From July 1 in the Russian Federation will enter into force New lawsIt aims to protect customers from fraudulent activities and reduce their debt burden. Among these innovations is an updated standard for microfinance organizations. Now they will not be able to sign the client’s consent to receive additional services (for example, insurance) not only when concluding a loan agreement, but also at other stages. The new standard also obliges MFIs to provide complete information about optional services and notify the client of the right to refuse them. “Moscow Evening” tells how effective this measure is.
Why did they talk about this?
As said by financial analyst, Candidate of Economic Sciences Mikhail Belyaev, the Russian Federation has long been struggling with the unscrupulous actions of microfinance organizations, as they often use loopholes that increase the debt burden on Russians.
—Any organization seeks to increase its profits. In the field of trade, this is done by increasing prices, and microfinance organizations begin to “play” with interest. If this does not help attract the client, they impose additional paid services (most often home or life insurance), Belyaev explained.
The expert pointed out that the trick is that microfinance companies themselves recommend a suitable organization for them to obtain insurance.
“They explain that they know which companies will accurately fulfill their obligations to the client and creditor. Therefore, they will be satisfied with the policy of only specific organizations included in their personal approved list, otherwise the loan will not be issued. As a rule, the cost of services from recommended insurance companies is always overstated, which is why clients lose money,” Belyaev explained.
Will this work
To combat this and reduce the financial burden on citizens, MFIs will now be required to report any additional services in the contract. However, it is not yet clear how this rule will work, the expert believes:
– Of course, it will not be possible to prevent the imposition of insurance. But now the organization will have to make the service completely transparent, clarifying the conditions for its provision, and then the person himself will decide on the need for insurance. If the customer refuses, the bank may not issue a loan without explaining the reasons.
Therefore, according to Belyaev, trying to stop the unscrupulous actions of microfinance organizations is a good idea, but its effectiveness will depend on implementation.
Also, at the birth of their second and subsequent children, Russian families can count on extended mortgage holidays of up to one and a half years. The corresponding law was adopted in final reading on June 23. Now borrowers will be able to survive difficult financial periods without the threat of losing their homes and accumulating debt loads. What has changed and how useful this innovation is, says “Evening Moscow”.