Finance Minister: Bank Staff Blurring Lines by Selling Insurance Alongside Banking Services, Confusing Customers

During the plenary session, Delegate Ha Sy Huan from Thai Nguyen Province’s National Assembly expressed agreement with the provisions in Clause 1, Article 127 of the amended law. The revisions aim to facilitate cross-selling of life insurance, non-life insurance, and health insurance by agents. This issue directly impacts distribution models, advisory quality, and policyholder benefits.

“Allowing insurance agents to cross-sell, if well-managed, can reduce societal costs associated with training, certification, and network organization, while meeting diverse customer needs. Citizens can receive comprehensive advice on health, property, life, and accident insurance in a single transaction,” Delegate Ha Sy Huan remarked.

However, the delegate emphasized the need for conditions, limitations, and strict oversight in cross-selling to ensure advisory quality, prevent conflicts of interest, and protect citizens. They proposed:

First, cross-selling must be registered and transparently disclosed, clearly stating which companies and types of insurance the agent represents, to avoid conflicts of interest. Consumers must be informed when agents advise on products from different companies or types.

Second, regulatory bodies should ensure cross-selling is not tied to mandatory conditions. For example, purchasing life insurance should not require buying motor vehicle insurance or vice versa. Companies must be held jointly liable if agents misuse cross-selling to provide incorrect advice, causing harm to customers. Mechanisms for inspecting and certifying cross-selling agents should also be established.

Supporting Delegate Ha Sy Huan’s views, Delegate Nguyen Huu Thong from Lam Dong Province’s National Assembly noted that expanding cross-selling mechanisms under the current inadequate supervision system poses risks of conflicts of interest.

“Insurance agents act as authorized representatives of insurance companies. Representing multiple companies simultaneously may lead to agents prioritizing commissions or incentives over policyholders’ interests. Recent reports highlight instances of misleading advice and forced insurance purchases through banks and agents. Without stronger legal requirements and oversight, these issues will persist,” the Lam Dong delegate analyzed.

Delegate Nguyen Huu Thong suggested that if cross-selling is permitted, the draft law must include stricter binding mechanisms: clearly defining the number of companies an individual agent can represent; requiring agents to disclose their affiliations and commission differences to customers; and imposing stricter penalties for violations, including joint liability for insurance companies.

To enhance professionalism, transparency, and customer protection, Delegate Pham Thi Kieu from Lam Dong Province’s National Assembly proposed prohibiting individual agents from representing multiple insurance types (life, non-life, health, micro-insurance) simultaneously. This aims to prevent conflicts of interest, ensure advisory quality, and strengthen state management of agents and policyholder rights. The delegate suggested:

First, individuals acting as life insurance agents for one company cannot simultaneously represent another life insurance company or act as agents for health insurance providers or micro-insurance organizations.

Second, individuals acting as non-life insurance agents for one company cannot simultaneously represent another non-life insurance company or act as agents for health insurance providers or micro-insurance organizations.

Third, individuals acting as health insurance agents for one company cannot simultaneously represent another health insurance company or act as agents for life, non-life, or micro-insurance providers.

Fourth, individuals acting as micro-insurance agents for one organization cannot simultaneously represent another micro-insurance organization or act as agents for life, non-life, or health insurance providers.

Addressing the National Assembly on the amended Insurance Business Law, Minister of Finance Nguyen Van Thang acknowledged recent issues of bank employees bundling insurance sales with banking services, causing confusion between banking and insurance products. In some cases, customers were pressured into purchasing insurance.

“The State Bank has issued strict directives. The Credit Institutions Law prohibits credit institutions, foreign bank branches, and their employees from linking non-mandatory insurance sales to banking services in any form,” Minister Nguyen Van Thang emphasized.

Additionally, the Insurance Business Law strictly prohibits coercion in insurance contracts. The law and its guidelines also mandate rigorous advisory standards, including audio recording, to improve agent quality.

Minister Nguyen Van Thang affirmed that the Ministry of Finance will continue inspections, penalize violations, and propose regulations to curb these practices.