Bank of Russia publishes review of interaction between its Risk Analysis Service and SROs of appraisers

The document was prepared to summarise the interaction between the Bank of Russia Risk Analysis Service (RAS) and the appraisal community in 2017–2018.

One of the key aspects of interaction appraisers have with self-regulatory organisations (SROs) is that the Risk Analysis Service sends complaints to SROs based on the analysis of appraisal reports prepared by independent appraisers. This is one of the instruments the Bank of Russia has in place to prevent organisations subject to supervision from using appraisal reports, which have been carried out in non-compliance with legal requirements.

As a result of the analysis of the appraisal reports used by organisations subject to supervision by the Bank of Russia and submitted by the Bank of Russia structural units for review, the Risk Analysis Service sent 255 complaints to the SROs about appraisers’ activities in the two years in question.

A study of the type of disciplinary measures SROs applied to appraisers subsequent to consideration of the complaints shows that SROs do not sufficiently use their instruments of influence on appraisers. The review highlights the fact that the use of measures such as single instances SRO issuing a fine (2%), suspension of the right to conduct appraisal activities (3%, where the suspension period was very short e.g. not more than 1 month), and recommendations that activities be suspended (1%) do not bring about a sufficient improvement in the quality of appraisal services.

The Bank of Russia Risk Analysis Service will continue to focus on improving the quality of appraisal services paying particular attention to those appraisers who have been the subject of more than one complaint and have been repeatedly subject to disciplinary measures.

Reviews of the interaction between RAS and SROs of appraisers will be published on the Bank of Russia website every six months.