Forcing Insurance Contracts on Customers

Aunna and CIAC denounce abusive banking practices

by ignoring the express prohibition on directly or indirectly forcing customers into insurance contracts. This statement follows complaints of poor banking practice passed on by their members' clients regarding applications for State-backed loans approved as part of the aid granted to mitigate the consequences of COVID-19.

These complaints also received significant coverage on social media after a video by a young woman describing how a bank branch had forced her to take out life insurance in order to be granted one of the ICO (Spain's official credit institute) guarantee lines set up to help businesses and self-employed workers cope with the consequences of COVID-19, approved by the government under Article 29 of Royal Decree-Law 8/2020, of 17 March.

This aid includes an ICO COVID-19 line for self-employed workers, microbusinesses and SMEs for any sector of activity, to cover liquidity needs such as paying wages, rent, suppliers, interest, tax obligations or suppliers. The loan repayment period is up to 5 years, with 1 year's grace period, and the government guarantees 80% of the loan amount. However, at no point does it specify that any linked product must be taken out — including, of course, any type of insurance.

Legal sources at the associations point out that ‘there is a blanket ban on bancassurance operators directly or indirectly forcing customers into an insurance contract’.

They also clarify that it is ‘debatable whether making the waiving of fees conditional on taking out one or more insurance contracts can be regarded as an indirect form of coercion’. However, in their view ‘it undoubtedly is, since the consumer is not free to choose whether or not to take out the insurance with the bank, but is clearly constrained by the condition imposed on them in order to be exempt from fees’.

Aunna and CIAC point out and maintain that customers are free to take out a loan on their own terms, especially at this delicate time for businesses and families hit by the COVID-19 crisis. They therefore call on financial institutions and supervisory bodies to safeguard consumers' full freedom of choice and to abide by the conditions set by law when applying for an ICO COVID-19 loan (or any other type of credit).

The associations will continue to gather information on the matter and to ensure that consumer freedom is respected.

Source

https://adndelseguro.com/mediacion/aunna-ciac-denuncian-practicas-abusivas/