Banks can be fined from 400 million if forcing customers to buy insurance

Banks can be fined VND400-500 million if they force customers to buy non-compulsory insurance products with loans.

The State Bank is drafting Decree 88 on administrative sanctions for violations in the monetary and banking sector.

Accordingly, the State Bank stipulates a fine of 400 million to 500 million VND if banks attach non-compulsory insurance products to the provision of banking products and services in any form.

This penalty was added to be compatible with the Law on Credit Institutions, which took effect from the beginning of July this year. Currently, banking regulations do not mention any form of insurance that is mandatory for borrowers.

Circular 67 guiding the Law on Insurance Business issued by the Ministry of Finance since the end of last year prohibits banks from selling investment-linked insurance (a type of life insurance product) within 60 days before and after the date of disbursement of the entire loan. Other types of insurance such as loan, fire, death, mixed insurance... are not mentioned by the Ministry of Finance in this Circular.

The new sanctions of the banking industry were introduced after a series of complaints from people saying that they were forced to buy life insurance when borrowing money over the past time. Many borrowers agreed to buy life insurance (a high-value insurance product that requires long-term payments) as an "unspoken rule" to get the loan disbursement.

In addition to life insurance, banks often sell loan insurance, fire insurance... with lower value when disbursing loans. These are non-mandatory insurance products, offered by banks to ensure the safety of assets and loans. Buying loan insurance or fire insurance according to banks, helps increase the ability to approve mortgage loan applications, protect collateral assets...

Source: https://baoquangninh.vn/ngan-hang-co-the-bi-phat-tu-400-trieu-neu-ep-khach-mua-bao-hiem-3331888.html