St. Petersburg International Legal Forum participants discuss the FOS progress
Participants of St. Petersburg International Legal Forum «Legal Forum 9 ¾» discussed the results of the activities of the Financial Ombudsman institution and the prospects of progress of out-of-court dispute resolution in the financial sector.
The discussion was held within the session on «Establishment and Development of the Financial Ombudsman Service (FOS) as an Effective Means of Citizens’ Legal Protection» moderated by Chief Financial Ombudsman Yury Voronin.
The speakers at the session were:
– Sergey Shvetsov, First Deputy Chairman of the Bank of Russia, Chairman of the FOS Council;
– Igor Divinsky, Member of the State Duma of the Federal Assembly of the Russian Federation, Chairman of the FOS Public Council;
– Mikhail Krotov, Judge of the Supreme Court of Russia;
– Igor Jürgens, President of the All-Russian Union of Insurers, Member of the FOS Council.
In the first part of the workshop meeting the participants discussed the results of the institute of out-of-court dispute resolution on the financial market. Yury Voronin provided statistical data about the work in 2020, according to which 187,386 appeals from consumers were received by the Financial Ombudsman Service that considered disputes in insurance and microfinancing during the reporting period. A total of 114,907 decisions were taken, in 37.2% of the cases the consumer’s claim was satisfied, in 48.8% of cases the consumer’s claim was rejected. In 14 per cent of cases, the decision was taken to terminate consideration of the appeals for various reasons.
The FOS interacts with 6,904 financial institutions. In spring 2020, the FOS had to organise work remotely in an extremely short period of time because of the pandemic and restrictive measures, the Chief Financial Ombudsman noted. «Not for a single day did we suspend the work with appeals from citizens, most of the appeals being fortunately submitted to the Service in electronic form. During the busiest period of work, in April and May, the Service received 25,434 appeals and issued 17,786 decisions,» he said.
Yury Voronin added that, according to the Russian Supreme Court, the work of the Financial Ombudsman Service had significantly reduced the load on the judicial system. As for the insurance market, according to the Russian Union of Motor Insurers, the legal expenses of insurance companies had considerably decreased.
During the workshop meeting, First Deputy Chairman of the Bank of Russia Sergei Shvetsov assessed the work of the FOS. «I believe that this is one of the best projects in the field of consumer protection over the last ten years in Russia,» Sergei Shvetsov remarked.
He reminded that it was owing to the FOS activities that the number of insurance disputes in courts had dropped by about half. «At the same time, the costs of insurance companies have also decreased. And now we say that individualization of CMTPL insurance rates has reduced the cost of the policy, but some contribution to reducing the CMTPL cost, of course, contributed to the institution of the FOS,» Sergei Shvetsov emphasized.
Judge Mikhail Krotov of the Russian Supreme Court agreed that the FOS institution in Russia had succeeded. «That real reduction in the judicial workload not only for the Supreme Court, but for the judicial system in general, does show that the need for the out-of-court dispute resolution procedure is dictated by time. The number of appeals is large, many issues are typical, and no one needs a dispute for the sake of a dispute in court, of course,» he said.
The electronic form of interaction during the pandemic also demonstrated that it was indeed possible to exercise one’s rights without recourse to those bodies for which a special mode of operation had been introduced, Judge Mikhail Krotov continued. «And this mode also seems to need further development, because one can really only commend the way this has been done, working during the pandemic has yielded a large number of appeals and shown the effectiveness of dealing with these disputes,» Judge Mikhail Krotov added.
Igor Jürgens, President of the All-Russian Union of Insurers, noted during the discussion that the institution of out-of-court dispute resolution in the financial market acts as a civil society institution rather than a purely legal one. «It works as an institute of educating both the consumers and, in our case, the insurers, in the spirit of the value of the product they sell and are responsible for it afterwards,» Igor Jürgens believes.
Member of the Russian State Duma Igor Divinsky noted that under conditions of decreasing real incomes of population, increasing level of mortgages and increasing defaults on loans many financial institutions deliberately violate rights of consumers of financial services or mislead them regarding real benefits and actual conditions of the services offered. «Under such conditions, the FOS activities become even more important and necessary for civilized and, more importantly, prompt resolution of situations,» Igor Divinsky summarized.
PLANS AND PROSPECTS
The second part of the discussion concerned plans and prospects for further development of the Financial Ombudsman institution.
«We would like the Financial Ombudsman Service to become a generally recognized expert body in matters of dispute resolution at the financial market and gain wide publicity among citizens,» Yury Voronin remarked. To this end, the FOS is arranging work towards improving financial literacy and expanding the institution’s popularity. One of the channels for consumers to get information about out-of-court dispute resolution will be insurance policies, on which it is planned to broadcast this information.
The FOS is to establish a unified methodology centre for a number of categories of disputes within the institution, which will work out uniform predictable solutions so that both consumer communities and financial institutions will clearly understand what decisions will be made by the Financial Ombudsman in each case, the Chief Financial Ombudsman proceeded.
In order to influence the behaviour of market participants, the FOS is to make rankings of financial institutions available on its official website, which will reflect a company’s position in terms of number of appeals, satisfaction of claims, etc. These rankings will influence consumers’ decisions when buying a financial service.
The First Deputy Chairman of the Bank of Russia thinks it important the FOS activities be extended to other sectors of the financial market, as the institution has shown positive results in the insurance market. «We have a lot of products, we have a lot of disputes between participants and financial institutions, and an ombudsman has plenty of elbow room. There are transitions between NPFs, the relationships between microfinance institutions, and many other things we have talked a lot about,» Sergei Shvetsov added.
The workshop participants also discussed the issues of including bankruptcy of individuals in the FOS competence, mediation in disputes between the client and a financial institution, the topic of reducing the penalty, which is currently only possible by court decision, as well as digitalization of the institute of out-of-court dispute resolution.