SEBI vs IRDA.. Who is the boss!!!

In recent days, there is lot of hue and cry between the 2 regulatory bodies viz SEBI and IRDA on the issue of validity of ULIPS. For uninitiated, unit linked insurance plans (ULIPs) are the products sold by insurance companies, which have some insurance component, but fair percentage of the client's money is used to invest in the equity market.After a course on business ethics, i sometime wonder how people can't see obvious things in world, or rather they didn't want to see.

Why do we need regulators? because the common people are not expert to judge whether the products and services offered to them are in their interest or not. Suppose, you go to a doctor , then you believe that he will offer the treatment in your best interest, without fulfilling his interest. You have no way of checking this out, as you are not an expert in the field of medicine. So, people vest power in the hands of the regulators , who ensure that professionals work for the best interest of the customer, and to ensure that there are certain guidelines which should be complied.

So, what will happen if regulators start to get dysfunctional... we need a regulator to look over the regulators and thus the system would be crippled by the sheer number of the regulators in the systems. It will become a classic example of "who will guard the guards ??". so this ugly spat between the 2 of the reputed regulators had left a bad taste in the mouth of the investors. Insurance companies, despite their best of efforts, can't deny the equity nature of the ULIP products, and my hunch is that SEBI will get the mandate in its favor from the high court. After all, for mutual funds like products,why a investor should pay a commission in range of 40% , where it is in single digits in the case of Mutual Funds.