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01 february 2024, 15:01
On 31 January, Chief Financial Ombudsman Yury Voronin addressed the International Conference “Success Story: 20 Years of the Russian Deposit Insurance System”. In his speech he outlined the opportunities for cooperation between the Financial Ombudsman Service (FOS) and the Deposit Insurance Agency (DIA), and also spoke about the prospects for the development of the institution of out-of-court dispute resolution in the financial markets.
In particular, the expanding of the range of issues that are within the competence of the Financial Ombudsman, and the range of persons who can take advantage of the out-of-court dispute resolution procedure is being considered. “We are working on the option of extending the institute to persons engaged in investment so that they too are protected through such a facilitated, no-fee procedure,” the Chief Financial Ombudsman noted.
There is also a need to raise the maximum dispute amount (property claims against a financial institution), at which it is allowed to apply to the Financial Ombudsman, from the current RUB 500 thousand to RUB 1–1.5 million for the majority of disputes.
The procedure for obtaining evidence by the Financial Ombudsman when considering consumer appeals needs to be improved. “We know that banks keep audio or video recordings of communication with the client, but at our request they only provide them when it is to their advantage. Therefore, it is imperative that such an obligation for financial institutions should be legislated. This would considerably contribute to the protection of consumers of financial services,” he explicated.
In addition, Yury Voronin believes it necessary to improve the procedure for financial institutions to appeal against the Financial Ombudsman’s decisions. “The relations between the Financial Ombudsman and the courts should be more clearly prescribed in the Russian Code of Civil Procedure. A new chapter is required, which would take into account the particularities of the disputes considered by the Financial Ombudsman,” the Chief Financial Ombudsman clarified.
He also added that the Service is currently working on the ‘payment reform’ problem when the Financial Ombudsman considers citizens’ appeals. “The law provides for the financial institution to pay the FOS for each case. This causes certain difficulties both for us and for financial institutions. In light of international experience, we intend to consider a subscription fee, which is more justified and more comprehensible,” Yury Voronin further explained.
The Chief Financial Ombudsman also suggested a number of areas for cooperation between the FOS and the DIA. In particular, such cooperation is conceivable within the framework of implementation of the Russian President Vladimir Putin’s instruction to establish a unified mandatory procedure for the out-of-court dispute resolution between creditors and citizens in connection with debts on loans and credits; and in informing consumers about the options to protect their rights when interacting with financial institutions.
He also mentioned the unacceptable practices identified during the consideration of appeals: for example, mis-selling when selling Investment Life Insurance products. “It would make sense to join efforts to co-inform citizens or to consider obliging banks when selling services to notify consumers that some of the universal protection measures for the products offered are missing,” Yury Voronin said.
He also announced that the Service is engaged in a project on mediation in the sphere of interaction between consumers and financial institutions. “We are working out a large number of options, discussing this scheme with the regulator and the banking community, as to how it may operate. The DIA has accumulated a lot of experience in debt settlement procedures of relations between banks and borrowers, which could be of great use to us,” the Chief Financial Ombudsman went on to say, adding that interaction with the institute could be arranged by a stand-alone agreement.
