Regulator warns lenders against automatically subscribing borrowers to additional services
Lenders should ensure that borrowers are able to make an informed choice of whether to subscribe to additional services or not. However, in the course of conduct supervision, the Bank of Russia has found out that it is not a rare occasion that some banks and microfinance organisations (MFOs) still use pre-populated forms with borrowers’ consent to pay for insurances, certificates for various advisory services, SMS notifications and other services.
Moreover, banks and MFOs use marketing tricks so that applicants do not notice pre-ticked consent boxes. Their attention is distracted by eye-catching texts to proceed with the loan application and thereby agree to pay for extra services. Sometimes, to reject them, applicants have to make a number of steps, e.g. to open a special section to untick consent boxes.
In its letter to banking associations and MFO self-regulatory organisations, the regulator warns that such techniques are against the law. Although the Bank of Russia gives violators individual recommendations, holds supervisory meetings, issues orders and fines, it finds it crucial that professional unions counter such malpractices proactively ahead of supervisory measures.