Delegate Pham Van Thinh (Bac Giang) highly appreciated the process of receiving, explaining, and revising the draft Law on Credit Institutions (amended), and expressed high agreement with many contents of the draft law. However, in the two previous sessions, the drafting agency had spoken about commercial banks acting as life insurance agents, and had accepted some of them but still had concerns.
Delegate Pham Van Thinh - National Assembly Delegation of Bac Giang province. (Photo: Quochoi.vn).
Mr. Thinh stated that commercial banks that are affiliated with life insurance agents have suggested forcing customers to buy life insurance with an annual payment of 2% to 4% of the loan value. Bank employees are assigned targets for the number of insurance contracts and life insurance premium revenue.
According to the inspection conclusion of the Ministry of Finance in July 2023 on 4 life insurance companies providing insurance products to customers through commercial banking channels, it showed that the contract cancellation rate after the first year of customers was up to 70%. If customers cancel in the first year, they will lose all the premiums they have paid.
Many banks also suggest that borrowers pay fees for the first two years. In the first two years, the amount of money borrowers must pay is up to 4 to 8% of the loan value. The real interest rate on capital released into the economy due to the purchase of additional life insurance can increase by 50 to 100% in the first two years compared to the interest rate on the credit contract.
The delegate pointed out that the first year's prepayment for the exclusive cooperation contract that the insurance company pays to the commercial bank, which is made public when signing, accounts for a large proportion of the commercial bank's pre-tax income.
Citing data from some banks, according to delegate Pham Van Thinh, from 2018 to 2022, income from life insurance agents of commercial banks accounts for a very large proportion of the profits of commercial banks.
With such great reality and benefits, he believes that if the draft Law only accepts the direction of adding Clause 2, Article 113: Commercial banks are allowed to conduct insurance agency activities according to the provisions of the law on insurance business, in accordance with the scope of insurance agency activities according to the regulations of the Governor of the State Bank, then there will be nothing to ensure the situation of forcing customers to borrow money to buy insurance or taking advantage of the lack of knowledge of customers with savings deposits to buy life insurance products as in the recent past.
Therefore, Mr. Thinh suggested that the draft Law should add an article assigning the Government to issue documents regulating the business of insurance products for which commercial banks and credit institutions act as agents to ensure publicity, transparency, and protect the rights of customers borrowing capital as well as depositing savings at banks.
Sharing the same view, delegate Pham Van Hoa (Dong Thap) emphasized that the consequences of joint venture and joint banks selling insurance in the past have been very clear. Banks do not have insurance headquarters. Therefore, the delegate supports the view that joint venture and joint banks are not allowed to sell insurance...
Delegate Pham Van Hoa - National Assembly Delegation of Dong Thap province. (Photo: Quochoi.vn).
Regarding the content of assigning the State Bank to review and intervene early when foreign banking organizations operate at risk to customers, Mr. Hoa said that this is a very humane provision of the draft Law on Credit Institutions (amended) this time.
PHAM DUY
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