Recommendations on information diclosure standards when granting consumer credits

№ IA/7235

№ 77-T

May 26, 2005

on recommendations on information diclosure standards when granting consumer credits

In accordance with the Article 23 of the Federal Law of June 23, 1999 № 117-FZ «On protection of Competition in Financial Services Market» (Code of Laws of the Russian Federation, 1999, № 26, art. 3174) the Federal Antimonopoly Service and the Central Bank of the Russian Federation recommend the credit organizations to disclose the information when granting consumer credits according to enclosed Recommendations.

Head of the Federal Antimonopoly Service - I.Y.Artemiev
Vice-Chairman of the Central Bank of the Russian Federation - A.A.Kozlov

The Enclosure

to the letter of the Federal Antimonopoly Service and the Central Bank of 

the Russian Federation

of May 26, 2005

№ IA/7235 / 77-T

on recommendations on information disclosure standards when granting consumer credits

RECOMENDATIONS ON INFORMATION DICLOSURE STANDARDS WHEN GRANTING CONSUMER CREDITS

1. The current recommendations on information disclosure standards when granting consumer credits (hereinafter - Recommendations) have been elaborated in order to prevent credit organizations from having uncompetitive advantages when granting consumer credits by means of dissemination of false, inaccurate or anomalous information about the conditions of granting consumer credits.

Following the current Recommendations will contribute to the protection of competition in financial services market, increase of transparency of the activity of credit organizations, forming of comprehensive overview of the credit organizations' services, rise of the trust to them. 

2. For the goals of these Recommendations the notion «consumer credits» means credits that are granted to natural persons (consumers) with the aim of acquisition of goods (works, services) for private, family, household and other needs which are not connected with the realization of entrepreneurial activity. 

3. Then granting consumer credits a credit organization discloses to a consumer fair and comprehensive information about conditions of granting, drawing up and repayment of a consumer credit. 

4. The information is provided to a consumer before the signing a credit agreement. In case of using special banking terminology the credit organization gives appropriate explanation to it so that the information would be understandable for the persons who do not possess special knowledge in this sphere and would be available without using of informative-communicative technologies. 

5. The information contains:

- the name of credit organization, registration number, place of residence, contact telephone number and WEB-site of credit organization;

- minimum (maximum) consumer credit period;

- minimum (maximum) consumer credit amount (credit limit) as well as the currency of consumer credit;

- consumer' expenses on granted credit which consist of annual interest on credit and, if any, additional expenditures on consumer credit that embody all the kinds of payments to credit organization and third parties (for example, to insurance organizations, appraisers, mail services) related to granting, drawing up and repayment of a consumer credit (recommended Form № 1);. 

- information on calculation of interest amount and additional expenses of the consumer for utilization of the credit and other related expenses: the order and periodicity of charging of interest (illustrated by calculation examples); 

- schedule of payments on consumer credit that indicates value of payments aimed at credit repayment directly, interest on consumer credit as well as, if any, additional expenses on consumer credit (recommended Form № 2);

- approximate list of documents necessary for estimation of the creditability of a consumer;

- approximate list of possible kinds of credit security (if any);

- the order and terms of the examination of consumer' application on granting the consumer credit; 

- conditions of advanced repayment of the credit;

- the value of forfeit (fine, penalty) including the one for expiration of payment on consumer credit, and the order of calculation of the amount of forfeit (fine, penalty);

- other conditions that are obligatory for fulfillment then granting consumer credit including the one deals with the necessity of signing of agreements with third parties;

- restrictions on granting consumer credit;

- the information about possible increase of the expenditures on consumer credit (increase of interest rate, additional expenses, forfeit (fine, penalty));

- information about methods of repayment of the consumer credit debts.

6. The condition on the order and consequences of the cancellation of the agreement connected with nonfulfillment of obligations by third parties (for example, by a producer, executor, seller) is indicated into the credit agreement.

7. If the credit agreement envisages the possibility of unilateral changing by a credit organization of the conditions of the agreement, it is recommended to inform the consumer about probable changes not less than 30 days before the date of these changes (the form of the announcement on changes of agreement' conditions is determined by the credit organization in credit agreement). 

8. In case of introducing changes into conditions of the agreement which have entailed changes in the schedule of payments on consumer credit or advanced repayment of the part of amount of consumer credit, the consumer is provided with specified schedule of payments in advance before the date of regular payment.

9. If advertising on banking services on consumer crediting contains the information about even one kind of consumer' expenses on granted credit, all the other expenses on consumer credit must be indicated as well.