Many executives of companies in this segment of the financial market expect certain problems after the regulation is transferred to the National Bank
On July 1, the transition period to the regulation of the non-banking financial market from Natskomfinposlug to the National Bank began in accordance with the well-known law on the split. However, until December 31, 2020, both regulators will work together for the time being. And the NBU has already begun to actively control such institutions.
The NBU says it is almost completely ready
The “Government Courier” repeatedly wrote on this topic last year, and then, to tell the truth, there was no noticeable great joy of the participants in the market regarding the transition of regulation to the NBU.
What happened on the eve of July 1, 2020? Were the non-banking financial market institutions – insurance companies, macrofinancial organizations, pawnshops, credit unions – ready for this important step? And is the National Bank itself ready for a new and significantly expanded mission?
NBU leaders note that their institution is fully prepared for such an important step. In an official response to the Government Courier, the top managers of the main financial regulator note that the structure of the NBU was changed by July 1, and new divisions and departments were formed to successfully start their work aimed at regulating non-banking financial services markets.
It should be added that for a considerable period of time, before July 1, many market companies could be properly registered on the website of the main regulator. Interestingly, a third of them have already submitted reports to the National Bank of Ukraine, in fact, not yet being subordinated to it (fully regulated by Natskomfinposlug).
Hugs are not so warm?
The “Government Courier” found out what the participants of the non-banking financial services market think about this.
President of the National Association of Credit Unions Petro Kozynets notes that all market participants wanted to be regulated by a separate independent structure: “It should develop special rules of the game for the market. And then the National Bank performs both supervisory and regulatory functions. However, what the NBU declares gives us confidence that everything will be fine. “
Mr. Kozynets does not consider the work of Natskomfinposlug, which has been regulating the activities of credit unions for several years, to be good. According to the expert, the companies were at a low start for some time. This is understandable, because the market was a little nervous when waiting for significant changes, and the institutions did not actually know many questions about their future life under the management of the National Bank.
But Vyacheslav Chernyakhovsky, General Director of the Insurance Business Association, is more categorical about the split and the readiness of the regulator and companies for the warm embrace of the National Bank. According to him, there are many factors that indicate the NBU’s unpreparedness for this process: there is no anti-crisis program, many regulations, the National Bank can not fully accept financial and regulatory reporting (although the regulator gave a clear answer about full capacity).
“If the start date of the split was postponed to six months or a year, all parties to the process – Natskomfinposlug, NBU, NSSMC, almost 2,000 non-bank financial institutions, professional associations – could build the best possible procedures, transfer experience and prepare for regulatory change. “, – says the expert.
The analyst’s words can be partially confirmed: the National Bank and the Verkhovna Rada are only going to adopt regulations on the regulation of the non-banking financial services market during the transition period. It is not yet known what they will be and how they will positively or negatively affect the participants of the market. Even the nervousness of companies in this sense has a certain logic.
However, the heads of the regulator reassured until July 1: after this date for market participants almost nothing will change, except that “the address to which you need to apply for reporting or resolving current issues.” In case of problems, the NBU is ready to promptly solve them in close cooperation with the market, adhering to the principle of transparency.
The excitement is understandable
Oleksandr Kamsha, a lawyer with Ilyashev & Partners, is well aware of some of the market companies’ excitement and says the National Bank is likely to change or set new rules and regulations after carefully studying the situation in Ukraine’s insurance market. “It is possible that they will hold meetings and meetings with representatives of the insurance business to clarify their position on regulatory regulation,” he said.
At least one of the participants in the insurance market stated that there were no meetings, let alone the development of a general compromise position between the heads of the National Bank and market participants. And they are unlikely to happen in the future. It seems that, according to him, the chief financial regulator simply informed about this or that step and the corresponding changes that await market participants.
But the head of the All-Ukrainian Association of Pawnshops Yulia Rozhkova has repeatedly stated until July 1 that she does not see any problems associated with such a transfer of market companies to the National Bank. She believes that the chief financial regulator has done and is doing everything possible to make market participants feel comfortable and calmly enter the new regulatory format.
Regarding her colleague’s criticism of the regulator’s low activity in communicating with the companies involved and developing a common position, Ms. Rozhkova added: the companies received all information from the NBU on time, held discussions and videoconferences (during the hard quarantine phase), took into account their positions and opinions. Many companies in the market are also worried that during the transition period, and especially after its completion, companies will be closed en masse that will not meet the new rules of the game and the requirements of the regulator, such as capitalization.
The National Bank does not intend to close companies. In the beginning, according to regulators, the old regulation will apply, and companies must comply with the requirements to which they are accustomed. And for all market participants, as stated in the National Bank before July 1, however, except for insurance companies and credit unions, in the future such requirements will only be simplified.
INTRODUCTORY BRIEFING
Supervisory powers – by a special committee
On July 1, the National Bank held a large briefing, which significantly clarified the requirements for non-bank financial institutions and provided a plan of work of the regulator in the transition period, as well as announced which regulations will be adopted soon.
Transitional regulations to be adopted later are defined in the areas of: licensing and registration; supervision; on-site inspections; sanctions; reporting. The new versions of the draft laws “On Credit Unions”, “On Insurance”, “On Financial Companies” are carefully studied by relevant experts and discussed with all market participants.
The National Bank said that work would soon begin on new laws “On compulsory civil liability insurance of owners of land vehicles” and “On insurance distribution.”
Important news: until the National Bank sets tariffs for licenses, they will be issued free of charge. The regulators have determined that inspections of market companies will begin only after the NBU approves special regulations on such inspections of non-banking financial services market participants (except for clients) and the application of enforcement measures.
Given the significant differences between the banking and non-banking components of the financial market, supervisory functions will be divided. Thus, the main supervisory powers will be exercised by a special committee on supervision and regulation of non-banking financial services. The National Bank has created separate divisions that will supervise them.
Deputy Chairman of the NBU Kateryna Rozhkova said at a briefing that the regulator will monitor the activities of market companies and severely penalize those who grossly violate the law. It assumes that permanent violators will be deprived of the right to operate in the market. According to her, consumers of non-banking financial services often complain that these companies in one way or another behave dishonestly towards them.
Now consumers can discuss all complaints of customers of companies in this market on special hotlines of the National Bank or write to the relevant sites. It seems that the chief financial regulator will take strict control over non-bank financial institutions. And this is now a victory for consumers of financial services, which are supposed to be even more protected. We will see what happens next during the transition period.
Oleg GROMOV,
“Government Courier”