Trang Chủ
Protecting financial consumers – from the role of DIV
There are currently 5 agencies involved in the protection of consumer interests in the financial sector, including: the State Bank of Vietnam (SBV) in charge of the banking sector; The Ministry of Finance manages the securities and insurance sectors; The Ministry of Industry and Trade, the Ministry of Information and Communications and the Vietnam Consumers Protection Association that are responsible for consumer protection in general. All five of these agencies have the ability to participate in the process of protecting consumers of financial services, but these agencies do not have a specialized department as well as a specific management process to perform the task of protecting consumers, and there is no coordination mechanism to handle conflicts of interest that occur when using financial products and services.
In theory, depositors are an important part of the Vietnam’s financial system. This is also a consumer of financial services, because in addition to savings services, attracting deposits, commercial banks also provide other services such as issuing certificates of deposit insurance, providing payment services, transferring money, granting credit, credit guarantees, issuing bonds, distributing insurance...
The objective of the deposit insurance policy is to protect the legitimate rights and interests of depositors - financial consumers in the economy. When depositors have knowledge and trust in financial institutions, financial transactions are promoted, and people are encouraged to save money. Thereby, contributing positively to the national financial inclusion.
In Vietnam, the banking system is still the main source of capital for the economy, so depositors are a very important component of Vietnam's financial system.
DIV was established with the mission of protecting the legitimate rights and interests of depositors, contributing to the stability and healthy development of the national financial system. Currently, DIV is protecting depositors at 1,280 insured institutions and through two methods: direct and indirect.
Accordingly, DIV protects the legitimate rights and interests of indirect depositors by implementing operations as: supervision and examination periodically to detect and recommend the SBV to promptly resolving violations of regulations on deposit insurance and safety in banking operations. Besides, in order to effectively participate in the restructuring process of weak credit institutions, the DIV also implements the following tasks: providing special loans to specially controlled credit institutions, participating in the formulation of the bankruptcy plan for the specially controlled credit institutions, participating in the assessment of the feasibility of the people's credit fund recovery plan, communicate and disseminate deposit insurance policies through various channels and mass media to raise public awareness, especially towards students, depositors in remote areas.
Not only that, in case the insured institution encounters an insolvency problem, the DIV will directly protect depositors through the reimbursement to depositors with the coverage limit prescribed by law. The excess amount will be paid during the liquidation of the assets of the insured institution. As a result, depositors feel more secure when depositing at insured institution, thereby being more proactive in financial transactions, contributing to promoting financial inclusion.
After more than 20 years, it can be said that DIV has well protected the legitimate rights and interests of depositors, which is also the protection of financial consumers - the focus of the National Financial Inclusion Strategy through concretizing deposit insurance policies, synchronously implementing operations to strengthen depositors' confidence in the financial system, and raising financial awareness. As a result, consumers make the best choice to participate in financial transactions, and at the same time encouraged to use legitimate financial services. Therefore, in the coming time, it is necessary to further enhance the role of the DIV in protecting the legitimate interests of financial consumers - depositors.
Early amend the Law on Deposit Insurance – strengthen the role of consumer protection of financial services
In Vietnam, consumer protection is mainly based on the legal basis of the Law on Protection of Consumer Rights, but this law does not have a separate regulation on financial consumer protection. Meanwhile, laws in the financial sector such as the Law on Credit Institutions, the Law on Securities, the Law on Insurance Business have provisions on protecting the interests of customers but are incomplete and lack of specific guidelines for timely and effective handling of financial consumer complaints.
At the 5th session of the 15th National Assembly, on the afternoon of June 20, 2023, with 93.7% of delegates in favor, the National Assembly voted to pass the Law on Protection of Consumer Rights. However, there is no separate regulation on financial consumer protection in this Law. Delegates also said that, besides the Law on Protection of Consumer Rights, for specific fields, there should be specialized laws to protect consumers' interests, for example, to protect the interests of consumers in the field of financial services, banks need to apply laws on finance, banking and insurance.
At the same time, in order to protect the right of consumers, it is also related to the organization and implementation of legal policies. The Standing Committee of National Assembly also suggested the Government direct ministries and branches to be more drastic in protecting the interests of consumers in the financial services, banking and electronic transactions.
Meanwhile, the recently revised draft Law on Credit Institutions also received many comments from the National Assembly deputies. In which, there is a requirement to complete the legal basis to protect the legitimate rights and interests of depositors, and to facilitate the access to banking services of businesses and people. In particular, the delegates also raised the issue of how the interests of depositors will be guaranteed in case the bank goes bankrupt.
Currently, the Law in deposit insurance is the highest legal basis governing deposit insurance activities in Vietnam. With the legalization and concretization of many contents, the Law on deposit insurance has improved the effectiveness and enforceability of the deposit insurance policy, bringing the policy of depositor protection and ensuring the safety of the banking system to a new level. Law on deposit insurance has clearly defined the functions and tasks of the state management agency in charge of deposit insurance, deposit insurers and insured organizations as well as regulations on the interests of depositors, thereby creating an open and clear corridor for deposit insurance activities. During the implementation process, the provisions of the law have come into life, continuing to promote effectively.
