Complaints from financial consumers to Bank of Russia continue to trend downwards in 2019

The Bank of Russia notes that in 2019 it updated its methodology for counting complaints filed with the regulator.  In accordance with the new approach, each complaint in a letter from a consumer is counted as one unit if the complaints are filed against different organisations supervised by the Bank of Russia. As a result, the number of complaints rose and the data on the number of complaints received by the Bank of Russia in 2018 were revised using the new methodology in order to ensure the comparability of annual dynamics.

Should the old methodology be used, the number of complaints filed in 2019 would decrease by 5.4% (from 243,600 in 2018 to 230,500 in 2019).

In 2019, the total number of complaints was influenced not only by a 16.5% decrease in complaints against non-bank financial institutions (NFIs), but also a 0.6% reduction in the number of complaints against credit institutions.

Complaints against credit institutions totalled 141,600 units, more than a half (57.4%) of the total number of complaints filed with the regulator. The slight decline in this segment was caused mainly by the contraction in the number of complaints about mortgage lending by nearly a third (27.4%); it was registered after the law on mortgage holidays came into force. Also, fewer complains were registered against enforced services and incomplete information; this caused an overall reduction in the number of complaints in the consumer lending segments (by 4.3%). Changes in credit institutions’ customer communication policy resulted from the regulator’s use of conduct supervision.

Complaints against NFIs totalled 81,900 (33.2% of the total number). In this segment, the decrease was caused by a further contraction in the number of complaints against insurance agents by more than one third (34%). Nevertheless, complaints against insurers traditionally account for the bulk of complaints against NFIs: 41,600 complaints in 2019.  The most significant decrease was registered in the OSAGO segment—last year the regulator received 33,200 such complaints, 37.6% fewer than in 2018.  Problems in the OSAGO segment usually pertain to the use of the BMC—the bonus-malus coefficient (a discount for incident-free driving). The number of such complaints started to decrease from 1 April 2019, after the new procedure for calculating the BMC came into force.

In 2019, complaints against collective investment entities numbered 2,800, which is 17.8% less than in 2018. Most complaints in this segment (68.1%) are traditionally related to consumers’ objections regarding the transition from the PFR to an NPF, or between NPFs during the 2019 transition campaign. This segment registered a 6.5% reduction compared with 2018. The majority of such complaints pertains to the authentication of documents and signatures and falls outside the realm of the Bank of Russia.

Corporate relations featured 3,300 complaints in 2019, 7% less than in the previous year. The regulator received 963 complaints against professional participants (a 30.5% decrease).

Growth of 25.2% was registered in the microfinance organisation (MFO) segment—28,000 complaints were filed against the participants of this market. Nearly half (49.6%) of them pertain to the collection of overdue debts and largely relate to the activity of professional collectors, as well as illegal lenders and collectors. Furthermore, the dynamics of complaints against MFOs were influenced by the extensive communication to consumers of the restrictions on the maximum debt and the daily interest rate on short-term loans effective since 2019, and the reimbursement of overpayment to borrowers if the Bank of Russia reveals violations in MFOs. Complaints about MFOs’ incompliance with restrictions and overpayments numbered 13.7% of total complaints against MFOs and grew by a factor of 2.7 compared with 2018. However, in most instances such complaints refer to agreements concluded before the new restrictions came into force and not affected by them. In Q4, the Bank of Russia’s awareness-raising efforts resulted in a trend towards a decline in the number of complaints about MFOs. In addition, in 2019 the Bank of Russia removed from the microfinance market a group of companies that systematically violated consumer protection laws regarding the collection of overdue debts. This also helped reduce the number of complaints from consumers in Q4.

Since February 2019, the Bank of Russia has classified complaints about misselling into a separate category. In February—December 2019, 3,800 such complaints were received, of which 2,200 complaints were against banks.

As many as 5,300 complaints were filed in 2019 against credit history bureaus. The main increase was registered in February after households were informed that they can receive information about their credit histories free of charge twice a year. Though in the following months considerably fewer such complaints were received, nevertheless, their total number exceeds the 2018 reading significantly (655 complaints).

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. In 2019, the regulator held multiple supervisory meetings with representatives of financial organisations, held control exercises, and sent recommendations and information letters. As many as 2,710 instructions to remove/prevent violations were issued, and 3,385 administrative offence reports were compiled.

As a result of the review of complaints by banks and financial companies, consumers were reimbursed more than 93.5 million rubles. ‘Contracts worth several tens of millions rubles are being recalculated; funds will be returned to consumers in the near future,’ explained Mikhail Mamuta, Head of the Service for Consumer Protection and Financial Inclusion, ‘In addition, we have updated about 70,000 citizens’ credit histories.’