Finanznachrichten Martin Thaler: Residual Debt Insurance: Ampel sees room for improvement

The traffic light coalition, consisting of the FDP, the Greens and the SPD, plans to regulate the business with residual debt insurance more closely. In the future, residual debt insurance will be decoupled from lending, as can be seen from the recently presented coalition agreement.

Here it says: “With residual debt insurance, we will decouple the conclusion of the insurance contract and the conclusion of the credit agreement by at least one week.”

With residual debt insurance, borrowers can protect themselves in the event that they can no longer meet their obligations – for example due to their death or unemployment. Often these are sold at the same time as the loan is granted. Consumer advocates see this practice as a surprise to customers – they are given the impression that they have to take out such insurance if they want to get the loan.

This is to be prevented by the temporal decoupling. Great Britain serves as a model, where it is forbidden to sell residual debt insurance within seven days of the loan being granted.

Banking industry reacts irritated

As early as the spring, politicians saw a need for action on residual debt insurance and introduced a commission cap of 2.5 percent of the loan amount on July 1, 2022 – a reaction to excess commission in the industry. A survey by BaFin showed that twelve of the 31 banks surveyed received 50 percent of the insurance premiums, and in individual cases it was even 70 percent.

The banking association reacted irritated in view of the coalition project: “Why the residual credit insurance before these changes come into force [des Provisionsdeckels, Anm. d. Red.] is to be deeply regulated again, is incomprehensible “, it says on the part of the German Savings Banks and Giro Association procontra-Demand. From the point of view of the association, such a coupling ban would represent a disproportionate intervention in the market. Nor would this be justified by the consumer’s interest in being able to reconsider his decision.

“Such a far-reaching intervention would only be proportionate and permissible if the new regulation had not led to the result desired by the legislator or if there was a market failure,” the association continues. At this point in time, however, that cannot be assessed at all.

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