Financial consumer protection: discussion with banking community
The Bank of Russia with the participation of the Federal Antimonopoly Service of the Russian Federation (FAS) and the Federal Service for Surveillance on Consumer Rights Protection and Human Wellbeing (Rospotrebnadzor) held a meeting with representatives of credit institutions and banking associations to discuss the main results of conduct supervision in 2020, including banks’ practices of selling financial products, issues related to information disclosure to consumers, and plans for this year.
The regulator stated that the banking sector had carried out extensive work to enhance the quality of services provided and communication with consumers. Nonetheless, the Bank of Russia and Rospotrebnadzor are still detecting cases of misconduct by a number of creditors, specifically misselling, mispricing, hard selling of extra services, failure to disclose essential information to clients, schemes used to circumvent regulatory requirements, as well as other malpractice.
The Bank of Russia emphasised the importance of introducing a cooling-off period for any paid extra services and setting rules for selling financial products. These initiatives are currently under consideration by the State Duma. The regulator also reminded banks that their corporate governance systems should provide for the key management’s end-to-end responsibility for the quality of interaction with financial consumers and for assessing the efficiency of internal procedures on a regular basis.
FAS representatives noted a high percentage of violations of advertising laws, including in the course of attracting new clients, specifically failure to provide complete information on the conditions for receiving an interest-free period for credit cards, cashback, etc. Such malpractice is a primary focus of the FAS of Russia.
Another issue discussed at the meeting was countering fraud in the financial market. The participants also considered the main topics of inquiries received by the Bank of Russia that credit institutions should pay attention to. In particular, these are complaints about cyber fraud and failures to comply with laws on enforcement proceedings.
The key objective of the market is to increase confidence in the financial sector by eliminating unfair selling practices and improving the quality of services and interaction with clients. At the end of the meeting, the Bank of Russia’s representatives stressed that anti-crisis support to borrowers should remain a key task for banks in 2021.