Bank of Russia registers decline in consumer complaints in 2018
The Bank of Russia has registered, for the first time in years, a decline in the number of financial consumer complaints. In 2018, as many as 243.6 thousands complains were submitted, which is 5.8 thousand (2.3%) less than in 2017. The reduction comes as a result of an almost one-third drop (28.2%) in the total number of complaints filed at non-bank financial institutions. Here, the sharp reduction in OSAGO-related complaints (43.1%) played a significant role. At the same time, complaints against banks showed a rise of 6.6% compared to 2017.
Credit institutions gave cause for a total of 130.3 thousand complaints in 2018, which is more than half (53.5%) of total complaints the regulator received last year. As before, consumer lending issues continue to draw the most attention (39.7% of total complaints at banks). The strong numbers come as a result of, among other things, leading growth rates in lending to individuals (22.8% in 2018 vs 13.2% in 2017), including in mortgage lending. Mortgage lending was mentioned as the subject of 14.9% of total complaints against credit institutions.
Non-bank financial institutions meanwhile gave rise to 87.4 thousand complaints. Consistent with previous years, the bulk (62.2%) of them was about issues with insurance providers. These complaints showed a strong decline though (12.1 pp) vs 2017. This drop was mainly driven by fewer OSAGO-related complaints — despite the fact that OSAGO issues still dominate in the insurance segment. The Bank of Russia received as many as 44.3 thousand complaints about OSAGO. Key problems in this area remain the application of bonus malus (no-claims discounts), and rejection of a contract or e-policy. Having said this, 2018 saw a significant reduction in the number of complaints about these subjects. The strongest decline (by 62.9% vs 2017) was seen in complaints featuring e-policies — thanks to Bank of Russia supervisory action resulting in most insurance companies remedying inadequacies in their website operation. Incorrectly calculated bonus malus (BM) values generated 40.9% fewer complaints, on the back of a well-performing procedure for recovering a correct BM — a joint Bank of Russia and Association of Motor Insurers project. The year saw fresh reasons for complaints, however, e.g. the procedure for OSAGO in-kind damage compensation. The Bank of Russia handled 300 such complaints in the second half of 2017, whereas they topped 1.5 thousand in 2018.
Fewer complaints were caused by collective investment entities. The regulator was in receipt of 3.3 thousand such complaints — a 58.4% drop compared to 2017. The movements come as a result of sharply increased complaints against non-governmental pension funds (NPFs) in 2017, based on 2017 transition campaign results. The transition problem is still the most relevant one in the segment: in more than half of requests (60%) in 2018, customers disputed their transfers from the RF Pension Fund to the NPF or inter-NPF transfers. The second most relevant complaint was about problems executing, amending and terminating a NPF contract (23.3%).
The Bank of Russia notes a rise in complaints filed against microfinance organisations (MFOs) in 2018. There came 16.8 thousand such complaints, 4.1 thousand (or 32.8%) up on last year). This movement is aligned with the rise in microfinance loan volumes. Consumers tend to turn to MFOs more often, viewing them as an alternative to banks. Preliminary data show that in just the first nine months of 2018, the number of active microfinance loan contracts grew 33.0% (to 8.7 million) against the same period in 2017, with the total MFO portfolio having expanded 32.9% (to 148.6 billion rubles). In this context, from 2019 MFOs will become subject to extra regulations to limit social risk, which include a reduced debt ceiling and a cap on day interest rates.
Corporate relations feature in 2.5 thousand complaints last year, 16.7% less than in 2017. Over a third of this number (34.5%) are submissions by minority shareholders over non-payment of dividends.
Throughout the year, the Bank of Russia’s Service for Consumer Protection and Financial Inclusion took supervisory action in line with the law, reinstating consumer rights. The past year saw about 7 thousand instances of supervisory action, including improvement notices / warnings and administrative actions.
