Bank Of Russia Deluged With Complaints As Sanctions Bite

Law360, London (May 5, 2022, 1:01 PM BST) -- Russia's central bank has said the number of complaints it has received from financial industry clients has jumped by 38% to 94,900 cases in the first quarter of 2022 from the same period last year.

The Central Bank of Russia said on Wednesday that it traced the surge in complaints largely to western sanctions imposed since Russia invaded Ukraine.

A significant fraction of the complaints requested explanations of restrictions imposed by the central bank on the Moscow Stock Exchange. Other complaints were about whether payment card would work under sanctions and how foreign currency transactions would be hit.

Complaints against credit institutions rose to 49,000, a 15.5% increase from the first quarter of 2021. Approximately one in six of these complaints were about sanctions, while the two most common gripes were about refusals to withdraw cash from foreign currency bank accounts and lack of currency in ATMs in banks under Western sanctions.

"The introduction of the currency restrictions and the restrictions on capital movements — this is something that is quite distortive for economic policy," Alexey Zabotkin, deputy chairman of the Bank of Russia, said at the bank's press conference on April 29. "In fact, it complicates business operations, particularly as far as foreign economic activities are concerned."

The number of complaints would have been about equal to the same period in 2021 if complaints about sanctions were excluded from the data. Consumer lending complaints showed a significant 20.2% drop to 11,900 when compared with the same period in 2021.

Complaints about participants in securities market rose to 3,600, a sevenfold increase from the first quarter of 2021 — 60% of those complaints were linked to sanctions. The bank said this significant rise in complaints was caused by sanctions, the suspension of trading on the Moscow stock exchange and restrictions of foreign securities trading.

The most common theme of the complaints was about wrongful selling of investment products and life insurance policies by banks, investment funds and other institutions, which rose to 1,300, an 8% increase on the same period in 2021.

Russia's insurance sector was the subject of 11,800 complaints, a 33% increase compared to the first quarter of 2021. Two-thirds of complaints were about Russia's mandatory third-party auto insurance.

Pressure on Russia's financial institutions from Western governments has increased since the beginning of Russia's invasion of Ukraine. Westminster banned British consultancies, accountants and PR service from exporting services to Russia on Wednesday.

--Additional reporting by Najiyya Budaly and Joel Poultney. Editing by Ed Harris.

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