As financial markets grow in Q1, consumers complain more often
The number of complaints sent by financial consumers to the Bank of Russia increased in 2021 Q1, which was associated with the revival of most markets after the lifting of anti-pandemic restrictions, the expansion of financial institutions’ sales, and a fast rise in the number of retail investors.
In January—March 2021, the regulator received 63,600 complaints, which is 5.7% more year-on-year. Since February 2021, the Bank of Russia has been using a new methodology to record applications, breaking down complaints in the same application by topic. Such a breakdown will adjust statistics in 2022.
The number of complaints against banks increased (+1.7% to 39,300) primarily due to a considerable rise in the number of complains about fraudulent actions committed by unidentified persons which caused losses for people. The number of such complaints was up 2.6 times. Contrastingly, the number of complaints on issues being a focus of conduct supervision decreased, namely by 8.5% in consumer lending and 14.5% in mortgage lending.
The number of complaints against insurers also increased by 4% to 8,500 because of a higher number of complaints regarding life insurance and health and accident insurance. In addition, the number of complaints against securities market participants was up 1.6 times.
The number of complaints about misselling (deliberate misrepresentation of a product) also rose nearly 1.5 times. Furthermore, over one-half of them were against banks, with investment life insurance policies sold by bank offices under the guise of ‘deposits with increased returns’ remaining the key problem. To address this problem, the Bank of Russia was actively engaged in the work on a draft law that should establish rules for selling financial products and empower the regulator to apply supervisory measures where these rules are breached.
The number of complaints against microfinance organisations (MFOs) increased by 27.7% to 7,300. This growth was mostly driven by higher numbers of complaints about the hard selling of extra paid services (approximately 5 times more) and against MFOs excluded from the register and not entitled to issue loans (almost 3 times more). As regards problems related to overdue debt collection, the number of complaints dropped by nearly 10% as a result of the regulator’s work with individual market participants, including even the most serious measures if needed.
Furthermore, the number of complaints against collective investment entities decreased 2.7 times at the beginning of 2021, first of all owing to a steady reduction in the number of complaints about insured persons’ early transfers from one non-governmental pension fund into another and, accordingly, violations of their rights.