What are the penalties for banks forcing customers to buy insurance for loan disbursement in Vietnam? How to report the banks forcing customers to buy insurance?
Is it illegal for banks forcing customers to buy insurance for loan disbursement in Vietnam?
Pursuant to Clause 4, Article 10 of the Law on Insurance Business 2000 (amended by Clause 5, Article 1 of the Law on Insurance Business, revised 2010) there are regulations on prohibited acts of purchase and provision of insurance in Vietnam:
Article 10. Cooperation, competition and bidding in insurance business
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4. Strictly prohibit the following acts:
a) Collusion between insurance enterprises or between insurance enterprise and insurance buyer to divide insurance market, close insurance services;
b) Unlawful intervention in the selection of insurance enterprises;
c) Abusing positions and powers in order to assign, require, force, and prevent organizations and individuals engaged in insurance;
d) Providing untruthful information or advertisement on insurance contents, operation scope and terms, which cause harms to the legitimate rights and interests of the insurance buyers;
e) Competing for customers by means of obstructing, inducing, buying off or intimidating employees or customers of other insurance enterprises, agents or brokerage enterprises;
f) Illegal sales promotion;
g) Other illegal acts in cooperation, competition and bidding"
In addition, in Clause 2, Article 3 of Decree 73/2016/ND-CP, the following provisions are made:
Principles on purchase and provision of insurance in Vietnam
1. Organizations and individuals aspiring to conduct business in insurance, reinsurance and insurance brokerage in Vietnam must possess a License for establishment and operation (referred to as the License) from the Ministry of Finance or fulfill requirements for provision of cross border insurance services as per Section 1, Article 90 and Article 91 of this Decree.
2. Organizations and individuals desiring to purchase insurance shall choose insurance enterprises in their discretion but can only purchase insurance from insurance enterprises and foreign branches licensed to operate in Vietnam, except cross border insurance services defined in Section 2 and Section 3, Article 90 of this Decree. No entity can interfere in buyers' choice of insurance enterprises and foreign branches against the law.
Accordingly, the act of banks forcing customers to buy insurance for loan disbursement is a serious violation of the law on insurance.
What are the penalties for banks forcing customers to buy insurance for loan disbursement in Vietnam? How to report the banks forcing customers to buy insurance?
What are the penalties for banks forcing customers to buy insurance for loan disbursement in Vietnam?
Pursuant to Clauses 2 and 3, Article 17 of Decree 98/2013/ND-CP (supplemented by Clause 7 Article 1 of Decree 48/2018/ND-CP) as follows:
Penalties for violations against regulations on provision of life insurance and health insurance
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2. A fine of between VND 40,000,000 and 50,000,000 for any of the following violations:
a) Failing to provide sufficient information about the insurance contract; failing to explain the terms and conditions of the insurance contracts to the insurance buyer when concluding the insurance contract;
b) Failing to inform the insurance buyer of the status of the insurance contract as prescribed by law;
c) Forcing conclusion of auxiliary insurance contracts enclosed to the main insurance contracts;
d) Providing insurance products of investment-linked insurance, retirement insurance, or health insurance against the law.
dd) Forcing entities to buy insurance in any manner.
3. Additional penalties:
Suspension of operation for 02 - 03 months, for a part of content and scope directly related to administrative violations, in license of establishment and operation, for violations specified in Clause 2 of this Article
Accordingly, if banks force customers to buy insurance for loan disbursement, they may be administratively sanctioned with a fine of between VND 40,000,000 and 50,000,000. Moreover, the operation may be suspended operation for 02 - 03 months, for a part of content and scope directly related to administrative violations, in license of establishment and operation.
How to report the banks forcing customers to buy insurance to the State authorities of Vietnam?
Because banks, when carrying out insurance-related activities, can only encourage customers to participate in insurance on a voluntary basis without being obligated or take this as a mandatory condition for loan disbursement.
In the case of the above situation, the State Bank of Vietnam has set up a hotline to handle complaints and suggestions of people and agencies and businesses related to banking activities.
Therefore, citizens can call the Hotline as follows to report the situation of banks forcing customers to buy insurance for loan disbursement:
- Fixed number: (024) 3936.1017
- Mobile number: 0942.966.854
- Or send an email via Email: duongdaynong.cqttgsnh@sbv.gov.vn
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