01 june 2022, 15:45

The Financial Ombudsman Service publishes the Activity Report 2021 with data on financial institutions

According to Chief Financial Ombudsman Yury Voronin, the Report has been prepared in accordance with the requirements set forth in Article 13 of the Federal Law “On the Ombudsman for the Rights of Consumers of Financial Services”. The document contains summary information on appeals of consumers considered in 2021 by Financial Ombudsmen and decisions made on them with indication of names of financial institutions in respect of which appeals were submitted. The Report also contains information on compliance by financial institutions with Financial Ombudsman Service (FOS) decisions, on appeals against decisions and results of such appeals.

“Publication of such kind of information illustrating the number and validity of consumers’ claims against specific financial institutions is a mechanism for regulating the behaviour of financial market participants, encouraging companies to resolve disputes with their clients before they apply to the Financial Ombudsman Service. At the end of 2021, information appeared in the report on organisations in relation to which the FOS began to consider consumer appeals from last year. These are credit institutions, credit consumer cooperatives, pawnshops and non-state pension funds,” Yury Voronin remarked.

The Chief Financial Ombudsman specified that when working with data from the Report it should be taken into account that the absolute values, for example, on the number of appeals of consumers of financial services do not reflect the picture with the frequency of appeals to a particular financial institution. “It is only natural that the large financial institutions that have the largest number of insurance contracts receive the largest number of appeals. However, in order to give a complete picture, the ratio of the number of appeals to the number of claims made against a particular financial institution should be analysed. Such an indicator would demonstrate more clearly and objectively how a financial institution treats its clients,” Yury Voronin believes.

In 2021, the Financial Ombudsman Service received 179,911 appeals, which is 4% less than in 2020 (187,386 appeals). The overwhelming number of appeals were for insurance disputes – 161,629 (89.9% of the total number of applications), including CMTPL – 123,372 (68.6% of the total number of appeals). The main areas of concern in relation to CMTPL insurance appeals relate to disagreement with the amount of the insurance claim, refusal to pay the claim and failure to pay the claim in a timely manner. The largest number of appeals for other types of insurance relates to life insurance and accident and sickness insurance – 27,345 (15.2% of the total number of appeals). Here too, the main topic of disputes concerns the refund of insurance premiums in the event of termination of the insurance contract.

The second place in the number of appeals last year was occupied by disputes of consumers with credit institutions – there were 14,164 appeals (7.9% of the total number of appeals). Of these, disputes related to the applicant’s disagreement with the amount or deduction of commissions, fees for additional services (including insurance) in consumer lending accounted for the largest number.

Microfinance institutions (3rd place in terms of the number of appeals) received 1,724 appeals (0.9% of all appeals), credit consumer cooperatives – 818 appeals (0.5%), non-state pension funds – 73 appeals (less than 0.1%), pawnshops – 14 appeals (less than 0.1%).

The average amount of consumer claims in 2021 was 200.7 thousand roubles.

According to the results of consideration of consumer appeals, the Financial Ombudsmen issued 110,713 decisions, from which on the merits of the dispute, i.e. on the full or partial satisfaction or denial of the consumer claims – 96,505 (87.2%). Of the decisions on the merits of the dispute, 38,550 (39.9%) were decisions on full or partial satisfaction of the consumer claims, and 57,955 (60.1%) were decisions on refusal to satisfy the consumer claims.

“We believe that the downward trend in the number of satisfied claims suggests that business processes at the level of financial institutions have improved and there are fewer situations in which a financial institution has behaved in bad faith. We believe that this shows, among other things, the impact of our institution’s activities on the loss adjustment process,” said the Chief Financial Ombudsman.

Yury Voronin stressed that the Report discloses information about the amounts recovered from financial institutions by the FOS decisions. The amount of satisfied appeals from consumers of financial services according to FOS decisions in 2021 is 3,718,776.3 thousand rubles. The main volume of recoveries falls on insurance – 3,656,967.7 thousand roubles.

In accordance with the Law “On the Ombudsman for the Rights of Consumers of Financial Services”, in case of disagreement with the FOS decision, a financial institution has the right to appeal against such decision in court. There is a positive trend of decrease in the share of appealed positive FOS decisions. Thus, in 2020 the share of appealed decisions was 38.1% (16,272) and in 2021 it was 34.6% (13,351), Yury Voronin said.

“In most cases, the appeal is only for one purpose – to reduce the amount of the penalty on the basis of Article 333 of the Civil Code. The fact is that under the Civil Code the decision to reduce the penalty is made only by a court of law. There is no provision for the FOS to apply this rule when making a decision. This has the undesirable effect that the parties would have to go to court even if they had agreed with the FOS decision,” the Chief Financial Ombudsman explained.

The Activity Report 2021 contains information about income and expenditure of the fund for financing the FOS activities.

On 31.05.2022 the Report was made available on the FOS official website in the section “About the Service”. You can read the Report here.

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