However, after 10 years of implementation, the Law on Deposit Insurance has also revealed a number of shortcomings and limitations, due to many changes in practice, moreover, the regulations are not clear or there are provisions but inconsistent with other laws, for example about the time of arising obligation to reimburse, how to waive deposit insurance premiums; uninsured deposits; deposit insurance profiteering...
In recent years, the Prime Minister has issued important instructions regarding the amendment and supplementation of the Law on deposit insurance. Accordingly, in Directive No.06/CT-TTg dated March 12, 2019 on strengthening solutions to ensure operational safety and firmly strengthen the people's credit fund system, the Prime Minister directed the SBV: "Strengthening the role and task of the Cooperative Bank of Vietnam and the DIV in coordinating participation, supporting the examination and supervision function of the SBV of people’s credit funds; well perform the role and responsibilities of the Cooperative Bank as a system link in regulating capital and providing lending support to people's credit funds facing financial and liquidity difficulties; actively participate in resolving weak people's credit or show signs of unsafety in their operations; research and propose amendments to the Law on deposit insurance to use the deposit insurance premium to resolve weak credit institutions”.
In addition, the process of restructuring the credit institutions system associated with bad debt settlement in the 2016-2020 and 2021-2025 periods approved by the Prime Minister emphasized the use of the DIV's resources to support the recovery and resolve problematic small credit institutions. To create a legal corridor to implement these policies, it is necessary to have specific provisions in the Law on Deposit Insurance and ensure the consistency of this law with relevant laws such as the Law amending and supplementing the Law on Credit Institutions.
Therefore, in Decision 689/QD-TTg of the Prime Minister approving the process of restructuring credit institutions system associated with bad debt settlement in the 2021-2025 period, issued on June 8, 2022, the Prime Minister directed the group of solutions on the legal basis to restructure and resolve bad debts of credit institutions, including the content of researching, reviewing, amending and supplementing the Law on State Bank of Vietnam, the Law on Credit Institutions, the Law on Deposit Insurance, relevant laws in the direction of: and relevant legal documents in the direction of: researching, developing and supplying support mechanisms for credit institutions to participate in restructuring weak credit institutions to minimize negative financial and operational impacts; research and supplement the functions and duties of DIV to participate in restructuring weak credit institutions...
In Resolution No. 62/2022/QH15 on questioning activities at the 3rd session, the 15th National Assembly, the National Assembly requested to continue reviewing, amending and completing the legal framework, organizing the effective implementation of monetary policy, foreign exchange, gold trading and banking activities, including the Law on deposit insurance.
The amendment and supplementation of the Law on deposit insurance set out at this time is very necessary, in order to improve the effectiveness of depositor protection and safety of the banking system; handle problems that have arisen during the implementation of this policy in recent years; and to have regulations consistent with relevant laws such as the Law amending and supplementing a number of articles of the Law on Credit Institutions (Law No. 17/2017/QH14), Law on Bankruptcy...
In addition, the amendments and supplements to the Law on Deposit Insurance also aim to improve the legal basis, be in line with international practices, enhance the position and role of the DIV to participate more deeply and effectively in the process of restructuring the credit institution system, in order to better and more timely protect the legitimate rights and interests of depositors, and further expand the protection of the legitimate rights and interests of financial consumers.
Enhancing the position and role of DIV in protecting financial consumers
Along with the early amendment of the Law on deposit insurance, in order to enhance the role of DIV in protecting financial consumers - depositors, it is necessary to regularly evaluate the effectiveness of the protection of financial consumers - depositors on the basis of the Core Principle for effective deposit insurance systems and accompanying assessment methods. Therefore, identify the results and limitations in the protection of financial consumers and related issues such as financial products and digital deposits, transaction methods or non-banking financial services for the poor in relation to the deposit insurance regulations.
Continue to deploy insurance for forms of financial services and products such as online deposits to the extent permitted by the Law on Deposit Insurance in order to meet the deepening innovation of modern financial and banking activities, especially deposits of small and individual depositors. Study on amending and supplementing in detail the specific regulations for the form of online deposit and mobile phone deposit.
Focus on enhancing the role of communication of deposit insurance policies to the public. The DIV needs to actively coordinate with competent agencies such as the SBV to organize more programs on policy dissemination and financial education for people in the localities. Implement and evaluate the effectiveness of communication activities periodically through surveys; thereby building a suitable communication strategy for each period.
With the rapid and strong development of the banking system with a series of new products and services being introduced to the market, along with the trend of applying high-tech products, pose many challenges to the depositor protection mission of DIV. Therefore, in the short term, the DIV needs to study and propose to periodically increase the deposit insurance coverage limit; raise public awareness about deposit insurance, especially for those who are disadvantaged in society and have little financial knowledge such as the elderly, people with disabilities, people in remote areas, etc.
At the macro level, it is necessary to strengthen the financial capacity of DIV (such as increasing charter capital, diversifying investment portfolio, etc.) to implement the deposit insurance policy, the policy to protect depositors - financial consumers, and to ensure the safe and healthy development of credit institutions.
Communication Department
