Putin signs law to increase fines for banks for violating rights of financial services consumers

MOSCOW. Dec 29 (Interfax) - Russian President Vladimir Putin has signed a law to increase fines for banks for violating the rights of financial services consumers, and the relevant document has been posted on the official website of legal information and comes into force on the day of its official publication.

The adopted law stipulates that if a bank commits a violation for the first time, then the regulator would issue a recommendation to rectify the matter. For a repeat violation, the lending institution would receive an order and pay a fine of up to 0.1% of its equity. However, if the bank does not properly respond to the order, then the fine could rise to 1% of the bank's equity, but not less than 1 million rubles.

"The Central Bank of Russia has repeatedly identified gross and systematic violations of consumer rights by certain market participants. It has been easier for them to pay the fines, because they have gained significantly more from unfair practices, with profits totaling hundreds of millions of rubles. Therefore, we proposed an approach that would render violations economically unprofitable. We hope that understanding that a violation would result in a significant penalty, exceeding the unfair gain, will deter the use of bad practices. This is precisely what the regulator is striving to achieve. We need not punishments, but the absence of violations of citizens' rights," Central Bank head of the Service for Consumer Protection and Financial Inclusion Mikhail Mamuta said regarding the previously adopted law.

The regulator will decide on the fine amount based on the number of transactions in which consumer rights have been violated, the extent of damage caused, and the bank's unfair profits. Increased penalties apply for the most toxic and unacceptable financial market practices, such as pushing additional services when providing loans, unjustified denials of payment holidays, and others.