The law on “split”: what awaits non-bank financial institutions.
The beginning of July became a kind of “X” day, which more than six months expected non-bank financial institutions: according to Law # 79-IX “On Amendments to Certain Legislative ACTS of Ukraine to improve the functions of state regulation of financial services markets” (so-called Law on “split”), Natskomfinposlug has given its powers to regulate the FINANCIAL non-banking markets of the NBU and the National Securities Commission and the Stock Sites Vsya (NSSMC).
Thus, the NBU will not only regulate, but also control the work of credit unions, pawnshops, insurance companies, financial microbusiness institutions (such as “Money to pay” or “Quick loans”), ETC.
However, until January 1, 2021, there will be a so-called transition period, when Natskomfinposlug and the National Bank will work together, and then the first will go down in history, leaving the second institution all the functions of a financial regulator for non-banking companies.
The National Bank successfully reports
Are the companies ready for this large size? All sites for such a “warm” reception? And is the NBU ready for its significant expansion of regulatory law?
“The National Bank is ready to move under the regulation and supervision of the NBU participants All sites of non-bank financial institutions. Preparatory work for this is coming to an end, everything is going according to schedule. In particular, the structure of the NBU was changed, new subdivisions were formed and the functionality of the existing subdivisions was expanded to ensure the possibility to fully perform the Functions for regulating the markets of non-bank financial services from July 1. Competitions for the positions of heads of newly created departments have also been completed, and now the winners of the competitions are undergoing the necessary formal procedures, ”reads the ANSWER to the official request of BUSINESS magazine to the main financial regulator.
The NBU also adds that more than 1,300 companies have already registered on the regulator’s website for reporting, and 30% of participants All sites were directly involved in reporting.
In addition, the National Bank prepared and presented Sites All a vision of future regulation in six White Papers in the main segments Sites All. Key Ideas of documents will form the basis of bills and regulations prepared by NBU specialists in close COOPERATION with participants of the All Sites.
Thus, the heads of the NBU in preparation for the implementation of the Law on “Split” report only on the positive and declare full readiness to become a mega-regulator of various FINANCIAL companies.
“We are not ready”
Six months ago, a representative of pawnshops, macrofinancial organizations, insurance companies, credit unions was very critical of the liquidation of Natskomfinposlug and the transfer of functions of regulating the activities of their companies to the NBU. Nowadays, not everyone criticizes this idea, which is already becoming a reality. Against such unions and INDIVIDUAL companies on the Sites Everything is, and the stench has its own strong arguments.
“For us, the question is, rather, whether the NBU is ready and whether I will be able to perform the function of a regulator. The leaders of the National Bank state that the regulator is 90% ready for the “split” . Contrary to many of those involved in the devolution process, the situation is different. We note a list of factors that indicate something NBU adequately not ready for it, starting with program anti-crisis measures for the non-banking Sites whole, lack of necessary regulations and ending the inability to fully take the state budget financial and regulatory reporting non-bank financial institutions “ , – said B ‘ Jacheslav Chernyakhovsky General Director of the Insurance Business Association.
According to him, the Association, TAKING INTO ACCOUNT the current economic crisis and its consequences, insists on postponing the introduction of the “split” for at least six months. And the NBU at this hour should focus primarily on performing the main functions of conducting monetary policy and maintaining the stability of the currency.
For the sake of persuasiveness of his words, Mr. Chernyakhovsky gives interesting figures. Thus, in the first quarter the number of insurance contracts (except for compulsory insurance against accidents in transport) reduced by 6.9% – up to 17.8 million units. The number of insurance contracts with individuals was reduced by 9.2% to 16 million.
According to Natskomfinposlug, the reduction of gross insurance premiums occurred in almost all types of insurance, in particular, in property insurance – by 43%, insurance against fire and natural disasters – by 49.2%, liability to third parties – by 41.1% , cargo and luggage – by 39.1%, FINANCIAL risks – by 19.3%. The new law raises the requirements for the capitalization of companies, which in the current situation may complicate their already difficult lives.
ABBREVIATIONS and “split”
Will all companies that do NOT stand the test of time and will not be able to comply with the new rules from the National Bank leave the Sites?
“On July 1, of course, companies will NOT start closing. But, according to our forecasts, if you do not make some adjustments to the requirements and regulations, then in the coming year from the Sites All may go from 60 to 100 insurance companies, ie every second. I have information that several dozen companies are already preparing for the closure, – said Mr. Chernyakhovsky. “The worst thing is that most of them will be small regional insurers, which have been operating normally for decades, fulfilling obligations to customers and partners, providing quality services, providing jobs and paying taxes, but do not withstand the New Testament and disproportionate capitalization requirements . “
To this, the Heads of the National Bank in life without the ANSWER of the business note that REDUCTIONS on the Sites All insurance took place even without changes in regulation. In particular, in the first nine months of last year, 51 companies left the Pishla insurance market (18% of the number as of the end of 2018 ). “Most of them, in accordance with the requirements of the law, will leave the market because they have not conducted insurance activities for more than six months or will decide to hand over (revoke) Licenses. Then Zara predict specific changes in the number of players on All Sites to more e runtovnoho ANALYSIS ego state after 1 July and were direct new regulations “ , – added the stench.
