Residual debt insurance


What to do when the cooling-off phase for residual debt insurance comes?

In a recent development, the Banking Industry Association (BFACH) has taken a stand against a planned legal innovation in the German banking sector. The Future Financing Act (ZuFinG) currently under discussion provides for a so-called cooling-off phase for residual debt insurance (RSV). This means that it would only be possible to take out an RSV seven days after signing a loan agreement – a clear break with previous practice in Germany and a step that differs from the regulations in other EU countries.

From the perspective of the BFACH, this measure represents a challenge under European law. In the Consumer Credit Directive promulgated on October 30, 2023, the European legislator expressly permitted the bundling of products with optional additional services. The introduction of a cooling-off period could therefore be interpreted as a contradiction to this directive. Interestingly, almost 30% of consumer loans in Germany are covered by residual debt insurance, which underlines the importance of this discussion.

The key question that now arises is how banks can deal with this potential change. In view of the fact that RSV contracts would have to be concluded one week after the loan agreement, a suitable software solution is required in the area of customer management in order to avoid significant additional work.

Software for automatic customer contacts already exists

This is where Acceleraid‘s technology comes into play. The “Trigger & Automation Engine” seems to be ideal for such challenges. With the ability to deliver content in an automated and personalized way, banks could respond effectively to key customer signals. This type of technology makes it possible to take quick and appropriate action and deliver content that is timely and relevant to the customer and now also to the banks.

Personalized customer outreach, whether through emails, specific web content or call center activities, could be crucial in guiding customers through their offers and contacting them efficiently once the cooling-off period has passed. In addition, behavior-based emails and push notifications enable targeted communication with customers who potentially abandon their purchase process or need additional information.

Given these technological possibilities, the dreaded cooling-off phase of BFACH appears less as an obstacle and more as a stimulus for innovation and digitalization in the banking sector. By using such advanced software solutions, banks could not only meet legal requirements, but also improve their customer service and strengthen customer loyalty.

In a rapidly changing market environment, this challenge could therefore be a hidden opportunity for banks to expand their digital capabilities while taking customer service to a new level. This could be a seminal moment for the banking industry to showcase itself as agile, customer-centric and technologically advanced.