HCM CITY — The Ministry of Finance has proposed a decree imposing fines of up to VNĐ100 million on life insurance companies found to be providing “incorrect advice intentionally.” This regulatory measure, aimed at addressing violations within the insurance industry, seeks to deter wrongful conduct and safeguard consumer interests.
The forthcoming decree will specifically target issues related to the distribution of insurance products and services. In contrast to prior practices of issuing warnings for certain violations, the proposed regulations will introduce fines for offenses such as furnishing unclear and inaccurate product information. Additionally, penalties will be applied for actions such as promising illegal benefits, advising clients to purchase insurance with less competitive terms, and engaging unqualified brokers.
Trần Nguyên Đán, a member of the Vietnam Lawyers Association, has suggested even more stringent measures, proposing that severe violations be treated as criminal offenses.
Prime Minister Phạm Minh Chính recently ordered a report on bancassurance, the practice of selling insurance products through banks. Bancassurance has faced criticism for misleading customers and, in some cases, alleged fraud and coercion. Numerous complaints have been filed by individuals who were reportedly sold insurance under false pretenses, falsely claiming them as high-interest banking products and coercing them into purchasing policies to secure loans.
An anonymous employee at a State-owned bank in HCM City revealed that it is an “unwritten rule” for borrowers to acquire life insurance if they wish to secure a loan.
In recent years, bancassurance has become a lucrative source of income for many banks, generating substantial revenue through fees and commissions. A recent investigation by the Ministry of Finance uncovered violations, including insurers’ failure to provide direct advice to customers about products and procedures, as well as regulatory breaches by insurance agents and bank employees.
Viet Nam holds a significant position in the Asian life insurance market, according to the Insurance Association of Việt Nam.
