INSS: Finance companies invest in payroll payroll – 03/12/2023 – Market

The possibility of offering payroll loans and other products to retirees and pensioners led financial institutions and medium-sized banks to intensify the dispute with the largest banking institutions in the country for the INSS payroll.

Today, 19 institutions operate the payment of benefits from the agency, including large and medium-sized, public and private banks, cooperatives and financial institutions, according to data from the Ministry of Social Security. The next auction should take place in 2024 and will cover the benefits that will be granted between January 2025 and December 2029.

According to January data, there were 37.8 million benefits granted by the INSS. Historically, Bradesco has the largest stock of payments, with a total of 11.6 million. Caixa Econômica Federal comes in second, with 6.2 million, followed by Banco do Brasil, with 6 million.

In the last auction, held in 2019, a total of 23 institutions participated in the fight to define who would be entitled to manage the payroll of the benefits granted between 2020 and 2024. Six private banks won the auction: Itaú and Santander, two of the largest in the country, in addition to Mercantil do Brasil, Agibank, BMG and Crefisa.

They now have the right to make INSS benefit payments. In exchange, they pay an amount per beneficiary, which varies from region to region. In São Paulo, this can exceed R$ 65 per month per beneficiary. In 2022, according to Social Security data, the INSS had revenue of BRL 4.7 billion from these payments. For this year, the forecast is R$ 6 billion.

Until 2009, the government paid for banks to operate the transfer to beneficiaries, to offset the cost that institutions could incur with card issuance, for example. When payroll loans gained strength in the country, however, the INSS realized that it could capitalize if it auctioned the payroll of new beneficiaries.

For banks, the advantage is to expand their business by offering services to INSS policyholders and, thus, profit from financial operations.

The new benefits are more attractive for financial institutions, because they have the so-called free assignable margin.

According to the law, it is possible to commit up to 45% of the value of the benefit to payroll, 35% of which to loans, 5% for expenses contracted by payroll credit card and another 5% for expenses with a benefit card —a new type created in August 2022 that may include mandatory life insurance and funeral assistance.

Upon receiving the benefit, the first payment will be made at one of the institutions that won the right to administer the payroll.

From there, the institution can try to retain the new customer, who already comes with the “advantage” of having a guaranteed income. If the beneficiary does not want to open a current account, he can opt for a benefit account, which includes a magnetic card and limited operations, but at no cost.

In addition, you can carry out the portability to a bank with which you already have a prior relationship, just being careful to confirm that the institution has a contract with the INSS. Another calculation made by the institutions is the potential for capturing new customers and offering them, in addition to payroll, insurance and other financial products to increase their profit margin.

Professor Ricardo Teixeira, coordinator of the MBA in Financial Management at FGV, says that, for the bank, it is advantageous to operate these benefits because it can also use the resource to grant loans.

“Why does the bank want to have all the accounts that pay salaries and benefits? The banks, if they could, would have them all. [o dinheiro] it is not applied by those who received it, the bank makes money from it. When it is applied by those who received it, the bank also wins.”

He recalls that these resources are used within a fixed security limit, but that allows the financial institution to be available to operate in its main business, which is lending money.

Ione Amorim, coordinator of the Financial Services program at Idec (Brazilian Institute of Consumer Defense), sees the situation as worrying.

“The consumer does not have, at first, the option of being within an institution with which he is familiar, he goes to a small institution that does not have such a comprehensive service structure, he is already exposed to this abusive offer of credit “, criticizes.

According to her, some report problems already in this initial phase. “Often the consumer, suddenly, realizes that the institutions are calling. It is the bank that was selected to pay the benefit and it is not up to that institution to make the first contact with the consumer offering the payroll loan. first abuse, the way in which this information is already automatically oriented towards this service offer.”

For the insured, an important point is to evaluate the structure offered by the payer of the benefit. The large conglomerates have capillarity in the country and tend to maintain agencies not only in the large capitals.

Amorim points out that, among the winners of the last trading session, many are small. “This type of institution does not have a significant volume of branches. This often ends up being a limiting factor.”

These finance companies and medium-sized banks end up resorting to lottery outlets or banking correspondents, such as stores and supermarkets, to make the benefits viable. Some offer the possibility of withdrawing benefits from the network 24 hours a day, for example.

This concern should fade over time, says Teixeira. “Today the tendency is less and less to go to agencies”, he emphasizes.

In a note, the INSS states that the contracts signed with financial institutions provide for the contracting of payment services for benefits administered by the INSS paid in Brazil and follow the specific legislation of the national financial system. In addition, he indicated that the inspection of banking practices is not the responsibility of the agency.

Sought, Febraban (Brazilian Federation of Banks) says that the entity and its associated banks “do not condone practices that disrespect consumer rights.”

“The rules for offering products to INSS beneficiaries and pensioners are clear and known to the financial institutions that operate the INSS agreement”, adds the federation. “The main objective of the measures is to standardize the products and services offered by financial institutions, having transparency in negotiation with the customer as the main pillar.”

The entity also says that its associated banks have a specific self-regulation on payroll, which considers “a serious lack of any form of inadequate or illicit capture or treatment of consumers’ personal data, without their authorization, and all banks that participate in self-regulation assume the commitment to adopt the best practices regarding the protection and processing of customers’ personal data, the offer of credit and the fight against fraud.”

According to Febraban, since January 2020, when the self-regulation of payroll loans came into effect, more than 1,113 correspondents have already been punished, 42 of which have been permanently banned and can no longer grant credit on behalf of banks.