Control over collection agencies and microfinance organizations (MFIs) is planned to be tightened. In particular, they will be required to record and store all negotiations with debtors, both oral and written. Ensuring order in the field of debt collection will fall on the shoulders of bailiffs. The relevant bill introduced to the State Duma by the government of the Russian Federation.
Conversation on record
Changes are proposed to be made to the laws “On the Protection of the Rights and Legitimate Interests of Individuals in the Implementation of Activities for the Return of Overdue Debts” and “On Microfinance Activities and Microfinance Organizations”. The purpose of the amendments is to protect Russians from excessive persecution of creditors.
MFIs commit the most gross violations of the law associated with threats to the life and health of citizens, the explanatory note says. So, in 2019, the Federal Bailiff Service (FSSP) received about 16,000 complaints against credit and microfinance organizations, which is more than half (55%) of the total. In 2020, their share increased to 59%, for 10 months of 2021 – up to 65%. Every year, on such facts, the service initiates over two thousand cases of administrative offenses.
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The bill empowers the Federal Bailiff Service of Russia with the authority to control collection, microfinance and credit organizations that repay overdue debts of citizens.
It is proposed to oblige credit and microfinance organizations to record all negotiations with clients aimed at returning overdue debts – oral, text and any other. These records will need to be kept for three years.
Before starting to communicate with the debtor, creditors will have to send a notification and copies of documents confirming the availability of the necessary equipment and software to the FSSP. For example, “automated intelligent agent” is a program for sending voice messages that uses speech generation and recognition systems and supports certain conversation scenarios depending on the content of the dialogue. The use of this software minimizes the influence of the human factor, and hence the possible violations of the law.
The service will maintain a register of professional collection organizations and a list of credit and microfinance organizations. All data will be received automatically as part of the interaction of the service with the Bank of Russia and posted on the official website of the FSSP. In case of violations by creditors, bailiffs will be able to limit their interaction with debtors for up to 60 calendar days.
In addition, it is proposed to allow creditors to interact with debtors via e-mail and through public services. According to the authors of the bill, innovations will save money for both parties. At the same time, collection agencies will be required to post their e-mail address on the official website for customer inquiries.
Contact with the collector via chatbot
The bill has already been supported by the Public Chamber (OP) of the Russian Federation. The activity of collectors causes an ambiguous reaction in society, therefore, tightening of control is necessary, said Alexander Ternovtsov, a member of the commission of the Civic Chamber of the Russian Federation for the examination of socially significant bills and other legal initiatives. He proposed extending the new procedure to other organizations working in the field of consumer lending – pawnshops, credit consumer cooperatives.
According to the National Association of Professional Collection Agencies (NAPCA), there are more than 9 million people with overdue debts to banks in the database of collection agencies. Their total debt is about 1.3 trillion rubles.
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For contacts with collectors, Russians are increasingly choosing alternative communication channels, the association notes. Debtors explain this by saving time and unwillingness to raise the “debt topic” over the phone for fear that others will hear the conversation. Messengers are the most popular alternative communication channel, the share of which has grown to 72% in 2022. Chatbots are also gaining popularity on the websites of collection agencies (20%). E-mail debtors began to use less frequently (5%).
“For a debtor, like any consumer, speed is important. On average, when using instant messengers and chat bots, the client goes to the dialog box in one click. In addition, these tools have the ability to quickly respond, and the client receives a response within a few minutes,” NAPCA notes.
Now debtors can remotely learn about repayment methods, the possibility of reducing the monthly payment, the consequences of non-payment, they can request a repayment certificate, and also leave an appeal or complaint about the work of employees.
The association supports the amendments to the law, but notes that the current text differs significantly from that proposed by the working group on the regulatory guillotine in the field of collection activity in 2020. “There is a risk that if those proposals are not taken into account, we will see half-hearted formulations that do not help either debtors, or creditors, or recoverers,” NAPCA warns.
So, for example, the draft law does not define the concepts of “telephone calls” and “voice messages” as methods of interaction during collection, the possibilities of sending information on debt through the Unified Portal of Public Services are severely limited, and the rules specifying the procedure for using modern technologies are not described.
Protect the rights of debtors
In general, the bill deserves support, says Vyacheslav Golenev, managing partner of the Lawyers: Golenev and Partners law firm. It can be assumed, he says, that if a strict control mechanism is established in relation to any professional debt collectors, banks will quickly move to an exclusively judicial model of debt collection, and the possibilities for restructuring credit obligations will be significantly reduced.
“If the possibilities of out-of-court and pre-trial recovery are limited, then why pay more, waste time on repeated (and often fruitless) exhortation of the debtor and become at risk of administrative responsibility and control measures of the FSSP? I think the answer is obvious for bankers,” explains Golenev.
The proposal is absolutely reasonable and logical, agrees Olga Vlasova, adviser to the Federal Chamber of Lawyers of the Russian Federation. It is no secret that numerous violations in the implementation of the return of overdue debts from individuals are allowed not only by collection organizations, but also by banks, and especially microfinance organizations. Therefore, strengthening state control in this area is necessary.
At the same time, the bill contains a rule that messages about the need to return overdue debts can be sent not only to the debtor, but also to any third party, Vlasova draws attention. This rule must be excluded, since it violates the rights of debtors and can be used as an instrument of psychological pressure on them.
Olga Vlasova believes that at the pre-trial stage it is generally inappropriate to use any forms and methods of coercive influence on debtors and involve collectors in such activities. “Credit and microfinance organizations, as well as other participants in the consumer lending market, need to more widely use mediation and restructuring methods, and promptly file claims with the judiciary,” the lawyer is convinced.