Of course, the regulator is right, and these calculations can not be ignored. Regarding capitalization, the NBU states: CONSIDERING that regulation will remain unchanged for some time, it is expected that for non-bank FINANCIAL INSTITUTIONS almost Nothing will change, except for the address to which you need to apply for reporting or resolving issues. “In the event of any problems, the National Bank is ready to promptly resolve them in close cooperation with the market and adhering to the principle of transparency,” – summarize the EXPERTS.
Notable negatives
One of the leaders of the credit union, who wished not to be named, said that he does not expect anything good for his company from the transfer of functions of the regulator. According to him, the NBU has recently provided a business trip to banks to introduce a ban on the transfer of funds to customers of the credit union. And this is happening from January 1, 2020. That is, in the opinion of the respondent, the National Bank long before the beginning of the transition period shows what it is capable of.
His vision about A capitalization requirements of small companies and vislovlyuye Victoria Volkov , General Director of the Association of Financial Institutions: “Perhaps such firms to stop activities prydetsya not so much because nemozhlivist fulfill this condition, but because of those something any change in the rules trebuet extra charge. Will they be able to afford their stench, given that most companies are operating at a loss for the entire second quarter? Thus, according to the Association of FINANCIAL INSTITUTIONS, during the quarantine period the VOLUME of loans issued by non-bank financial institutions decreased by 2.5-3 times .
The expert emphasizes: it is not a matter of reducing demand for consumer loans. The main reason why some non-bank financial institutions reduce the number of loans, in her opinion, is the high risk of default.
According to FINANCIAL companies – Members of the Association, the amount of non-performing loans during the quarantine period has doubled and averaged 40%. Whereas in 2019 this indicator becomes only 20%.
Some experts, who are also active participants in the All-Site, note that they still remain without one of the main levers of influence of the non-bank financial Site All on the regulator – opportunities to discuss all issues with the National Bank through a public body of the latter. This, incidentally, was at a time when companies were regulated by Natskomfinposlug.
The NBU, as we said above, rejects all these remarks and once again emphasizes the active COOPERATION with the player Sites All and fruitful consultations.
“Besides, the participants of the All Sites are deprived of protection from the Actions of the regulator in case of their appeal, because there is no relevant APPELLATE AUTHORITY on the All Sites. Normative legal acts of the National Bank have also NOT been registered with the Ministry of Justice for five years. That is, the regulator does what he pleases, and in fact there is no management and control over its activities and will not be, “ – says Ms. Volkovsky.
She also make sure that the regulations that will be adopted after July 1, will not be positive for the people involved.
Insurers, in turn, note: based on what proposals and documents produced by the NBU for insurance sites Everything, it becomes clear that its employees do not have enough practical experience in the implementation of regulation and supervision of non-bank financial institutions. “Almost all employees who are now engaged in the NBU nutrition insurance sites All, have never worked on it and, accordingly, do not have the necessary competencies. The prospect is also quite sad: the number of specialists with experience in Natskomfinposlug that will be accepted into the NBU staff is very small. Thus, out of 264 employees of the COMMISSION, about 20 people have been invited to work in the NBU staff, which is absolutely insufficient to preserve the institutional memory of the regulator , ”the Insurance Business Association notes.
There are no questions to the NBU
For the sake of balance, another, positive, point of view should be defined. In particular, Yulia Rozhkova, director of the ALL-UKRAINIAN Association of Pawnshops, believes that most of the innovations regarding the Lombard Sites Everything is progressive and expand opportunities for its members.
“We are also talking about the expansion of financial services for pawnshops, for example, the possibility of providing currency exchange services in cash, as well as the fact that the activity of providing financial services will no longer be exclusively a type of activity. As for the requirements for equity in the amount of 500 thousand – 1 million UAH, the stench is NOT new – the market has long been fulfilling them, “- says Rozhkova.
As for the competence of NBU specialists, the director of the ALL-UKRAINIAN PAINTING HOUSE ASSOCIATION
During the development of this document, the expert emphasizes, they learned and used the world experience of the activities of pawnshops and systematically organized communications with a representative of the Ukrainian Lombard Sites Everything.
The same opinion is held by companies and public organizations of other subsectors.
The National Bank, in turn, blames the opponents of the “Split” Regarding the shortage of specialists. Search for EMPLOYEES Currently, highly specialized market specialists from Natskomfinposlug are invited to work. However, as of June 15, it seems that 89% of vacancies have already been closed.
Of course, the transition under the “wing” of the National Bank of non-bank financial sites All makes it a powerful mega-regulator. According to experts, there are almost no such examples in European practice. And this, apparently, for a democratic country does not look quite acceptable…
At that time, the National Bank was endowed with broad powers and both regulatory and punitive functions. There is simply no one in Ukraine against the Supervisory Body, which would clearly control the activities of the main financial regulator.
But, on the other hand, it may be more convenient for the NBU, having “embraced” almost the entire financial market, to put things in order there.