Guidance on the Regulation on Minimum Requirements for the Activities of Microcredit Organizations and Pawnshops in Relations with Financial Services Consumers

The Central Bank, in order to protect the rights and legitimate interests of financial services consumers, approved the "Regulation on Minimum Requirements for the Activities of Microcredit Organizations and Pawnshops in Relations with Financial Services Consumers" (registered on June 30, 2020, under No. 3262).

The Regulation establishes minimum requirements for microcredit organizations and pawnshops (hereinafter referred to as credit organizations) to disclose information about financial services provided to consumers, as well as for the interaction between credit organizations and consumers in the event of debt occurrence and the consideration of consumer appeals.

This Regulation was adopted for the following purposes:

✅ to ensure compliance with the rights and legitimate interests of financial services consumers;

✅ to prevent unfair practices in the interaction between credit organizations and financial services consumers;

✅ to increase the information transparency of the microfinance market, as well as to increase the awareness of financial services consumers.

This Regulation regulates not only relations with citizens, but also with small and medium-sized business entities.

In particular, according to the document, information about the services provided and their terms must be posted on the stands and websites of the credit organization.

Credit organizations must disclose the terms of financial services before signing the relevant contract, which is provided to consumers for prior review of contract drafts.

Borrowers have the right to obtain information about payments made by them on the loan and the existing loan balance.

In such cases, credit organizations must provide consumers with a copy of the signed contract.

Credit organizations do not have the right to unilaterally change credit contracts that violate the rights of borrowers or increase their financial obligations.

It should be noted that credit organizations are not entitled to restrict the right of consumers to pay for their services in cash or non-cash form.

The Regulation enters into force on October 1, 2020.