Large Chinese Bank and Two Insurers Found in Violations
China’s banking and insurance regulator uncovered infringement of consumer rights by a big bank and two insurers, including overcharging on fees and engaging in deceitful sales tactics.
The China Banking and Insurance Regulatory Commission (CBIRC) didn’t disclose the names of the bank and insurers in a statement released Monday. But the regulator revealed the products involved in the misconduct, and publicly available records showed that these products were offered by state-owned Postal Savings Bank of China, PICC Life Insurance Co. Ltd. and ZhongAn Online P&C Insurance Co. Ltd.
The bank was found to have illegally charged an annual fee to certain credit card holders and a monthly account management fee to some account holders with a small balance in violation of CBIRC regulations, the regulator said in the statement.
Videos also showed that the sales staff at the bank provided deceiving and misleading information while pitching insurance products to consumers.
For example, the sales staff promised a 3.2%-3.4% annualized rate of return on a guaranteed-return insurance product, while actually the dividend on the product was not guaranteed. The regulator also found a lack of a trackable management system in place at the bank, as video and audio files indicated that the sales staff didn’t show the product introduction, insurance policy and contract terms while selling to potential clients.
For years, regulatory noncompliance has existed among banks that sell insurance products as wealth management products (WMPs) on behalf of insurers. Since the beginning of this year, with the decline in returns of WMPs and a flurry of new, tighter regulations on WMPs, sales of universal life insurance products have picked up. While selling such insurance products, which are essentially high-yield WMPs, banks usually promise guaranteed short-term returns.
The CBIRC also found the sales staff at the life insurer deceived and concealed important information while selling insurance products on the phone.
The insurer was also found conducting false advertising whiling selling a car insurance product and a children’s health product on Alibaba’s mobile and online payment platform Alipay. Caixin checked on Alipay and found that the children’s health product is listed as PICC Life’s product. Certain parts of the insured coverage described in promotional materials are not included in the contracts, the CBIRC said.
The regulator disclosed that the property insurer deceived and overcharged policy holders. The CBIRC’s statement listed five products using false advertising. One of the products was a popular health insurance policy offered by ZhongAn Online P&C Insurance in 2016.
ZhongAn said it held internal meetings to correct its violations. The questionable webpage was deleted at the end of 2018, the company said.
Contact reporter Denise Jia (firstname.lastname@example.org)
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