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Law forbidding collectors to threaten debtors comes into force in Ukraine

Source : 112 Ukraine

Violations can be reported to the financial institution or the National Bank. Two violations of the requirements of ethical conduct will result in early termination of the contract
11:25, 14 July 2021

Law forbidding collectors to threaten debtors comes into force in Ukraine
Open source

A law that prohibits collectors from threatening debtors came into force in Ukraine on July 14.

The approved document sets certain requirements for lenders and collection companies when settling overdue debts.

All companies engaged in collection activities must submit to the National Bank (NBU) a statement of inclusion in the register.

Requirements for lenders by the new law

According to the innovations, lenders should enter into agreements only with legal entities included in the Register of Collection Companies and inform the National Bank of Ukraine about the conclusion of an agreement with the debt collecting company (within the terms and procedures specified by the NBU).

In addition, in case of exclusion of a debt collecting company from the Register or in case of violation of its requirements for ethical conduct (twice or more per year), the lender is obliged to terminate the contract with such company unilaterally.

Among the requirements are compliance with ethical conduct and rules of interaction with the debtor and control of the involved collection companies.

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The lender has no right to involve a collection company to settle overdue debt unless the terms of the consumer loan agreement provide for such a right.

Requirements are also established for interaction with the consumer (or representative) in settling overdue debts (requirements of ethical behavior), which can occur by:

  • direct interaction (personal or telephone conversations);
  • sending messages (text, voice, and other messages, including without involving employees through the use of software);
  • sending postal items (by place of residence or place of work).

Interaction of collection company with the borrower

At the stage of drawing up a loan agreement, the borrower must be warned in advance that it may be transferred to collectors.

The collector must inform the borrower about the lending company and provide documents on cooperation within ten days upon request. Conversations with the borrower or guarantor should be maintained for three years.

The National Bank of Ukraine, within its competence, has the right to establish additional requirements for interaction with the consumer in settling overdue debts (requirements for ethical conduct).

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Collectors are not allowed to:

  • interact with the borrower before providing the appropriate agreement with the lender;
  • interact with third parties who are not parties to the contract;
  • demand to assume obligations from relatives, guarantors, representatives of the borrower;
  • call from 20:00 to 8:00, use a secret number, call more than twice a day, as well as on weekends, holidays, and non-working days;
  • make an autodial call for more than 30 minutes a day (30 minutes are considered only when a person has listened to the information about his debt in full);
  • call or send messages from secreted numbers;
  • in any way inform third parties about the consumer's debt or interact with these people in such a way that they know or could become aware of information about the consumer's debt (except for guarantors);
  • require the consumer, his relatives, representative, heir, surety, property surety, as well as his employer and/or other persons to assume obligations for overdue debts, if this is not provided for by the consumer loan agreement or the law;
  • collectors are strictly forbidden to touch minors, as well as those who are in the hospital, have a disability of group I or incapacitated;
  • demand repayment of debt in a different way than provided for by the consumer loan agreement or by law;
  • hold personal meetings with the consumer, his relatives, representative, heir, surety, property guarantor, third parties, interaction with which is provided for by the consumer loan agreement and who have agreed to such interaction, without the prior agreement of such meetings with the person concerned;
  • provide false information about the amount of debt and the consequences of non-payment;
  • introduce as an employee of government agencies;
  • use the inscriptions on the envelopes "executive document", "decision to collect", "notice of eviction"

Related: World Bank expects G20 to extend debt payment freeze through end of 2021

What to do when collectors threaten or call compulsively for a bad loan?

The National Bank of Ukraine oversees compliance by banks and other financial institutions and entities that are not financial institutions but have the right to provide certain financial services, as well as collection companies.

Violations can be reported to the financial institution or the National Bank. Two violations of the requirements of ethical conduct lead to the early termination of the contract.

In this case, consumers should write to the National Bank a complaint about non-compliance by the creditor, new creditor, and/or collection company with the requirements established by law.

In the event that you do not like something in a conversation, you should record it on a mobile phone or other media.

Sanctions for creditors

The National Bank of Ukraine has the right to impose on the collection company the obligation to remove from work any of the managers and/or employees of the collection company in case of their non-compliance with the requirements established by this law and/or the regulations of the National Bank of Ukraine, including qualification requirements. The collection company is obliged to take measures to remove such a person (such persons) from work in the manner determined by the NBU.

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In case of violation, the National Bank also has the right to apply measures of influence, which include:

  • a written reservation to the lender, new lender, and/or collection company with a requirement to eliminate the identified violation and/or take measures to prevent such a violation in future activities (written reservation);
  • the imposition of a fine on the lender, new lender, and/or collection company;
  • a temporary ban of the collection company from the implementation of the settlement of arrears;
  • exclusion of information about the collection company from the Register of collection companies in the case provided for in clause 5 of part 2 of Art. 25 of this law;
  • temporary suspension or revocation (revocation) of a license from a lender - a non-bank financial institution, a new lender - a non-bank financial institution to carry out activities to provide financial services.

Fines are also provided for:

  • failure of the financial service provider to inform the consumer about the assignment of the right to claim under the financial service agreement, if the obligation of such notification is established by law - in the amount of 187 USD to 380 USD;
  • non-compliance with the requirements established by law for interaction with the consumer when settling overdue debts (requirements of ethical behavior), - from 1,800 to 4,400 USD.

The same penalty is stipulated in the event that a legal entity that is not included in the Register of Collection Companies is involved in the settlement of overdue debt and does not comply with the statutory requirements for a consumer loan agreement.

Related: Banks to collect Ukrainians' debts automatically

Earlier, on July 6, ministerial order on banks’ right to automatically write off debts from the accounts of Ukrainians comes into force.

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