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27 march 2023, 09:58
Russian Supreme Court points out the consumer’s right to refuse a bank’s additional service of arranging insurance when granting a loanThe Supreme Court of Russia has stated that a consumer has the right to refuse a bank’s additional service of arranging insurance when taking out a loan. A respective position is contained in the Ruling of the Supreme Court dated 06.12.2022 in case No 18-KG22-73-K4 https://www.vsrf.ru/stor_pdf.php?id=2195484 .
A consumer turned to a bank with a claim for termination of a service agreement and a refund of the money paid to the bank for subscribing to the insurance programme offered by the bank when the loan agreement was concluded. The trial court granted the consumer’s claim. The appeal court disagreed with this position, overturning the decision, the court dismissed the claim; the appeal court’s position was upheld by the court of cassation. The Supreme Court of Russia quashed the rulings of the appellate and cassation instances and remitted the case for a new examination by the court of appeal.
On 11 July 2019, a consumer loan agreement was concluded between the consumer and the bank in the amount of 1,172,000 roubles for a term of 36 months. On the same day, the parties entered into a service agreement, under which the consumer expressed a wish to become an insured person under the voluntary insurance programme “Borrower Protection”. The bank undertook to conclude, in its own name and for its own account, a personal insurance contract between the consumer and the insurance company, and to debit the client’s account with a fee of 68,457 roubles 64 kopecks. The consumer was aware that the bank’s commission included an insurance premium of 8,228 roubles 45 kopecks.
Following the early repayment of the year’s loan, the consumer applied to the bank for termination of the service agreement and a refund, which was refused.
The first instance court partially granted the consumer’s claim. The court of first instance had proceeded on the assumption that the plaintiff had prematurely repaid the debt under the loan agreement and, as a result, the insurance contract was not valid and did not provide for payment of insurance compensation in the absence of the balance of the loan in the event of premature repayment. The court stated that, since the plaintiff had performed their obligations to the bank before the due date, the insurance contract should be considered terminated as of that time; therefore, the plaintiff was entitled to be paid back the part of the insurance premium in proportion to the unused time.
The appeal court overturned the ruling of the first instance court. The appeal court concluded that the sum of 55,549 roubles 59 kopecks constituted a bank commission, which was remuneration for organizing the insurance process. The commission was paid in a lump sum and could only be refunded in full under clause 2.5 of the Bank’s Rules for Providing Services to Natural Persons under the Insurance Programme, i.e. only until the bank had fulfilled its obligations under the service agreement.
The court of cassation of general jurisdiction upheld the appeal decision.
The consumer appealed the rulings of the court of appeal and the court of cassation to the Supreme Court of Russia.
The ruling of the Supreme Court of Russia of 06.12.2022 in case No. 18-KG22-73-K4 overturned the judicial acts of the court of appeal and the court of cassation and sent the case for reconsideration.
The Russian Supreme Court noted that the court should have determined what kind of services had been rendered to the plaintiff and to what extent, what actual costs had been incurred by the Bank at the time the plaintiff withdrew from the service contract.
The appeal court had not, however, refuted the first-instance court’s conclusion that the bank had not provided evidence of the expenses incurred in the amount remaining after the insurance premium had been paid to the insurer and had not stated what proved that the bank had properly fulfilled its obligations under the service agreement in full, in accordance with its terms.
The case is scheduled for retrial by the Krasnodar Regional Court on 5 April 2023.
