Credit associations and financial market self-regulatory organisations (SROs) have signed the memorandum of cooperation on countering the unscrupulous sales of financial products and services of non-bank financial institutions in banks’ offices. The document was signed in Saint Petersburg during the 27th International Financial Congress (IFC) on 6 June 2018.
According to the document, Russian credit associations will create standards for credit institutions’ employees selling non-bank products and services. Currently, such standards are applicable only to non-bank financial institutions. Specifically, consumer protection standards elaborated by SROs in line with the regulator’s requirements and approved by the Bank of Russia regulate the provision of comprehensive and detailed information to consumers regarding the specifics and potential risks associated with financial products or services they buy. Similar standard will be mandatory for banks which signed the memorandum.
This document shall become a reliable instrument enabling the professional community and the Bank of Russia to counter misselling practices, whereby due to the insufficient information received in a bank's office individuals’ investment expectations regarding financial products or services do not match the situation in reality. The issue became the central topic of the IFC roundtable ‘Conduct Supervision, from Concept to Practice: Agency Schemes for Selling Financial Products’ organised by the Service for Consumer Protection and Financial Inclusion of the Bank of Russia.
“The memorandum constitutes a milestone for the financial sector demonstrating the professional community's eagerness to maintain high standards with regard to consumers’ trust in the financial market and to the efficiency of dialogue between credit associations and SROs when countering unscrupulous practices”, said Sergey Shvetsov, First Deputy Governor of the Bank of Russia, during the signing ceremony.
The memorandum implies the disclosure of information on credit associations’ members adhering to the standards and/or non-complying with them. In the near term, the list of signatory SROs may expand, as this memorandum will be open for signing.