Protection of consumers of financial services remains on paper, - lawyer of Skliarenko, Sydorenko and partners

The President signed the Law “On Amending Certain Legislative Acts of Ukraine Regarding the Protection of the Rights of Consumers of Financial Services”, which comes into force on January 19, 2020. This act should create the conditions for the protection of citizens from dishonest creditors.

For a significant part of real and potential consumers who have suffered (or who will suffer in the future) from insane interest and fines, nothing will actually change” convinced  the lawyer of Skliarenko, Sydorenko & Partners, Timur Michailow, who commented on the consequences of this Law for portal "Ministry of Finance".

Earlier, he had already analyzed the situation in the market of instant consumer loans, including the problem of hiding real interest rates on a loan, because of which borrowers could not calculate their strength, liabilities were growing, and debt was becoming unbearable.

“The consumer is fooled by the “interest-free loan” advertisement, and then he cannot pay the lender. Collector methods are applied to it. As a result, due to fines and penalties, you have to pay several times more money than the loan amount,” the lawyer explains.

The situation today is exacerbated by the fact that the borrowers are not given the opportunity to familiarize themselves with the loan agreement before he signs it. There are also cases when, after signing unilaterally, the lender changes the essential terms of the contract, reporters pay attention.

However, despite the introduction by the Law of clear rules regarding the financing conditions for consumers, the legislator for some reason left aside the regulation of the two most popular types of loans:

1) agreements containing a condition on a consumer loan in the form of credit to an account with a loan repayment period of up to one month, and loan agreements concluded for a period of up to one month;

2) loan agreements for which the total loan amount does not exceed one minimum wage established on the day the loan agreement is concluded.

We are talking about all the same quick and online money to paychecks (a loan of less than a month or in the amount of up to 4173 UAH, which is the size of the minimum salary in 2019), which can be borrowed at almost every corner in the cities of Ukraine, or even without leaving home.

The fact is that for these types of financial services, the norms of the current Law “On consumer lending”, which establish guarantees of consumer protection (preliminary and detailed informing about all conditions of the contract, including the real interest rate, the total cost of the loan and additional payments that arise in case of breach by the borrower of the terms of the contract) does not apply at all. And the new Law on the Protection of the Rights of Consumers of Financial Services for some reason left this gap.

“I don’t understand the motives of the authors of the bill on this issue. If a student or a pensioner takes a loan of 4 thousand UAH, and is forced to give 40 thousand UAH, then this situation should not have remained without state regulation,” T. Michailow believes.