Regulation in installments – Newspaper Kommersant No. 227 (7428) dated 07.12.2022
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Consumer rights advocates sent initiatives to the Central Bank to regulate installments on marketplaces, designed to complement the proposals of the regulator itself. Experts note that the introduction of norms will help protect the rights of customers, but will lead to a decrease in the availability of goods on the sites and, in general, “looks unfinished”.
“Kommersant” got acquainted with the proposals for regulating relations between consumers and marketplaces on the issue of providing installments (But Now Pay Later, BNPL), which the Confederation of Consumer Societies (ConfOP) sent to the Central Bank at the end of last week. In particular, we are talking about establishing requirements for mandatory verification of the solvency of consumers before granting installment plans for the purchase of goods. ConfOP also considers it necessary to introduce effective dispute resolution mechanisms on marketplaces. Now these questions are not settled.
The Bank of Russia has repeatedly raised the issue of the lack of regulation in the BNPL market, since, although the installment plan itself is a financial product, the players providing it are usually not controlled by the Central Bank. For its supervised, the regulator issued recommendations on the need to adhere to the law “On consumer credit (loan)”, however, the financiers quickly circumvented the instructions of the Central Bank by creating subsidiaries. The Bank of Russia spoke about its ideas for regulating the BNPL at a meeting on November 17th. He would like to regulate installments in the same way as loans, limit their maximum value and the amount of penalties for missing a payment, and also insisted on “full product transparency.”
BNPL is actively growing. Thus, according to Grand View Research, its volume in the world is about $5 billion. At the same time, its growth rate in 2022–2030 is estimated at 26%. In Russia, according to FlexiPay, the market size by the end of 2022 will reach 8 billion rubles. (see Kommersant dated August 19).
Experts acknowledge that regulation will help customers, but it will also affect the availability of goods. “The ConfOP initiative is primarily focused on protecting the interests of consumers,” notes Pavel Ickert, managing partner of the Ickert and Partners law firm. in installments.”
At the same time, Anna Avakimyan, chief analyst at Regblok, emphasizes that for financial organizations, marketplaces are one of the channels for selling services. This segment now employs a significant number of small and medium-sized businesses, and restrictions could lead to excessive volatility and reduce the number of financial products, which “will not support the banking industry either,” Wildberries adds. Ozon and Yandex declined to comment.
Also, experts doubt that the Central Bank should regulate the segment that is not supervised by it. “As an option, marketplaces should be singled out as an independent institution of trade relations that requires additional supervision, in which case it will be possible to establish additional rules for them that stimulate activities in favor of the interests of buyers,” Mr. Ickert believes. According to NKR Managing Director Stanislav Volkov, if the installment plan is provided by the marketplace, the marketplace itself bears the risk, “therefore, from this point of view, regulation similar to banking in the medium term is not needed here.” However, he clarifies, in the event of a large number of non-returns, the sites will be forced to include these risks in the commission for the goods, which will cause prices to rise.
At the same time, Alexander Shornikov, director of the retail risk department at Zenit Bank, believes that the Central Bank’s initiatives to equalize requirements for creditors that provide services to retail customers are “necessary for the market to have healthy competition.”
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