New rules for pawnshops
Beginning on 11 January 2021, pawnshops are to pass a special procedure to be admitted to the financial market. In accordance with amendments to the law, organisations that are going to obtain the status of a pawnshop and already operating pawnshops shall submit a request to the Bank of Russia for entering their data into the state register of pawnshops and mandatory documents. The list of these documents and related requirements are stipulated in the Bank of Russia Ordinance.
Should operating pawnshops delay the submission of documents needed to introduce their data in the register, their operation will be limited from 10 April 2021. Specifically, they will be prohibited to conclude consumer loan agreements and amend due dates under earlier signed agreements. Moreover, if data on an organisation are not entered in the register according to the new rules until 9 July 2021, it will lose the status of a pawnshop.
A legal entity not recorded in the state register of pawnshops is not entitled to use the word ‘pawnshop’ in its name for more than 90 days. This will make it easier for consumers to distinguish between professional lenders supervised by the Bank of Russia and fraudsters.
In addition, the law updates the requirements for pawnshop management’s reputation, expanding the requirements for the reputation of a pawnshop’s sole executive body and removing such requirements for the board of directors’ members and the collegial executive body.
The new rules for pawnshops’ operation will help further develop a fair competitive environment in the consumer lending market and enhance the transparency in the pawnshop industry and the protection of consumers’ interests.