Bank of Russia unveils requirements for credit consumer cooperative interactions with consumers
Credit consumer cooperatives (CCCs) will be obliged to notify their actual and potential shareholders of any membership risks and give a warning if the CCC is a non-participant in the deposit insurance system. This and a string of other rules for CCCs for interaction with shareholders shall be part of the Basic Standard for Financial Consumer Protection, a package of regulations to be developed by self-regulatory organisations (SROs) for their members, in compliance with the regulator’s requirements.
As required, this core standard shall specify the minimal volume of information to be provided to a shareholder (or a person willing to become one). This will include details of the cooperative's governing bodies, the scope of services subject to additional charges, the address to which shareholders may send urgent information if necessary, remedies available to protect shareholder rights and out-of-court settlement options.
Also, the cooperative’s management is obliged to notify its members of any subsidiary liability they assume in the case of their cooperative-incurred loss. The underlying standard requires that the shareholder be made aware of the procedures for his / her participation in management of the cooperative.
The BoR requirements also specify that a basic standard determine a procedure for information disclosure to shareholders for cooperatives to comply with. In particular, it is required that information be communicated in plain language and presented in a user-friendly, easy-to-read format, with explanations of any technical terms, if there are any.
The standard shall stipulate rules for timely notification of CCC borrowers of their past-due debt when it arises; borrowers shall also be advised of the likely consequences of a failure to honour their obligations, as well as the procedure for
Apart from of that, the basic standard shall detail CCC staff requirements, a procedure for handling shareholder complaints/appeals and minimal service-level standards for physically disabled consumers.
The regulator also considers it essential that the standard stipulate the procedures for SRO control of CCC compliance with the proposed regulations. In this way, in conducting checks over their subordinates, SROs ‘shall be able to take action towards the execution of a transaction’, thereby instantly detecting violations.