Safe money

Safe money

EU-FINREG project, which is under the EU4Business umbrella, is helping to build a better non-bank financial services market in Ukraine.

Leave the relative safety of the banking sector, and venture out into the landscape of the non-bank financial services market, and there are pitfalls aplenty for the unwary.

Misleading “0%” loans, mysteriously and abruptly changing tariff rates, and pressure from debt collectors are just a few of them.

So to help consumers of financial services chart their way safely through the sometimes confusing and dangerous territory of the non-bank market, Ukraine’s central bank, the National Bank of Ukraine or NBU, launched a national information campaign called #KnowYourRights to improve citizens' awareness of their rights when using financial services.

Using posters in grocery stores and free legal aid bureaus all around the country, the campaign helped inform people in all regions of Ukraine how to protect themselves. Project experts also produced an article “How to get a loan and not regret it” which, for maximum impact, was shared among 48 online regional media outlets for higher impact.

And this campaign is just one example of the activities organized by the EU-FINREG project – a European Union-funded project to bolster Ukraine’s financial regulation environment.

Fairness and efficiency

The EU-FINREG project, the full name of which is the “Strengthening the regulation and supervision of the non-bank financial market” project, is supporting the Ukrainian authorities in building a sound regulatory environment for the non-bank financial services market. The long-term goal is to ensure that the market is fair and efficient, while protecting consumers and promoting market development – thereby contributing to the sustained economic growth of the country.

Results in the market will only be visible after the strengthening of the regulatory and supervisory framework of the non-banking financial sector. But that will not happen in a day: Lots of tasks must be achieved before reaching that final point, such as reviews and gap analyses of existing relevant laws, the provision of recommendations, and the drafting of new laws (or drafts of amendments to existing laws). Then the final drafts of the law are sent for public discussion, and finally, the parliamentary procedure for adoption can begin.

#Cashless is another campaign supported by the EU-FINREG project that was launched by the NBU amid the COVID-19 pandemic and which has reached over 2.5 million people. While promoting non-cash payments, the campaign is helping the general public – especially elderly people –not only to gain a better understanding of cashless payments but develop trust in the system. For example, know how to pay with a smartphone, use online banking or even open an account. The NBU survey showed that 76% of Ukrainians used cards to pay, but only 21% used online banking, compared to the EU, where the number of online banking users has reached 63%.

Analyses and recommendations

In addition to campaigns, the project has produced a large number of analyses and recommendations for improving legislation. It also provided Tuition Assistance (TA) for the drafting of several laws and by-laws, for strengthening the market behaviour of financial institutions, and for financial education, as well as holding numerous training sessions for the employees of the beneficiaries.

Ukraine’s new law on insurance, which is intended to modernize the regulation of insurance services in Ukraine, is among those that were drafted with the EU-FINREG project’s support. The new Law introduced new requirements for licensing of insurance companies, solvency assessment, corporate governance and risk management, termination of insurance companies and transfer of insurance portfolios, which is of particular importance for the stability of the insurance market and the protection of the rights of policyholders and other insurance beneficiaries. It also lays down rules on the provision of insurance and reinsurance distribution services.

In addition, before the adoption of this Law, foreign insurers could carry out their activities in Ukraine in only two ways: through local subsidiaries or through branches. According to the new law, a foreign insurers may, under prescribed conditions, provide a limited number of services without a license, and conclude insurance and reinsurance contracts in Ukraine.

Other laws drafted with the project’s support include the law on the financial services market and the law "On Amendments to Certain Legislative Acts of Ukraine Concerning the Simplification of Attracting Investments and Introduction of New Financial Instruments."

In addition, the project supported NBU in implementing a pilot project on self-assessment of market practices by financial institutions. It involved 65 financial institutions in the work, with the goal of gaining better insights into the practice of identifying weaknesses and areas that need to be strengthened.

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