The Central Bank wants to oblige MFIs to indicate the full cost of the loan in advertising

by time news

The Bank of Russia is exploring the possibility of introducing an obligation for microfinance organizations (MFOs) to indicate the full cost of the loan (CCC) in advertising for loans, said Alexei Chirkov, head of the regulation department of the consumer protection service and ensuring the availability of financial services of the Central Bank, during the MFO RussiaForum 2021 forum.

“This is not a ready-made solution, but a direction. It is about the fact that advertising does not have only one number, for example, the interest rate, which would be multiples of the total cost of the loan. That is, as in the example, when the rate is indicated in the advertisement of 5-6% per annum, and taking into account insurance, this rate is 25%, but in the advertisement this is indicated in small letters. Obviously, this is misleading and makes unfair competition between creditors possible, ”he said (quoted by TASS).

Also, the concept of the Central Bank assumes the obligation for banks and MFOs to take into account all additional paid services, for example, insurance, and not only interest and the amount of the principal debt when calculating the CPM. The regulator announced the need to implement this approach in early September. Then the first deputy chairman of the Central Bank Sergei Shvetsov sent a letter to the financial market participants, where he recommended that all additional services be taken into account when calculating the CPM.

On September 22, speaking at the Federation Council, the chairman of the Central Bank Elvira Nabiullina said that regulation in this area needs to be tightened. According to her, now banks and MFOs must disclose to the borrower the amount of the CPC, so that he does not find himself in a situation where he was expecting some conditions, and in the end he had to pay more. However, credit institutions have already “adjusted” to the current measures and “some of the services are carried out bypassing” this requirement, the head of the Bank of Russia summed up.

Nabiullina also announced the need to extend the limitation of the maximum amount of the CPC to all types of loans. Now this applies to mortgages: the CPC on it at the time of the conclusion of the agreement cannot exceed the lower of the two values ​​- 365% per annum or the average market value of the CPC calculated by the Central Bank – by more than a third.

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