Customers cry foul as banks palm off insurance products as deposits

When Do Nhu Huong went in June 2021 to a Saigon Commercial Bank branch in Hanoi to withdraw a mature deposits, an employee persuaded her to put the money into a six-year "savings-investment" product that offered higher interest rates and allowed premature withdrawal.

She only found out later she had bought an insurance product when Manulife contacted her and charged a VND50 million fee ($2,105) for an insurance contract.

"There was never any savings account," she said. Of the VND110 million she paid, VND50 million went towards insurance and the remaining VND60 million into an investment fund.

The bank employee had claimed she would get 9.5% annual interest, but she found out it was false.

"I had to bear all risk in that investment, and there were times when it posted double-digit losses."

Huong is among hundreds of SCB customers around the country accusing the lender of conning them into buying insurance.

Many of them are long-time depositors who, after withdrawing money, were reportedly offered a "new type of deposit" with higher interest and an insurance policy as gift.

The policy was the product they had paid for.

Similar complaints have also been heard about other banks.

Thanh Thao of Hanoi, a TPBank customer, said an employee called her one day and said it was the last day of a program offering gold as gift for buying a savings-investment package.

It came with a compulsory insurance policy, the employee said without providing more details about it.

Another TPBank customer, Do Hong Anh, bought Sunlife insurance through TPBank, and has since complained to the State Bank of Vietnam and the Ministry of Finance that a bank employee had tricked her into buying it.

She said she had been told it was an investment-linked insurance policy that carried an interest rate of 8.7% for six years and allowed premature withdrawal from the fourth year onwards.

She was never told she was actually buying a life insurance policy, and only found out later she had paid VND90 million for insurance and not any investment.

Tran Hong Son holds an insurance contract made in a partnership between Manulife and Saigon Commercial Bank. Photo by VnExpress/Quynh Trang

SCB, TPBank, Manulife, and Sunlife all told VnEpxress that they always instruct their employees to follow regulations.

TPBank claimed that all customers were clearly informed they were putting their money in insurance, and its employees did not mislead them into thinking they were putting their money into deposits.

Manulife said customers would become aware that they were buying insurance while completing documents as it regularly sent them text messages to keep them informed.

But the complaining customers said they disregarded these text messages since the bank employees told them the insurance policy was a gift and they did not need to pay attention.

TPBank and Manulife promised that if they detect violations they would assign priority to customers’ rights.

Sunlife Vietnam said it is working with relevant agencies to look into the complaints.

An investment-linked insurance policy splits the premium a customer pays into two, with one going towards basic insurance that needs to be paid annually (for at least 10 years) and the other into an investment fund.

The latter is invested in stocks and bonds or deposited in banks. When the stock market lost sharply last year, some of these funds reported double-digit losses.

Insurers often collect an "initial fee" for the first two years of 115% of the value of the basic insurance. It is non-refundable.

SCB customer Tran Hong Son paid VND206.7 million towards this fee and only found out after completing the contract that he would not get this money back.

But Luong Van Ban of Tinh Hoa Viet law firm said the initial fee should not exceed 15% of a customer’s annual income.

Customers mistakenly place trust in bank employees without verifying the information themselves and are taken advantage of and do not have much chance of getting their contract canceled, he said.

Some seniors told him they just signed wherever the bank employee told them to, and it is hard for him to get them back their money, he added.