Chairman of Federal Antimonopoly Service of Russia Igor Artemyev
Photo: Dmitry Dukhanin
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Massive Banking-Insurance Conspiracy Uncovered
The Federal Antimonopoly Service suspects dozens of banks and insurance companies of price fixing in retail crediting. Most credits are accompanied by life and property insurance policies. By working together, banks and insurance companies were able to hold down the real cost of credit. The FAS has sent its territorial departments material to charge 51 banks and 70 insurance companies with administrative infractions, the country's largest among them. The move was announced on Friday by FAS deputy chairman Andrey Kashevarov.
This is the first investigation by the FAS into cooperation between the banking and insurance industries. The banks and insurance companies involved in the actions were not specified. The FAS did, however, provide the example of Avangard bank and Avangard-Garant insurance company. The FAS initiated a case against them in March for violations of article 11, part 5, of the law “On Protecting Competition,” which prohibits concerted actions to impose disadvantageous conditions. The FAS also overruled Anangard-Garant's rule depriving violators of traffic laws of insurance payments. Since the cause for insurance payments is most often the violation of traffic laws, the FAS found that the insurance coverage did not work for the insured, even though the insurance company received regular payment.
Experts say that the schemes the FAS objects to are even more widely used than what the FAS has charged. “There is a common scheme on the market, for example,” one executive at a major bank told Kommersant, “where banks requiring mandatory insurance for a mortgage or car loan do not limit the choice of insurer. But the insurers, by agreement with the banks charge a excessive fee for their services, and the extra income, for example, about 2 percent for comprehensive coverage, is sent to the bank.”
Kashevarov promised more action to combat conspiratorial practices before the end of the year.
www.kommersant.com
All the Article in Russian as of July 23, 2007
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