On October 16 2011 the Law on Amending Certain Laws Regulating Relations between Creditors and Consumers of Financial Services entered into force. The law introduced, among other things, the following main changes concerning the activities of Ukrainian banks and financial institutions:
- From October 16 2011 it is prohibited to provide consumer loans to private individuals in Ukraine in any other currency except for hryvnia.
- Under loan agreements concluded after October 16 2011, lenders may charge fees, commission, interest and other payments only for those actions which are regarded as services according to the Law on the Protection of Consumer Rights (May 12 1991, as amended). Furthermore, lenders are prohibited from charging any fees for early repayment of a consumer loan cannot refuse an early repayment.
- A lender is prohibited from accelerating a consumer loan repayment unless the borrower is in default by at least one calendar month, or three months for a mortgage loan.
- The law stipulates procedures for using fixed and floating interest rates in loan agreements including:
- rules for the calculation of floating interest rates;
- requirements to index such calculations; and
- mandatory determination of the maximum increase in the floating interest rate in a loan agreement.
- A lender must notify the borrower where its rights of claim under the consumer loan agreement are transferred to a third party. The law also states that a bank is allowed to disclose information which is covered by banking secrecy in case of assignment of the bank's rights of claim under agreements with its clients.
The law also introduced certain changes to loan restructuring, security enforcement and insolvency procedures, as well as to the identification and liability of borrowers' legal successors.
For further information on this topic please contact Armen Khachaturyan or Yevgen Porada at Asters by telephone (+380 44 230 6000), fax (+380 44 230 6001) or email ([email protected] or [email protected]).