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D i a g n o s t i c R e v i e w of C onsu m e r Prote c t i on i n F i n anc i a l S er v i c e s
correct level of deposit insurance (at RUB 700,000 or about $20,000). Six percent of the population believes that this insurance covers all bank deposits in their full amount or up to a million rubles. Furthermore, there is very little knowledge of reliable sources of information regarding the rights of financial consumers. Russian consumers have little confidence that problems with financial transactions can be easily and fairly solved. Three quarters (77 percent) give a 50:50 chance (or worse) that disputes with financial institutions "will be resolved quickly and justly." Consumers are also passive in defending their legal rights. Eight percent of consumers said that, over the past five years, they had bought a financial service (generally a consumer credit) that did not meet their needs. They concluded that they had been deceived by those who provided the service. Yet more than 60 percent of unsatisfied customers took no action. Only four percent complained to the financial institution and three percent submitted a report to a government authority. At the same time, most of the population has unrealistically high expectations of Government support for individual welfare—and, therefore, fails to develop long-term financial plans. About half the population believes that the Government should compensate them for losses in the case of a bank’s bankruptcy. Another 15 percent believes that the government should compensate individuals from losses if the market value of shares in investment funds drops. In addition, 16 percent believe that any decrease in prices of residential real estate should be compensated by the government. Surprisingly, the age group of 25 to 34 is the one most convinced that its members can rightly rely on Governmental support in case of personal financial losses. Russian consumers already take some measures to protect themselves. Over 40 percent of households say that they compare the terms and conditions of a financial product or service before purchasing it—although 46 percent use a bank's reputation (and only 37 percent use the cost of credit) as the determining factor in choosing a bank for borrowing purposes. Over 80 percent of consumers receive financial information from newspapers, magazines and specialized TV shows. However, when making a financial decision, 51 percent of consumers turn first to the advice of family and friends and 36 percent look to the "consultants" providing the service. Households would like to receive financial education. Three-quarters of respondents said that they would like training in protecting themselves financially and in planning their financial futures. One third (31 percent) wants to learn what laws protect financial consumers and what procedures should be followed when consumers believe their rights have been violated. Over ten percent (13 percent) would like information about credits for household consumption and another 16 percent want to learn about credits to finance the purchase of a house or apartment.