product safety of a specific number or percentage of annual sales. The MVA permits designated officers to inspect manufacturers’ premises and review records and procedures. Non-compliance with manufacturing specifications, technical standards, and safety norms can lead to vehicle recalls and penalties. The MVA holds directors and officers vicariously liable for the company’s actions, including non-executive directors who approve contravening acts through board decisions.

Enhancing Safety and Consumer Protection

While the MVA enhances manufacturing safety, the Consumer Protection Act, 2019 is consumer-focused legislation addressing product liability. It shifts the burden of proof from the consumer to the manufacturer and seller to disprove liability for specified defaults.

Implications for OEMs and Component Manufacturers

These regulatory changes require OEMs to certify that new vehicles meet improved technical standards and safety norms, involving additional testing, mandatory anti-hazard safeguards, smart management systems to prevent overcharging and short circuits, and comprehensive warranty support.

Japanese companies, among others, must note that OEMs and component manufacturers are subject to presumptive liability. The regulatory amendments necessitate OEMs to review and update product testing and commissioning processes, enhance compliance, conduct audits, and perform thorough vehicle risk assessments. Manufacturing processes must be thoroughly documented. OEMs must ensure adherence to safety norms, pre-certification, and warranty coverage, while drafting carefully worded liability management provisions in supply contracts to apportion statutory liability and costs to component manufacturers and other parties.

To mitigate product liability, OEMs should implement comprehensive and robust quality controls and testing measures throughout the manufacturing lifecycle. Third parties should conduct testing and validation, and OEMs must maintain detailed records to demonstrate due diligence and transparency. With statutory powers allowing for investigations, document reviews, and procedure recordings, OEMs must prepare for business disruption risks and potential breaches of confidentiality.

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Strategic Recommendations

OEMs should regularly audit suppliers and track parts to identify defective vehicles, facilitating the assignment of liability and costs. Board procedures must be rigorous, ensuring nominees fulfill their fiduciary duties. Insurance policies must cover product liability and recall.

OEMs should develop clear escalation procedures and crisis management plans, and establish robust contracts with suppliers and partners that include warranties, indemnities, and allocated responsibilities.

Cost Implications

In the near term, these measures may increase manufacturing costs in India. Given India’s highly competitive and price-sensitive market, OEMs might find it challenging to pass these costs onto consumers.

Source: law.asia

The post Auto industry product liability and recall appeared first on HIPTHER Alerts.

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A recent study by Jumio, an AI-driven identity verification and compliance solutions provider, has revealed that 78% of consumers in Singapore are prepared to switch banks due to insufficient fraud protection.

The Jumio 2024 Online Identity Study highlights the increasing concern among consumers about their banks’ ability to protect them from fraud. The study found that 75% of consumers globally, and 78% in Singapore, would consider changing their banking provider if fraud protection was inadequate.

Surveying over 8,000 adults across the United Kingdom, United States, Singapore, and Mexico, the study reveals that 75% of consumers hold their banks ultimately responsible for safeguarding against cybercrime and fraud.

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The rising sophistication of fraud tactics, such as deepfakes and voice cloning, has intensified these concerns. Deepfake technology, in particular, is being used more frequently to deceive consumers into divulging sensitive information, significantly contributing to their anxiety.

In Singapore, 78% of respondents are especially concerned about their bank’s efforts to combat deepfake-powered fraud, compared to the global average of 67%. Additionally, 74% of Singaporeans call for stronger cybersecurity measures, surpassing the global average of 69%.

The expectation for financial institutions to provide robust fraud protection is increasing, with three-quarters of consumers expecting a full refund if they become victims of cybercrime.

Source: fintechnews.sg

The post Jumio Study: Deepfakes, Fraud Fears Drive Demand for Stronger Bank Security appeared first on HIPTHER Alerts.

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In 2023, the average valuation multiples of fintechs have dropped to 4x, a significant decline from 20x in 2021. Similarly, equity funding has fallen to $42 billion in 2023 from $144 billion in 2021.

Despite this downturn in funding and valuations, fintech firms’ global revenues grew at a compound annual growth rate of 14% between 2021 and 2023, according to a report by Boston Consulting Group (BCG) and QED Investors. This trend is attributed to key fintech players achieving profitability and scaling rapidly.

The report, based on insights from interviews with over 60 global fintech CEOs and investors, outlines the main forces shaping the industry and identifies trends that will drive future innovation.

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“Profitability and compliance are now the cornerstones of fintech success,” says Deepak Goyal, BCG managing director and senior partner. “They are crucial for attracting continued investment, scaling operations, and building lasting, valuable companies.”

The industry has shifted from a ‘growth at all costs’ model to one focused on profitable growth, with average margins improving by 9 percentage points, the report states.

Looking forward, the report highlights that the industry is entering a prolonged period of higher interest rates, which will continue to raise funding costs. Consequently, the era of ‘growth at all costs’ fueled by cheap capital is coming to an end. The emergence of new regulations by various global regulators will also be closely monitored.

The report also notes that digital public infrastructure has accelerated the adoption of real-time payments in countries like India and Brazil. In India, the Unified Payments Interface (UPI) drives digital payment infrastructure, while in Brazil, it is Pix.

“While the success of India’s and Brazil’s digital public infrastructures is clear, it is not certain that other countries, including developed markets, will be able to replicate it,” the report states. “Much depends on the current market context and the maturity of various layers.”

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Source: financialexpress.com

The post Global fintech revenue rose 14% in last two years: Report appeared first on HIPTHER Alerts.