FINANCIAL ORGANIZATIONS ARE NOT ENTITLED TO CHANGE THE TERMS OF GRANTING LOANS DEPENDING ON THE NAME OF THE INSURER

The recommendations are designed to provide lendee with a competitive choice of insurers when lending

FAS Russia and the Bank of Russia have prepared a joint letter for credit and insurance organizations. In it, the agencies draw the attention of financial organizations to the need to comply with the Government Resolution* that has entered into force when insuring borrowers' risks.

When promoting financial products, financial market participants often take advantage of the lack of information of citizens and impose insurance products of their insurers at an inflated price.

It is important to note that the resolution contains requirements for disclosure of information necessary for insurance. In particular, we are talking about the requirements of a credit institution to insurance organizations and the conditions for providing insurance services, the list of insurance organizations that meet the specified requirements of a credit institution. If the bank does not disclose such information, then this may be regarded as an unacceptable practice.

In order to protect the rights of citizens, FAS Russia and the Bank of Russia remind credit and insurance organizations that refusals to accept insurance policies of organizations with a credit rating on the national rating scale not lower than the level "A-" **, as well as changes in the interest rate under the loan agreement (loan agreement) depending on the name of the insurance organization are unacceptable.

Regulators also recommend that the decision to accept an insurance policy should be brought to the attention of citizens-borrowers no later than 7 working days after the policy is submitted to the bank. This is necessary in order to exclude an unreasonable delay in making a decision on the compliance of the policy of the insurer chosen by the borrower, and to prevent an increase in the costs of citizens for lending.

For reference:

* Resolution of the Government of the Russian Federation No. 39 of 18.01.2023 "On the Admissibility of Agreements between Credit and Insurance Organizations, as well as Foreign Insurance Organizations and on the Invalidation of Certain Acts and a Separate Provision of the Act of the Government of the Russian Federation"

** When lending to individuals for purposes not related to the implementation of entrepreneurial activities, provided that the contract complies with the bank's requirements for the terms of insurance services