Selling some financial products under the guise of others is a problem that almost every tenth customer of banks faces. This practice is called misselling, and 90% of consumer complaints to the Bank of Russia about credit organizations are connected with it.
In practice, instead of a contribution, a bank consultant can offer you investment life insurance, securities, mutual investment funds. At the same time, the employee may be silent about the risks of investing in alternative products to deposits, and sometimes even distort information, saying that they are insured by the state. The logic of sellers is very clear – they receive additional commissions, acting as agents of insurance and management companies, non-state pension funds. And bank consultants receive bonuses for such sales. Therefore, employees of credit organizations are aimed at selling a lot and actively.
Until recently, most often, under the guise of deposits, bank employees sold investment life insurance policies. This product was promoted as a “high yield contribution”. Any methods of persuasion were used, for example, “IZH is more profitable”, “you will earn more”, “the product is insured, because the name contains the word“ insurance ”. Sometimes, consultants could simply let a client sign an investment life insurance contract under the guise of a deposit agreement. Inattentive citizens entered into an agreement, believing that they are signing a deposit agreement.
But on April 1, the Bank of Russia directive came into force, according to which insurers and their agents are obliged to warn customers about the main risks of these products when selling insurance policies. Sellers must inform customers about the procedure for calculating investment income, about the absence of guarantees for its receipt, about the procedure for returning money in case of early termination of insurance contracts. Thus, now the Bank of Russia is regulating the sale of ILI policies. Misseling cases in this segment should become less.
However, the sale of investment products under the guise of deposits remains common. Instead of ILI, consultants actively offer to invest, for example, in bonds, assuring that these investments are insured by the state.
By and large, investment tools can bring more income than a contribution. So, the advantages of investing in bonds are the possibility of generating income (coupon payments), which may exceed the deposit rate offered by banks, as well as the liquidity of these securities. But their risks are higher than those of the deposit. Customers may not earn anything or lose their savings when investing in securities. In addition, a person cannot return the invested funds before the bonds expire. If necessary, he can resell the bonds on the stock market, but their value at the time of resale may be significantly less than the one for which they were originally purchased. Customers are often disappointed when they become more familiar with the terms of the contract.
Excessive credulity fills many: customers inattentively read the terms of the contract, prefer to take word of mouth to bank employees, many are tired of studying the details of agreements. As a result, they can be convinced of the profitability of alternative product deposits.
Eradicating misselling is a rather difficult task, the culture of bona fide sales of financial products in our country is only developing.
The Bank of Russia and the largest self-regulatory organizations in the financial market have embarked on the creation of this culture. So, last year, associations signed a memorandum on “Anti-Missingling”. In addition, the Bank of Russia recommended the development of standards for the sale of financial products; now the Association of Banks of Russia, the Association of Russian Banks and the All-Russian Union of Insurers are working on them.
The standards of banking associations stipulate that the information on a product sold to a client must be reliable and free, accessible to any client on equal terms and in equal volume. It should be provided in an accessible and understandable form for the client, without distortion, ambiguity and the use of terms unfamiliar to him. Depending on the type of financial services, the bank must provide the consumer with additional information on such a product, if it is not a commercial or other secret.
SRO NFA at the initiative of the regulator is preparing requirements for sales scripts of individual financial products. They will indicate that bank employees can and should not speak when serving customers. For example, when selling bonds it will be forbidden to say that the product is insured by the state. In addition, the client will be required to disclose the risks of investing in this instrument, including the risk of loss of savings. Requirements for sales scripts for financial products should appear in the second quarter of 2019.
But you need to understand that the standards of associations will not be binding, and the requirements for sales scripts will become internal standards of the SRO. Market participants will be able to choose whether to use the new rules in their activities. We believe that most banks will want to play fair. However, there will remain those players who want to circumvent the recommended rules. Gradually, such will remain less.
It is important for the consumer to know that there is such a practice as misseling. And for customers, a general rule should apply – to ask consultants about all the details and risks of products, carefully read the contract. If you agree to arrange any investment product, you need to understand that the funds are not insured by the state. In case of any doubt, it is always better to refuse to conclude an agreement. People who are not ready even for the slightest risk and long-term investment should choose their usual deposits. If a bank employee misled you, you can contact the Bank of Russia Consumer Rights Protection Services or file a lawsuit.
The opinions of experts of banks, financial and investment companies presented in this section may not coincide with the opinion of the editorial office and are not an offer or recommendation for the purchase or sale of any assets.