Vietnam limits shadow investment package sales at banks

The new regulation, which was included in a recent circular, applies to the sale of insurance policies linked with investment packages. Some of these packages offer high interest rates but also include high risks as the customers’ money will be spent on stocks and bonds.

The ministry decision came after significant numbers of banking customers began complaining that they unknowingly bought insurance policies when they thought they were either getting loans or depositing money at interest.

Many customers have said that they were led to believe they were putting their money in the banks as deposits with high interest rates and only found out later that the bank had mis-informed them into actually buying insurance policies that include investment package instead.

In an effort to tighten regulations in the insurance sector, the ministry has also ordered bank employees to make a record of their conversation with customers whenever they consult about an insurance policy that includes an investment package.

Many customers have lost money when the investment packages tanked in the bad economy. Many who have figured out that they had been duped canceled the policies within or after the first year. And even if they didn’t lose on the investment, they lost on the insurance plan’s sign-up cost, fees and premiums.

Insurance companies need to conduct regular quality examinations at banks to see how bank employees are selling their policies, the ministry says.