Banks and imposed insurance

What is happening

The car loan or cash loan was arranged in a hurry, and the branch said it would not be approved without insurance. At home it turned out the insurance cost a sizeable share of the loan, and interest is being charged on it too.

The loan was repaid early, but no one recalculated the insurance. The insurer points to its policy terms, and the bank says it is "not our product".

You cancelled the insurance or paid package, but no money has come back, or the bank has raised the interest rate and blames the cancellation. It is unclear whether that is lawful and what to do next.

What the law says

• Making one service conditional on buying another is prohibited, and losses caused by such tying are compensated in full (Article 16 of the Law of the Russian Federation No. 2300-1 of 7 February 1992 "On Consumer Rights Protection" (the Consumer Protection Law)).
• The Federal Law No. 353-FZ of 21 December 2013 "On Consumer Credit (Loans)" (the Consumer Credit Law) requires the borrower's consent to paid add-on services to be given when the loan is taken out and allows them to be cancelled within a set period with a refund.
• Where a loan is repaid early and the insurance was taken out to secure it, the borrower may claim back part of the premium in proportion to the unexpired term.
• For voluntary insurance of individuals, the Bank of Russia has set a cooling-off period of 14 calendar days, during which the policy can be cancelled for a full refund, or less a portion for the days it was already in force.
• A bank may set different rates for loans with and without insurance; if cancelling the insurance triggers a higher rate, this must be expressly provided for in the contract, and the rate may not exceed the one applied to loans without insurance.
• Relations with insurers are governed by the Civil Code and Law of the Russian Federation No. 4015-1 of 27 November 1992 "On the Organisation of Insurance Business in the Russian Federation"; for most claims against insurers and some against banks, the financial ombudsman must be approached before going to court.

What we do

• We go through the loan agreement, loan application, policy and insurance terms, and any contracts for paid packages and cards.
• We establish which cancellation periods are still open and on what basis to claim a refund: the cooling-off period, early repayment or tying.
• We prepare and send cancellation and refund requests to the bank, the insurer or the third-party service provider.
• We check whether a rate increase after cancellation was lawful and challenge it if the contract did not allow for it.
• We prepare the application to the financial ombudsman and a complaint to the Bank of Russia.
• If you disagree with the ombudsman's decision, we prepare the lawsuit and represent you in court.

What we will need from you

• The loan agreement with its individual terms and the repayment schedule.
• The loan application and all forms you signed.
• The insurance policy, policy terms, certificates and contracts for paid services.
• Confirmation of early repayment or closure of the loan, if that applies.
• Any requests you have already made and the replies from the bank and insurer.