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26 june 2024, 18:00
The session “Legal regulation, practice and prospects of out-of-court resolution of financial disputes”, organised by the Financial Ombudsman Service (FOS), was held on June 26 as part of the 12th St. Petersburg International Legal Forum (SPILF).
The session was moderated by Chief Financial Ombudsman Yury Voronin. Opening the session, the Chief Financial Ombudsman pointed out that “the Service has been functioning for more than five years and that time has demonstrated that the institution of the Financial Ombudsman has succeeded”. “We have gradually covered all the sectors of the financial market, which were initially included in the design capacity of the service, and gradually reached the operational scale.”
Speaking during the session, Financial Ombudsman Viktor Klimov pointed out that for all the period of its operation the Financial Ombudsman Service has already received more than 800 thousand appeals of consumers of financial services on disputes with financial institutions. More than half a million decisions have been made on these appeals. The total scope of claims that have been considered has exceeded 15 billion rubles. At the moment one can state with confidence that the original ideology of the Financial Ombudsman institution, wherein the consideration of disputes should be simple, fast, free of charge, has been implemented, Viktor Klimov added.
He also noted that for a number of years the Service has been showing a steady downward trend in the number of incoming appeals, with an average annual decrease of 20 thousand.
According to Viktor Klimov, the number of appeals received by the FOS in 2023, decreased in comparison with the number of such appeals in 2022 by 12.4% (134 thousand appeals in 2023 against 153 thousand in 2022).
The Financial Ombudsman pointed out that another of the current trends is a decrease in the number of satisfactory decisions, i.e. decisions in the consumer’s favour. Whereas in 2019 the number of rejections was around 40 per cent of those decisions considered, this has now risen to 60 per cent.
These two trends, while debatable, “we believe to be evidence that the Financial Ombudsman is not only successfully handling appeals, fulfilling its role at the pre-trial stage, but also putting pressure on market participants to adjust their conduct". “All the simplest and most obvious things that the Financial Ombudsman would predictably consider in favour of consumers have simply stopped coming to us,” Viktor Klimov noted.
According to the Financial Ombudsman, “this reasoning, both the claim procedure and the system of incentive contributions, is what was originally laid in the nature, in the design of the law and in the design of the very institution of the Financial Ombudsman Service”.
Another trend in the FOS activities named by Viktor Klimov as growing complexity is complexity of legislation, complexity of decisions, complexity of financial products and creativity of financial market participants in their interaction with consumers. “All this has been becoming more and more complicated year by year,” Viktor Klimov observed.
It’s not just that the easiest cases simply don’t make it to the Service. “We have a consistently changing regulatory field. So the resolution No. 31 of the Supreme Court Plenum of 2022, concerning the settlement of losses on the most common type of insurance, MTPL, providing for the recovery of losses for the violation of the insurer under the contract of MTPL obligation to arrange for car repair in the amount of the actual (market) cost of car repair, has complicated the recovery of losses in favour of the consumer and expert procedures. Now in most cases there have to be two expert examinations, and that has generally become more complicated”.
Consistently, the consumer protection legislation has become more complicated, in particular, the 353rd Federal Law “On Consumer Credit (Loan)” has recently been changed three times, which also does not favour simplicity and comprehension. For us, as a law enforcer, things are getting more and more complicated.
Another notable trend is unfair practices. Unfortunately, unfair practices are becoming more and more diverse, and despite our best efforts as law enforcers and regulators, they are not decreasing. The inventiveness of financial institutions is growing, they are becoming more and more diverse and that is a definite problem, which shows that nowadays unfair practices in relations with the consumer, despite all efforts, persist, among other things, because for the financial market, unfortunately, it has become a normal part of competition and a normal part of the economy, i.e. a sustainable component of making a profit.
Unfortunately, the changes in the law itself and our law enforcement and some adjustment of judicial practice does not seem to have a significant impact on this, the Financial Ombudsman pointed out.
Viktor Klimov also said that as time has shown, “the Financial Ombudsman institution is efficient not only in terms of dispute resolution, but also in exercising pressure on the market.” “The growth zone is also seen, we, as a centre of competence, should be more involved in adjusting the regulatory framework,” the financial ombudsman observed.
Financial Ombudsmen Viktor Klimov, Svetlana Maximova and Denis Novak, as well as Head of the Consumer Protection and Financial Services Availability Service of the Bank of Russia Mikhail Mamuta, and representatives of professional associations and members of academia took part in the 12th SPILF Session organised by the Financial Ombudsman Service.
