The Russian antitrust authority, FAS, developed draft amendments for Resolution No.386 of the Russian Government “On cases of admissibility of agreements between credit and insurance organizations” dated 30.04.2009 (hereinafter the “General Exclusions”) which is currently under public discussion. 

We would like to remind you that pursuant to the Competition Law, in certain events the Russian Government is entitled to establish exclusions for agreements formally falling within the bans established by the antitrust law.¹ In particular, such exclusions were established in relation to agreements between banks and insurance companies.

In accordance with the draft amendments developed by the antitrust authority, the General Exclusions are planned to be modified as follows:

1. Credit organizations, in addition to the existing right to assess the financial stability and solvency of insurance companies, shall be granted the right to assess the activity of insurance companies in making insurance payments and to obtain information on the insurance companies’ beneficiary owners.

Amendments pertaining to obtaining information on beneficiaries generally go hand-in-hand with the amendments in legislation on disclosing beneficiaries of legal entities, of which we told in detail here.

 2. An additional criterion is proposed for assessing an insurance organization – quantitative and staff structure of the insurer’s employees.

 3. The procedure is to be clarified for providing information and documents that the insurance company will be obligated to submit to the bank. In particular, insurance companies will no longer be required to provide credit organizations up-to-date documents and information that are published on their web sites and on the site of the Russian Central Bank.

[1] Part 2 Article 13 of Federal Law No.135-FZ “On protection of competition” dated 26.07.2006

4.Peculiarities are to specified for the procedure of approving the compliance of insurance companies with requirements of credit organizations, in particular:

• Precise timeframes are to be established for the insurance organization to provide information and documents – no more than 10 business days from the date a request is received;

• Timeframes are to be reduced for considering the documents provided by the insurance company for examining its compliance with the requirements for insurance companies, from 60 to 45 business days from the date all necessary information and documents are received;

At the same time, in the event of a motivated response on the insurer failing to comply with the said requirements, the bank will be obliged to indicate specific requirements with which the insurer does not comply.

• The need for grounds for including or excluding an insurance organization from the said list is to be removed from the requirements applying to the procedure for a credit organization to draw up the list of insurers meeting the requirements and conditions of providing insurance service.

However, the banks will be obliged to regulate separately:

-     The procedure for confirming the insurance organization’s compliance with necessary requirements, frequency of conducting such procedure, procedure and timeframes for informing the insurance organization on its compliance with the requirements;

-     Comprehensive list of information and documents needed for confirmation of compliance with requirements (in the current edition the point is about the documents needed for checking compliance with the requirements);

-     Procedure and timeframes for excluding an insurance organization from the list of insurance organizations meeting the requirements of the credit organization;

-     Procedure for entering amendments into the requirements for insurers and possible frequency of such amendments.

Furthermore, insurers shall not be restricted as regards timeframes for submitting documents for repeat compliance checks.

5. The General Exclusions are to expire in May 2017. The FAS is planning to extend their effect in the new edition for 5 more years, until 2022.

It is expected that these changes and proposed measures will promote the transparency of accreditation of insurers by credit organizations and fair competition among insurers in selling their services to bank borrowers.

Undoubtedly, the proposed changes require certain work on changing the internal documents of credit organizations. Furthermore, banks, as well as insurers will need to adjust their internal procedures related to conclusion of agreements with each other.

We would like to remind that at this stage the draft text of the Resolution is undergoing public discussion and anticorruption expert examination.

Irina Akimova  Of Counsel,  Head of Antitrust Practice                              Moscow   Tel.: +7 (495) 970 1090

Dmitry Gavrilenko   Senior Associate                   Moscow     Tel.: +7 (495) 970 1090

Additional notes

Should any questions arise in connection with the above or if you need any additional materials, please contact Irina Akimova or Dmitry Gavrilenko, Moscow Office of Capital Legal Services.

This Information letter keeps the clients of Capital Legal Services and other interested parties abreast of information that may, to any extent, affect their activity or cater to their particular interests. The opinions and commentaries expressed in this information letter shall not be deemed as legal opinions and do not cancel the need to obtain legal advice or legal opinion on separate issues.

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