Deputy Chair of the Federation Council reported on tightening of the Law on Consumer Credit

During the “Financial Consumer Protection during Pandemic” session of St. Petersburg International Legal Forum 91/2, the Deputy Chairman of the Federation Council of the Federal Assembly of the Russian Federation Nikolai Zhuravlev reported that next week the State Duma and the Federation Council are planning to adopt the next tightening of the Federal Law "On consumer credit".  

"The amendments will concern restrictions on fines and penalties at the amount of twenty percent of the body of the debt, as well as the removal of requirements for a minimum balance in the borrower’s account. We will introduce additional restrictions on the practice of imposing related services, the calculation of the full cost of the loan will be clarified, there will be a ban on the insurance contract for the entire term of the loan, if this term exceeds one year",  noted Nikolai Zhuravlev.

The Deputy Chairman of the Federation Council added that the law is already functioning effectively and it prioritizes protection of consumer rights. However, the Parliament considers it necessary to regularly introduce additional norms and amendments.

For his part, Mikhail Mamuta, Head of the Service for Consumer Protection and Financial Inclusion and Member of the Board of Directors, Bank of Russia, stressed that behavioral supervision continues to guard consumer interests. He also said that, despite the pandemic, the Central Bank has decided not to stop working on consumer protection.

"All processes related to consumer protection (e.g. processing of applications, real-time communication via our 24-hour call centre) are ongoing and they are classified as critical functions of the Bank of Russia. Thus, consumers do not lose protection, and we see to it that financial institutions comply with legal requirements and rules in this area. Behavioural surveillance, albeit on a reduced scale, continues to protect the interests of consumers," said Mikhail Mamuta.

According to him, this is especially important because now all financial institutions are trying to find a balance for future survival and development. The Bank of Russia has to make sure that they are acting decently during the crisis.

The Chief Financial Ombudsman of the Russian Federation Yuri Voronin told how the institute of financial ombudsmen can be improved after the pandemic. In his opinion, there are two key challenges in the work of this service now.

First, the lack of ‘smoothness’ in the legal handling of cases and the mechanisms of control over decisions. "The law pays less attention to this. At the same time the decisions and evaluations made by the financial ombudsman must be sustainable. Definitely, it is necessary that the courts should check the adequacy of compliance with the law and all necessary procedures in these cases. But so that they do not duplicate our activities. Let's say, if we assigned an evaluation, then we do not need a third, fourth and fifth expert review, but we can proceed from the fact that the evaluation, which is done on the instructions of the financial ombudsman, is effective and does not depend on the will of the parties", explained Yuri Voronin.

According to him, the second challenge is the lack of tools. Yuri Voronin noted that the service does not have all the powers of the courts, despite the fact that financial ombudsmen perform in their capacity in cases of consumer protection. He emphasized that lawyers will have to work on these challenges after the end of the crisis to enable consumers to protect their rights with the help of financial ombudsmen across the spectrum of their interests.

St. Petersburg International Legal Forum 9 ½: The Rule of Corona is held online from April 10 to 12. Heads of Russian and international authorities, lawyers, researchers, politicians and journalists will take part in virtual discussions. The main topic of the forum is legal aspects of public and business life in the context of COVID-19 pandemic.