Financial ombudsman to start operating in Russia

Starting 1 June 2019, insurance companies engaged in providing compulsory motor third-party liability insurance (OSAGO), voluntary motor third-party liability insurance (DSAGO) and motor hull insurance will be required to cooperate with an official authorised to protect the rights of the consumers of financial services (financial ombudsman).

The financial ombudsman will review inquiries related to individuals’ property claims to insurance companies when they fail to pay compensation under OSAGO agreements (irrespective of the amount) and other complaints where the claim amount does not exceed 500 thousand rubles. Before that date, such issues were under the jurisdiction of the courts.

In case of any dispute with insurance companies, individuals will now have to appeal to the financial ombudsman before turning to the courts. First of all, however, they must try and settle the dispute with the insurance company. If the latter fails to satisfy an individual’s claim or reply within the established time frame (30 calendar days in the case of a written inquiry or 15 business days in the case of an inquiry in electronic form), the customer may direct their inquiry to the financial ombudsman.

The financial ombudsman receives and reviews inquiries free of charge, except for those that are submitted by entities which have been assigned the consumer's right to file claims against financial institutions. The review period is calculated from the date of submission of the inquiry, and is 15 business days for financial consumers and 30 business days for their assignees. As a result, the individual will receive the financial ombudsman’s judgement (if the financial institution fails to execute the financial ombudsman’s judgement, it receives an order similar to a writ of execution).

In turn, the Service for Consumer Protection and Financial Inclusion of the Bank of Russia will continue to protect the interests of insurance companies’ customers and apply supervisory measures to violators regarding issues not related to civil disputes between the parties.

The institute of financial ombudsman was introduced to improve the efficiency of out-of-court settlement of disputes between consumers and financial institutions, to lower the number of disputes, including those settled in court, and to increase consumers’ trust in the financial market.