The Financial Ombudsman Service frequently resolves microloan disputes in favour of citizens

The out-of-court settlement of disputes between citizens and microfinance institutions (MFIs), which has been carried out for more than six months by the FOS, ends in favour of consumers in the overwhelming majority of cases, Chief Financial Ombudsman Yuri Voronin said.

A new procedure for resolving consumer disputes with MFIs has been in effect in Russia since January 1, 2020. Before filing a claim with an MFI, a consumer is obliged to contact the FOS where disputes with claims up to 500 thousand rubles are considered. Acceptance and consideration of consumers’ complaints is carried out by the FOS free of charge.

According to Yuri Voronin, MFIs’ clients submitted 323 complaints to the FOS in the first half of 2020. The largest number of complaints came from consumers from St. Petersburg (67, or 20.7%), Moscow (38, or 11.8%), the Republic of Tatarstan (16, or 4.9%). In addition, claimants from the Arkhangelsk, Nizhny Novgorod, Moscow, Rostov, Ulyanovsk and Novosibirsk regions, as well as from the Krasnodar Territory, filed complaints in disputes with MFIs.

In the structure of complaints, the majority of the cases (99, or 30.7%) fall on disputes related to non-refund of fees for additional services by MFIs. “It is, in particular, life or health insurance of the borrower, other insurance products, information texting, legal support of the consumer. The legal practice of considering such disputes demonstrates that the borrower’s consent to a particular service was often obtained by the lender in violation of the law or not received at all,” Yuri Voronin emphasizes.

Thus, for instance, a situation is typical for online loans when the lender in the loan application pre-sets a mark on the borrower’s consent to purchase an additional service, and when applying for a loan at the MFI office, the loan application can be issued with a pre-installed typographic mark of consent to the service, which does not allow the consumer to refuse the service.

Consumers also filed complaints on disputes with MFIs because of their disagreement with the calculation of interest (57, or 17.7%) and in connection with the discrepancy in the calculation of the penalty (26, or 8%). “A significant part of such requirements is associated with the imposition of additional services when issuing a loan, the cost of which is included in the total loan amount, thereby increasing the amount of interest. A classic example of imposition is the inclusion of the cost of any insurance. Disputes also concern the fact that MFIs accrue interest for the period of actual use of the loan at a rate exceeding the market average of the full cost of a consumer loan. The latter is determined by the Bank of the Russia,” Yuri Voronin points out.

During the reference period, based on the results of consideration of appeals in relation to MFIs, the FOS made 32 decisions, in 24 cases (75%) the financial ombudsmen satisfied the claims of clients of MFIs. “When speaking about decisions to refuse to satisfy the claims, such decisions are often taken today since MFIs voluntarily satisfy the consumers’ claims, without having to be urged by the FOS,” Yuri Voronin says.

The Chief Financial Ombudsman points out that a significant number of the complaints – 108 – could not be accepted for consideration, since the claimants had violated the claim procedure and had failed to preliminarily file a claim to the MFI. At the same time, all claimants are provided with a guide on the procedure for filing a complaint with the FOS. “It is also obligatory for MFIs to inform consumers about the procedure for contacting the FOS, especially so since the law “On the Ombudsman for the Rights of Consumers of Financial Services” imposes obligation to inform consumers at places where services are provided, including those on the official websites of financial organizations,” Yuri Voronin sums up.