Honest loan: loans in Russia will begin to be issued in a new way

The authorities obliged banks to disclose not only details of loan payments, but also all additional services

New rules for calculating the total cost of a loan (FLC) have come into force. Now this indicator will include all additional costs of the borrower that fall on him when receiving money on credit and affect the fact of its issuance and the final cost. It is expected that now citizens will be able to better understand how much money they give to the bank and for what services. And also the “cooling off period”, when additional services can be refused, has been increased from two weeks to a month. MK found out from experts how the adopted innovations will affect the lending market.

Last fall, the Bank of Russia reported an increase in complaints about imposed services when issuing a loan. Up to 60% of all requests from borrowers to the regulator were related to the fact that some kind of additional services were imposed on them: most often it was about insurance, but there were also subscriptions to online cinemas, consultations with a psychologist, lawyer and even an astrologer… Now there is hope that this will stop, because from January 21, lenders must indicate in the schedule not only loan payments (the amount of debt and interest), but also fees for additional services, without which the borrower will not receive it or they will greatly affect its terms. Now, no later than the next day of concluding a loan agreement, banks and microfinance organizations (MFOs) will have to send the borrower a full list of additional services that he received along with the loan. At the same time, creditors will be required to indicate that these services can be canceled within 30 days. Let us recall that until January 21, 2024, the “cooling period” was only 14 days. In addition, if the insurance company providing services under the loan agreement refuses to return the funds, then the borrower has the right to demand compensation from the creditor bank.

“This increased awareness of citizens is an obvious plus,” says Alexey Volkov, Marketing Director of the National Bureau of Credit Histories (NBKI). “This will not only allow them to assess their ability to repay the loan, but also, having seen the scale of the overpayment for the funds provided, to refuse both the loan itself and additional services.” In addition, thanks to the PSC, the borrower will understand that the interest rate is not the entire cost of the loan. For example, coming to the bank after an advertisement where they promise a loan rate of 5%, and seeing the PSC at the level of 20–30%, the borrower will definitely think about how much this loan will cost him in the end. And, most likely, he will want to choose the bank where the final overpayment on the loan will be the smallest, Volkov is sure.

However, most experts, although they support the changes, are skeptical about their effectiveness. As Maxim Osadchiy, head of the analytical department of BKF Bank, pointed out, almost 10 years ago, on July 1, 2014, the Federal Law “On Consumer Credit (Loan)” came into force, according to which all banks in the Russian Federation must disclose the PSC, and in the most visible place – “in a square frame in the upper right corner of the first page of the contract.” However, even this innovation did not bring significant changes to the consumer loan market, the target audience of which is people with relatively low incomes, and this indicator correlates with a relatively low level of financial literacy.

Lawyers point out that a person eager to receive money is rarely interested in interest and the final overpayment. “The idea itself is absolutely correct, but for those who are interested,” says Polina Gusyatnikova, senior managing partner of the law firm PG Partners. — In the last couple of years, the following trend has been noticed: the borrower is only interested in the size of the monthly payment. Neither the final overpayment, nor the loan term, nor other conditions, in fact, matter if a person desperately needs money.” Citizens evaluate only the monthly payment and calculate whether they can afford it.

Human rights activists point out that if the regulator, together with Rospotrebnadzor, wanted to completely defeat the imposition of additional services, they could simply ban them. And in the adopted amendments there is room for such tricks on the part of banks, especially if clients urgently need money. “A law has appeared that has changed the methodology for calculating the effective rate,” said Dmitry Yanin, Chairman of the Board of the International Confederation of Consumer Societies (ConfOP). “However, it is already clear that the advertised ultra-low interest rates on loans have not left the front page of banks’ websites, and information about the real cost of borrowed funds is buried deep inside the websites, which does not allow borrowers to quickly obtain information about the fair and full cost of the loan.” Therefore, one should not expect that the amendments that have entered into force will change the situation with imposed services, the expert summarizes.

Published in the newspaper “Moskovsky Komsomolets” No. 29200 dated January 23, 2024

Newspaper headline:
Fair loan