Countering loan fraud: Bank of Russia’s initiatives
The Bank of Russia proposes to establish a mandatory cooling-off period for consumer loans and microloans from the conclusion of an agreement till the receipt of money. Its duration will depend on the loan (microloan) amount.
It is assumed that no cooling-off period will be set for loan amounts up to ₽50,000. For amounts from ₽50,000 to ₽200,000, it will be four hours, and for loans exceeding this threshold — 48 hours. However, no cooling-off period is planned to apply to mortgage and car loans (if the money is credited directly to car dealer accounts), as well as to government-backed educational loans. The regulator sent these proposals to the Russian Ministry of Finance for drafting a law.
This initiative stipulates that banks will check loan applications for signs of fraud. If a bank suspects that a person is applying for a loan under the influence of scammers, it will have to warn a borrower about this.
The regulator’s initiatives include making the information exchange between lenders and credit history bureaus as fast as online communication so that no person can take out loans (microloans) simultaneously from several lenders under the influence of swindlers.
If a financial institution issues a loan (microloan) in violation of anti-fraud regulations, this lender will not be entitled to demand that the borrower fulfils his/her obligations, to charge interest, or transfer such a loan to debt collectors.
A separate package of changes has been prepared for microfinance organisations (MFOs). They are expected to be obliged to credit borrowed funds to an account when the data on the borrower and the payee are the same. If the information on the applicant is included in the Bank of Russia’s database of suspicious accounts, the MFO should refuse to conclude an agreement. To this end, it is planned to grant these organisations access to information from the regulator’s database.
The Bank of Russia believes that the implementation of the proposed measures will protect individuals in case they apply for loans (microloans) under the influence of fraudsters and then give them the money received. The regulator will continue to improve the rules for financial institutions to solve this problem.