Gennady Onishchenko, head of ROSPOTREBNADZOR, the Russian trade and sanitary inspection authority, has decided to protect Russian bank borrowers’ rights. His department has proved the illegal nature of commissions that boosted the annual credit rate to 40% to 60%. Now, Onishchenko has pledged to launch new legal proceedings against banks. However, the campaign may make banks repay commissions they have charged but lead to extensive consumer credit payment defaults, Oleg Vyugin, Federal Service for Financial Markets’ head, has warned. Bankers hope that in most cases the game is not worth the candle. The amount of the credit is usually not as large and only few borrowers will be involved in monthlong proceedings to refund, for example, R10,000. RUSSIAN STANDARD and HOME CREDIT & FINANCE, leaders on the consumer loan market, have failed to create reserves if they lose court proceedings. But the refunding of commissions charged is not only a threat. If the matter of extremely cunning banks and illegal commissions makes a racket, banks and the state may face huge consumer credit payment defaults.
Source: VEDOMOSTI, March 15, 2007
