Authorities clamp down on banks forcing insurance on customers
Authorities clamp down on banks forcing insurance on customers
The Ministry of Finance has announced strict measures will be taken against bank employees and credit institutions that force customers to buy insurance packages to get bank loans.
This week, the State Bank of Viet Nam (SBV) said it would crack down on the activity, noting that credit institutions will have to take full responsibility before the law for their actions.
The Ministry of Finance on Monday also ordered its Insurance Supervisory Administration (ISA) to intensify the inspection of insurance companies to prevent them from partnering with banks to force customers to buy insurance packages to get loans.
The ministry also instructed the ISA to co-operate with the SBV’s inspectors to prevent the activity.
Leaders of the ISA and the SBV’s Banking Inspection and Supervision Agency have discussed and agreed to set up hotlines to promptly handle reflections and recommendations of the public on the activity.
The hotlines are (024) 388266344 and (024) 3936.1017, or via email at duongdaynong.cqttgsnh@sbv.gov.vn.
The management authorities moved after it was continuously reported that despite unwillingness, some customers were forced to buy insurance products introduced by bank staff to get bank loans. Therefore, the authorities’ directions aim to stop the insurance cross-selling mechanisms.
The SBV last month also issued Official Letter No. 506/NHNN-TTGSNH on bank service provision activities related to insurance, in which it directed credit institutions to seriously abide by the law and the SBV’s direction on business activities and insurance agents.
Under the letter, the SBV has required banks, which provide bancassurance products, to strengthen their inspection and supervision of bancassurance activities to handle violations strictly.
The SBV requires banks not to sell insurance to their customers through dubious means. Any actions related to compulsory insurance in return for loans will be strictly handled.
The SBV said it would strengthen the management and supervision of insurance sale activities of banks’ agents to ensure compliance with the law.
Earlier, the SBV also issued a document requiring bankers to thoroughly explain the terms and conditions of insurance products to customers and help customers fully understand their rights and benefits. It also asked banks to disseminate the prevailing regulations on the insurance business to their employees to avoid violations.
In the context of difficulties expanding net income margins, many banks have been trying to boost service income from bancassurance activities. Bancassurance has become a strategic focus of many banks, especially under the retail banking strategy. This is to serve individual customers’ comprehensive financial needs and diversify banks’ service income sources.
Bancassurance activities in Viet Nam have increased significantly, with local and foreign insurers proactively expanding their network by initiating tie-ups with lenders. Some typical bancassurance deals included VietinBank and Manulife, ACB and Sun Life, and Vietcombank with FWD.
According to the Viet Nam Insurance Association, new insurance premium revenues through the bancassurance channel in 2019 accounted for 29 per cent of total new premium revenues, increasing from 10 per cent in 2016. In 2022, premium revenue from this channel continued to grow, accounting for some 40 per cent of the total new premium revenue.
