Unfair Marketing of Consumer Credit in Russia
Moscow based consumer group KonfOP has been battling the unfair credit practices of the “Russian Standard Bank” – which has the second largest market share for consumer credit in Russia (and has the largest for a non government bank).
Dimitri Yanin of KonfOP tells me that until earlier this year the bank aggressively marketed credit to consumers. Because in Russia there is no consumer credit act or other regulation of lending to require fair disclosure of the terms of the contract – the bank has been able to persuade more than a million consumers to enter into credit contracts worth more than US$5 billion over the past 4 years. The problem is that the fees and charges (including insurance with a related company) mean that the Annual Percentage Rate on the credit is between 50% and 90% per annum.
KonfOP campaigned for fair laws for more than 4 years, without achieving change. But recently when they persuaded the opposition political parties to take up the issue they got a good result. The General procurator’s office and the government put pressure on the bank to change its ways, and it no longer markets products at such high interest rates. Unfortunately there has been no compensation for the consumers already affected.
KonfOP continues to lobby for the introduction of legislation on consumer credit.
