Contact center
(from Russia)
ext 00020 (from abroad)
Monday - Friday from 8:00 to 20:00 (Moscow time), except public holidays, free call from regions of Russia
23 september 2024, 12:27
The institute of the Financial Ombudsman Service (FOS) not only considers appeals, performing its role at the out-of-court stage, but also successfully performs the task of correcting behaviour of market participants.
This opinion was expressed by Financial Ombudsman Viktor Klimov, speaking at the 15th International Conference “Insurance in Central Asia” in Kazakhstan, which was held in Alma-Ata.
As Viktor Klimov said, the Service has received about 750 thousand appeals for more than five years of work. Only in 2020, the first full calendar year of work, the Financial Ombudsman received almost 190 thousand appeals. About three quarters of them are disputes on CMTPL insurance. And this share is maintained, with an overall decline in the number of disputes by year, the Financial Ombudsman noted. “It is revealing that the percentage of decisions handed down in favour of the consumer drops from 43 per cent in 2019 to 30 per cent at the end of 2023. And, paradoxical as it may seem at first glance, the whole thing together is good dynamics, which, precisely, clearly shows that the task of correcting the behaviour of companies is being successfully performed by the institute. And it is provided mainly by the insurance market, and therefore by disputes on CMTPL insurance,” the Financial Ombudsman said.
He pointed out that “we, as a human rights institute, activate our competence in certain ways on the side of the consumer. In part, this is explicitly provided by law: consumers do not have to justify the amount of the claim and conduct an expert examination on their own.” “In addition, even for CMTPL insurance, the legislation is very complex, of course, the consumers are unable to work out what they are entitled to, they cannot, in particular, calculate the penalty correctly. We have it done for them. In strict accordance with the letter of the law,” the Financial Ombudsman said.
In his opinion, the efficiency of the out-of-court procedure is determined, among other things, by the number of further appeals to the courts. The Financial Ombudsman drew attention to the fact that “the legislation establishes an asymmetrical order of appeal of the parties to the dispute in court. It is caused by differing obligatoriness of our process for the parties”. The financial institution has to appeal against the Financial Ombudsman’s decision, as otherwise it is binding for it. The consumer, in case of disagreement with the decision, goes to court with a claim against the financial institution, attaching the decision as evidence that the mandatory out-of-court stage has been passed.
As Viktor Klimov noted, the share of appeals against the Financial Ombudsman’s decisions is noticeably decreasing, which also indicates the adjustment of behaviour of financial institutions. At the same time, more than half of the appeals are a request to reduce the penalty levied under the law due to its disproportionality to the violation. “Only the court has the right for such a discretionary, evaluative reduction and it usually does make such a decision,” Viktor Klimov said. “But in general, it rather speaks about the inefficiency of the norms of the law on CMTPL insurance, determining the increased amount of the penalty (one per cent per day in the limit of the sum insured, not payment). This is an issue for the regulator and lawmakers. We are participating in the discussion,” the Financial Ombudsman commented. In this regard, Viktor Klimov also drew attention to a number of existing systemic problems affecting such practices. First of all, it is the problem of the so-called “auto lawyers”, who often abuse the right, artificially stretching the terms for the penalty, splitting the applications for reimbursement of court costs on the lawyers, i.e. on themselves. In this way they “earn” what the consumer does not gain. Initially, our law established a “barrier fee” of 15 thousand rubles for persons who bought the right of claim from the aggrieved party, but this measure proved to be of little effect.
After mandatory identification of claimants through the state Unified identification and authentication system (UIAS) was introduced in 2021, the share of paper appeals to the Financial Ombudsman increased from 20 per cent to almost 50 per cent. At the same time, appeals can be signed by different aggrieved parties, but actually come from one “LLC”, which is the very same “auto lawyer”. The legislator is not ready to give up paper, as not every consumer has an internet access. “We’ve had discussions with the insurance community about the option of authentication through the offices of insurance companies. But so far we haven’t found a solution either. Now we are working with MFCs and preparing amendments to the law,” Viktor Klimov said.
In the Financial Ombudsman’s opinion, a complex and important problem related to the specific features of CMTPL insurance regulation is the existence of a fork in the road between priority in-kind repair and a cash payment discounted for wear and tear (up to 50%). The law establishes the obligation to compensate for damage, i.e. to return the vehicle to its pre-accident condition within the limits of the sum insured. The right to payment with depreciation appears in cases strictly specified by law. Failure to fulfil the obligation to restore the vehicle entails losses for the aggrieved party as he or she is forced to make repairs after a period of time and at market prices. Taking into account the dynamics of prices for spare parts, the losses are substantial. The Supreme Court has consistently been pursuing a direct course in its rulings on the recovery of such losses since 2020. In 2022, it secured this with a Plenum Ruling. This is now standard practice for us. Viktor Klimov emphasised that it is required, at least, that special legislation should define the consequences of such non-performance of an obligation and the procedure for compensation of losses.
Another important block of problems and unjustified driver of costs, according to the Financial Ombudsman, is expertise. In theory, if there are expert examinations of the parties (consumer and insurer), the Financial Ombudsman’s expert examinations should be given unconditional preference as they are independent. The grounds for the judge’s disagreement with our expert examination should be more substantial than a mere statement of disagreement by one of the parties. But it is also impossible to deprive the judge of the right to appoint their own expert examination. Therefore, it is necessary to regulate the procedure for such a challenge to the Financial Ombudsman’s expert examination. We are preparing our proposals for amendments to the Russian Civil Procedure Code (CPC), including ones on this issue, the Financial Ombudsman said, drawing attention to the need to raise the issue of the experts’ qualifications together with the insurance community.
The annual International Conference “Insurance in Central Asia”, which took place on September 18-19, is a traditional platform for dialogue and exchange of practices of insurance industry professionals. Speakers include national regulators, representatives of international organisations, top managers of international and national companies of the region’s countries, leading international experts. Conference participants are leading insurance, reinsurance and brokerage companies from CIS countries, Asia and Europe.
