The Verkhovna Rada of Ukraine adopted in the second reading and as a whole the law on protection of the rights of consumers of financial services (№ 1085-1), which makes provision for powers of financial market regulators to influence financial institutions and impose administrative penalties for violations of consumer rights.

This Law shall come into force on the day following its publication (for reference – published on October 18th, 2019) and shall be made effective 3 months later, namely on January 19th, 2020, except for some of its provisions specified in the final provisions of this Law, which shall come into force and shall be made effective on the day following the day of its publication.

Note: provisions of the Law will be applied to financial services agreements concluded after its entry into force.

The major changes that are introduced along with the adoption of the abovementioned law, are the following:

  • relevant legislative acts were supplemented with the rules that gave the authorities – regulators of the financial services market a clear definition of their powers, necessary for the implementation of the protection of the rights of financial services consumers;
  • the Code of Ukraine on Administrative Offenses was amended by the rules that clearly define concept of offenses in the specified area, their composition and responsibility for their commission;
  • Unification and clear definition of requirements for advertising of financial services by banks and non-banking institutions and providing the consumer with full information about such services, including specifying what unfair advertising in the specified area is;
  • it was finally clearly defined what exactly may refer to the total expenses under a consumer loan, which already includes all consumer expenses, including related and ancillary services provided by the third parties;
  • a consumer credit agreement can be concluded in the form of an electronic document, using an electronic signature.

I believe that the adoption of the aforementioned Law will help revitalize financial market of Ukraine, increase confidence of Ukrainians in the financial system as a whole, which in recent years has significantly decreased and, as a result, the number of outstanding consumer loans has rapidly increased, and will  improve financial literacy of citizens – consumers of financial services, which is, unfortunately, quite low.

Tetiana Romanchenko, senior associate  exclusively for The Ukrainian Journal of Business Law