Loans with a catch: what is silent in the banks, and that the Ukrainians should know

Most banks hide the real conditions of the loans, and borrowers do not know where to complain. These are the data of sociological research of the U.S. Agency for international development (USAID). In June the authors of the project interviewed more than a thousand respondents, caused more than a hundred visits in the role of “mystery shoppers” financial institutions in Kiev, Lviv, Odessa, Kharkov, Dnepr and Zaporozhye, and studied their ads and the credit agreement and this week presented the results.

According to the study, 73.6% of advertising materials on loans generally do not contain information on the cost of credit, in other cases, the value written is confusing. Is poor and written information about the terms of the loan: in 68% of cases, the “secret customer” it did not provide, and if they give, then not in full. Orally but Bank clerks answered readily in 80% of cases advised on major conditions. In this case the right of withdrawal from the contract is reported only in 54% of cases and about the consequences of late payment is 35%. Income of the potential borrower the I finrabotnikov interested only in 41% of cases. With regard to contracts for consumer loans, they often contradict the law. And only 15% of cases the consultant was allowed to “secret shopper” to take home a copy of the credit agreement, to calmly weigh the pros and cons and finally make a decision — to take or not to take the credit.

“33% of the contracts are not itemized total cost of the loan, 17% — no payment schedule, 54% of contracts there are conditions that violate the right of the borrower to early repayment of the loan, — the authors of the study. — More than half contain unfair conditions imposed on VAS, the creditor’s right to unilaterally terminate the contract and to disclose the banking secrecy and personal data”.

While 41% of respondents do not know where to turn in case of a conflict with the lender, and 78% would prefer not to complain.

According to the Chairman of the national Bank Ekaterina Rozhkova, today in Ukraine there is no comprehensive protection of the rights of consumers of financial services: “Therefore, the national Bank pays considerable attention to the bill to improve the protection of the rights of consumers of financial services, which is prepared for the repeated second reading in Parliament. Need a legal basis for the interaction of individuals with the banks on the European model. The NBU is empowered to define and control the minimum amount of information that must be provided to the consumer for each type of banking services”.

The problem will solve the new law and the Ombudsman

Bankers say that, despite the crisis, in recent years the interest of people to loans increased 4-5 times. At the same time people have become more attentive and increasingly want to know the detailed structure of interest rates, penalties, commissions. Moreover — from the 20th of June came into force the law “On consumer lending”: a certificate of credit and credit intermediaries, allowed to conclude e-contracts, the credit is forbidden to enter “0% rate” or “interest-free”.

How it works, shows a second wave of visits by “mystery clients,” is scheduled for December of this year. “The first study showed that the Ukrainian consumer is still vulnerable and unprotected when obtaining loans. We very much hope that the situation will change for the better”, — says Deputy head of the USAID Julia Branch.

Also, according to bankers, to help solve the problem, the introduction in Ukraine of Institute of the financial Ombudsman, which would help banks and their clients objectively analyze disputes in the legal field and, therefore, would return the trust of customers to the finsistemy. But in parallel, the need to increase financial literacy among the population — the borrowers must know how to choose the right Bank, and on what pitfalls to pay attention when signing the contract, and how to protect your rights in the event of force majeure.