22 december 2021, 09:56

Meeting of the FOS Public Council

A meeting of the Financial Ombudsman Service (FOS) Public Council in the form of videoconference was held on December 22, 2021.

Members of the Council considered three issues concerning activities of the Financial Ombudsman Service on themes of popularization of the institute of out-of-court dispute resolution at the financial market as well as on realization of the project on interaction with consumers when processing the appeals from consumers of financial services. The participation of members of the Public Council in informing the general public about the main directions and results of the FOS activities was also discussed.

Informing consumers more intensely about the institute of out-of-court dispute resolution

Head of the Ombudsman for financial services consumers support Service (OFSC) Olga Kraynova informed that the Financial Ombudsman Service has been carrying out active work on informing consumers of financial services about the availability of out-of-court procedures for dispute settlement. She noted that it is being monitored how financial institutions perform their duties to inform their clients about the possibility of dispute resolution through the FOS, recommendations have been given to financial institutions to properly inform consumers through specially developed information materials. The OFSC also places information materials in regional Multifunctional Centres, legal clinics, and on the websites of relevant associations and consumer protection services.

The OFSC also conducts explanatory work among consumers of financial services. Olga Kraynova described the services launched as part of these activities: «Friendly», «Knowledge Base», «Dispute Qualification», «Personal Reception» and the «Financial Ombudsman’s Diary». She also added that there is a project on cooperation with legal clinics to provide advice to the population on submitting appeals to the Financial Ombudsman Service, and participation in thematic events has been organised.

In 2022 the Financial Ombudsman Service will intensify its interaction with regional authorities and local mass media.

All resources used by the Service are in demand among consumers and help significantly raise awareness of the principles of the institution, said the Head of the OFSC.

At the same time the results of the consumer survey show that the work on informing citizens needs to be strengthened in order to ensure more effective interaction with consumers. Therefore, in the course of discussion the members of the FOS Public Council decided to expand the interaction by using the tools at the disposal of the civil society institutions and authorities represented in the FOS Public Council, to organize additional interaction with the consumers of financial services. In addition, in the course of the discussion, the members of the FOS Public Council proposed to oblige financial institutions to include information about the possibility of contacting the FOS in their financial services advertisements.

Informing about unfair practices detected in the activities of financial institutions

Head of Branch No. 1 of the OFSC Ekaterina Surmeneva presented to the FOS Public Council members a report on the unfair practices of financial institutions revealed by the OFSC in relation to consumers of financial services. She noted that informing consumers and the professional community about such practices identified by the Service can both have a discouraging effect on unscrupulous market participants and improve financial literacy of consumers of financial services, enabling them to build their relationships with financial institutions more prudently.

According to Ekaterina Surmeneva, the key block of such practices is related to the non-compliance of financial institutions with the requirements of relevant legislation, as well as legislation in the field of consumer protection. The OFSC reveals such facts in the sphere of insurance. For example, in compulsory motor liability insurance contracts there are cases of reduction of legitimate penalties by the agreement, artificial obstruction of communication of a consumer with an insurance company when applying for payment or with a claim (refusal to accept appeals to the address from the Unified State Register of Legal Entities), and so on. In non-motor insurance there are cases of arbitrary change in the sum insured during the insurance period, substitution of real risks with fictitious ones, which either cannot be realized in practice or are irrelevant to the consumer, and others. In addition, unscrupulous behaviour of market participants, such as credit institutions and microfinance institutions, has been detected: improperly informing consumers about the additional services provided, misleading consumers about the real cost of services, etc.

A number of practices are related to improper implementation of the law on the Financial Ombudsman. For instance, it relates to intentional submission by financial institutions of incomplete information in response to the Financial Ombudsman’s request, resulting in failure to review the merits of applications and issuance of termination decisions.

In her turn, Olga Kraynova said that the OFSC summarizes these data and provides information about unfair practices to the Bank of Russia on a quarterly basis. According to her, in view of this work, a number of companies have already changed their business processes and changed their relationships with their customers.

Based on the results of the discussion on this issue, the members of the Public Council agreed to increase public awareness of the unscrupulous practices identified and to use the information resources of the organisations represented by the members of the Public Council for this purpose. In addition, Chief Financial Ombudsman Yury Voronin’s idea to use the out-of-court dispute resolution practice as a basis for preparing proposals to amend legislation was supported.

Implementing of the «Friendly» project

The Financial Ombudsman Service also presented preliminary results of the «Friendly» project, which was implemented in order to reduce the rate of rejection of appeals coming to the Financial Ombudsman Service. Ekaterina Surmeneva told that the essence of the project consists in a step-by-step implementation of telephone communications with consumers (a friendly approach) in the business process of primary processing of appeals starting from July 2021.

Part of the refusals to accept an appeal for consideration are caused by a lack of information provided by the consumer as required by law. These shortcomings are inherently easy to remedy. In the framework of the project implementation, if it is identified that the appeal submitted to the Financial Ombudsman through the web Personal Account contains insufficient mandatory data and there is an objective possibility to eliminate this deficiency promptly, the OFSC employees may call the consumer and offer to add the required information through the Personal Account in order to avoid refusal to accept the appeal for consideration. At the same time, in case of problems and difficulties with delivery of necessary documents the applicant has the opportunity to call back and clarify their concerns.

Ekaterina Surmeneva reported that the complexity of the project implementation is due to strict deadlines for consideration of appeals of consumers of financial services by the FOS, established by the law on the FOS. In fact, the whole business process in the «Friendly» project (initial analysis of the appeal, communication with the consumer, study of received documents and preparation of draft notification) has to be implemented within one working day.

But despite the objective difficulties of the project, it proves its effectiveness, continued Ekaterina Surmeneva. Currently, the number of calls to be processed under the «Friendly» approach is more than 800 per month. At the same time, the «conversion of calls», i.e. the proportion of appeals, on which the decision was made to accept the request for consideration by the FOS after analysis of submitted documents, is at the level of 30% to 40% of appeals, on which calls are made.

The expected basic effect of the project is a significant reduction in the share of citizens’ appeals refused to be considered by the FOS. The effectiveness of the project is already indirectly proved by the reduction in the number of complaints of non-acceptance of appeals received by the Service in the framework of the 59-ФЗ Law.

At the same time the Service does not intend to stop there and expects the «Friendly» project to go beyond the local task of reducing the level of refusals to a more global goal – improving customer satisfaction in financial services.

The plans to develop the «Friendly» project also include work with so-called «appeals with a historical trail», i.e. situations in which the FOS has repeatedly decided to refuse to accept an appeal for review due to failure to address previously identified deficiencies. In the event of repeated rejection of an appeal, complainants will receive calls to explain the situation more specifically and to assist them in submitting an appeal to the FOS. These actions will help to ease consumer tensions and assist the complainant to resolve the dispute with the financial institution.

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