The Central Bank presented to market participants new principles for the development of financial products
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The Central Bank introduced new principles for the development of financial products to market participants. At first the rules should be advisory, but then they will become mandatory. Financiers fear that the introduction of the practice will lead to a sharp increase in the bureaucratic burden on banks, especially on small and medium-sized players. But if principles are introduced, they clarify, then they must also take into account the protection of banks from unscrupulous consumers.
Last week, Elvira Nabiullina reported that by the end of the year the Central Bank plans to provide banks with recommendations on analyzing financial products before launching them on the market in terms of their value and understandability for the client. In the future, the recommendations may become mandatory.
“Kommersant” had at its disposal the concept of the Central Bank, which includes six principles: organization of a financial product (FP) management system, continuity of management, responsible behavior of a financial organization, a risk-based approach to FP management, client value of FP and completeness and correctness of information about FP. The document states that the principles “contain basic requirements for FI management policies, encourage banks to develop products that meet customer expectations, help improve FI transparency and take into account existing regulation regarding consumer protection.”
A number of banking associations have already conducted surveys of their members and provided comments to the regulator. Thus, according to the Association of Banks of Russia (ADB), the introduction of the principles as mandatory will complicate the work of small participants in the financial market that do not have the necessary human and financial resources for this. “It is important to prevent an increase in the administrative and regulatory burden on banks, when they will have to carry out the same type of procedures both within the framework of regulation in terms of organizing internal control and risk management, and within the framework of regulation of the management of a financial product as a separate management process,” explained the vice president ADB Alexey Voylukov.
The Central Bank document is also criticized by systemically important banks. “Additional bureaucratization of the development of a financial product will negatively affect its flexibility, speed of delivery to consumers, and to some extent, expectations for accessibility,” explains Kommersant’s interlocutor in one of the large credit institutions.
At the same time, the National Council of the Financial Market (NCFM), based on the results of a survey of its members, considers it necessary, on the contrary, to supplement the ideas of the Central Bank. In particular, as the head of the National Financial Markets Service Andrey Emelin told Kommersant, we are talking about including in the list the principle of monitoring dishonest behavior of clients. He explained to Kommersant that there are often cases when a borrower enters into, for example, an insurance agreement, for which he receives improved loan conditions, and then, during the cooling-off period, refuses insurance under the pretext of the bank imposing a service.
“Such actions of consumers are difficult to qualify as conscientious behavior; at the same time, regulatory authorities take the position of a consumer in such disputes,” emphasizes Andrei Emelin. In his opinion, to eliminate such practices, it is necessary that banks have the opportunity to send information about relevant cases to the regulator. The Central Bank, Mr. Emelin adds, after assessing the compliance of financial products with the introduced principles, could publish information about the inadmissibility of abuse of rights by consumers in the most common disputes.
The Central Bank recognizes “the importance of emphasizing the conscientious behavior of consumers” and promises, as part of further coordination of the draft principles, to consider the possibility of “adding to the current edition with a thesis on the advisability of financial institutions monitoring facts of dishonest behavior of consumers – for example, in the description of the stage of monitoring the life cycle of a product.”
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