Bank of Russia sets procedure for suspending sales and refunding customers in case of misselling
These measures may apply when making a sale, a financial institution withholds important information on the limits and risks of a financial product, misleads customers about potential gains and guarantees, and misrepresents a financial product as another safer one.
Also, the Bank of Russia will take similar action if the procedure for testing non-qualified investors is repeatedly violated or high-risk financial instruments designed strictly for qualified investors are sold to non-qualified ones.
The ordinance stipulating the measures the regulator should take in such situations has been registered by the Ministry of Justice.
New measures will help better protect consumer rights against misselling and other unfair practices. The Bank of Russia’s right to take the said measures is stipulated in Federal Law No. 192-FZ, dated 11 June 2021.
‘A customer may be misled by a particular manager or a financial institution as a result of its consistent violations of sale and disclosure rules. Consequently, a customer either does not understand the risks of a purchased product or mistakenly regards it as another safer financial instrument (for example, an investment product is thought to be a deposit). From now on, it will be easier for us to suspend such sales until violations are rectified. In extreme cases, where a customer suffers from losses due to a seller’s misconduct, a financial institution will be obliged to cancel the sale and refund the customer,’ explained Mikhail Mamuta, Head of the Bank of Russia Service for Consumer Protection and Financial Inclusion.
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