Unsound lending practices and commission from the sale of financial instruments are the highest prioritised risks in Finansinspektionen’s (FI) consumer protection assignment for 2022.
We are still seeing risks on the consumer credit market associated with consumers receiving loans that they are not able to repay. In the long run, this can lead to overindebtedness.
In this year's consumer protection report, FI emphasises the importance of thorough credit assessments. The assessments must be based on sufficient information about the consumer's financial circumstances, so the consumer can pay back their loans and at the same time maintain a reasonable standard of living. If the loan has been issued through a credit intermediary, the creditor may need to supplement the information collected by the intermediary.
Although there was some improvement in terms of the handling of commissions, securities institutions and insurance undertakings continue to receive large commissions from product companies, primarily fund management companies, in terms of distribution, both with and without advice. We make the assessment that there continues to be a risk of adverse conflicts of interest due to commission.
An increasing number of consumers are turning to FI to complain that the banks are refusing to allow them to open a payment account or that their payment account has been frozen or closed. They then have difficulties managing day-to-day activities. In many cases, the banks make this decision because they view themselves as having insufficient customer due diligence according to the anti-money laundering regulations. We emphasise that they must always perform a thorough individual assessment of the consumer's application for an account.
Some consumers turn to FI because they have had difficulty getting into contact with the firms' complaint managers or have never been referred to such managers at all. It is important that the information about to whom consumers can turn is clear and that it is easy to communicate with the firm about the problem that has arisen.
In 2022, FI will analyse whether insurance undertakings are raising loyal policyholders' insurance premiums for home or auto insurance more than they raise premiums for other policyholders in the same risk group. During the year, we will also hold a dialogue with the Swedish fund managers regarding our analysis of activity levels in funds. Of the 28 funds that were included in the analysis, 19 were deemed to be potential closet index funds, with some belonging to the largest fund managers in Sweden. In the report, FI also highlights the risks of investment fraud, which has increased sharply in recent years, and the risks associated with investing in crypto-assets.
We also highlight the need for new rules on how liquidity in some funds can be safeguarded and on how the interest differential payment should be calculated when a consumer wants to repay their mortgage before their fixed interest term expires.