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Misselling in financial services thrives in Russia

Credit: Alexey Sukhorukov | RIAN

Misselling, or the practice of selling a product or a service to a customer that is different from what the customer ordered, is becoming common in Russia. Between February and August, the Bank of Russia received 2.4K misspelling complaints, according to Elena Nenakhova, Deputy Head of the Consumer Protection and Financial Services Accessibility Service at the Bank of Russia.  

During the 4th Territory of Financial Security international conference on protecting rights of financial service customers, the expert said that the most common type of deceiving clients practised Russian lending organizations is misspelling – for example, when a customer signs a trust management agreement or a life insurance contract instead of a bank deposit contract. Customers are often sold a loan with a higher interest rate than what they opted for. Another scam is to sell a product but not inform about all the risks associated with it.

Elena Nenakhova said the loss from early termination of a missold agreement (for example, a trust management agreement) can be significant: banks withhold up to 30% of the contract value. The regulatory body’s representative added that between February and August the Bank of Russia received 2.4K misspelling complaints.  

“In most cases, customers complain about lending organizations. They are most frequent abusers. Some 43% complaints concerned investment life insurance contracts that are sold instead of other products,” the expert concluded.

She stressed that today it is necessary to create tools for informing consumers about all pitfalls and risks of financial services.

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