Chairperson of the Agency for Regulation and Development of the Financial Market Madina Abylkassymova spoke with a report covering Agency's activities to comply with and ensure rights of citizens to receive banking and other financial services. The event covered key measures to protect rights of consumers of financial services.

"In order to protect rights of citizens and increase their trust in the financial system, the Agency is implementing a set of systemic measures covering all segments of the financial market - banking, insurance, stock markets, as well as the microfinance market. Given the scale of retail lending, key task of protecting consumers in the banking and microfinance sectors is to reduce indebtedness of the population and prevent growth of problem debt. Key measure to reduce the debt burden of the population was adoption in June 2024 of the Law on Minimizing Risks in Lending and Protecting the Rights of Borrowers," the Agency Chairperson pointed out.

To limit debt burden of borrowers who already have loans overdue for more than 90 days, a ban on issuing them consumer loans has been established since July 1, 2024.

To support problem borrowers, mechanisms for restructuring problem loans have been enhanced. In particular, a two-year moratorium has been introduced until 2026 on sale of problem loans to collectors.

Rights of citizens to out-of-court settlement of problem debt through the ombudsman mechanism have been strengthened. For this purpose, competence of the banking ombudsman includes study of disputes on all types of loans to citizens, including consumer loans. Since the beginning of this year, the institution of microfinance ombudsman has been introduced.

“Since October 2023, a uniform procedure for settling problem debt of citizens on loans has been introduced at the legislative level. Citizens can apply to banks, MFOs or collection agencies with an application for loan restructuring. If an agreement with the creditor is not reached, the borrower can contact the ombudsman or the Agency.

As part of this settlement procedure, banks, MFOs and collectors have adopted individual plans to reduce problem loans of citizens. In 2024, loans worth 358 billion KZT were restructured, loans worth 18 billion KZT were written off,” said M. Abylkasymova.

Today, one of the mechanisms for reducing the problem debt of citizens is the procedure of extrajudicial bankruptcy. Since the launch of the mechanism, 244 thousand citizens have applied for extrajudicial bankruptcy, but only 30.5 thousand people received the status of bankrupt. In order to simplify it, the requirement for mandatory debt settlement has been removed, and debts to creditors who do not provide information about loans to credit bureaus will also be written off.

In order to limit issue of loans to borrowers with a high level of risk, the regulatory maximum amount of consumer bank loans has been set at 2,200 MCIs, and microloans at 1,100 MCIs. A requirement has been introduced to obtain a spouse's consent when applying for a consumer loan in excess of 1,000 MCIs.

"The Agency, together with the National Bank, has also cut maximum values ​​of the effective interest rate on unsecured loans from banks and MFOs from 56% to 46%, and on secured loans from 40% to 35%.

In the microfinance segment, lending to the population is mainly represented by PDL microloans for up to 45 days. For such loans, from September 2024, maximum effective rate was cut to 179%, and the daily rate to 0.3%," said Madina Abylkassymova.

In order to systematically prevent risks associated with violation of consumer rights and unfair behavior of financial institutions, a risk-oriented model of behavioral supervision is being created within the new draft Law on Banks. It is designed to increase responsibility of financial institutions to clients at all stages of interaction – from development and promotion of products to their sale and dispute resolution.

During the meeting, Madina Abylkassymova indicated that the growth of financial fraud is becoming the most pressing problem. In the context of digitalization of the financial market and introduction of mobile applications, cases of deception of citizens in order to gain access to personal data of citizens and issue fraudulent loans have become more frequent.

"In order to protect citizens from credit fraud, since February 2024, the right of citizens to establish on their own a voluntary refusal to get bank loans and microloans has been legislatively introduced. This service is implemented on the eGov portal. Over 2.2 million people have already used this option.

Moreover, since June 2024, a requirement has been established for banks and MFOs for mandatory biometric identification of the client when applying for each online loan. In August 2024, creditors were required to check image liveness in order to rule out issuance of loans based on forged documents - deepfake," the Head of the Agency recalled.

Since July 2024, establishment of the National Bank's Anti-Fraud Center is provided for at the legislative level. The Center forms "black lists" including persons with confirmed facts of fraud, as well as "gray lists" with suspicious persons requiring extra verification. Since its launch, over 64.8 thousand suspicious transactions have been registered, for which more than 2.5 billion KZT of illegally obtained funds have been blocked.

To protect citizens who have suffered from actions of fraudsters, since August 2024 banks and MFOs have been required to suspend accrual of remuneration and debt collection on fraudulent loans if there is a decree of the Ministry of Internal Affairs recognizing a citizen as a victim of fraud.

In December 2024, new requirements for banks to manage fraud risks were approved for suppression of fraud. Moreover, in order to improve efficiency of interaction with clients, a requirement was established for availability of functionality for submitting requests on fraud issues through the bank's mobile application.

"Today, the problem of credit fraud remains relevant due to emergence of new typologies and forms of fraud, telephone fraud is actively used. In this regard, the Agency, together with concerned government agencies, provides for new legislative measures in the Law on Development of the Financial Market and Protection of the Rights of Consumers of Financial Services.

In particular, a "cooling-off period" of at least 24 hours is introduced when issuing the consumer unsecured online loans in excess of 150 MCIs. During this period, banks and MFOs must check the transaction for fraud signs. Moreover, the first consumer loan will be issued only in personal presence of the borrower at the lender's office, and online lending to citizens aged under 21 and over 55 will be possible only upon receipt of their consent, issued through eGov," said the Agency Chairperson.

In order to protect victims of fraud, grounds for writing off fraudulent loans have been legislatively expanded.

Additionally, telecom operators have to create internal anti-fraud systems, block fraudulent calls and transfer information about numbers from which they were made to the National Bank’s Anti-Fraud Center. In addition, a ban is imposed on connecting the subscribers to communication services without passing biometrics, as well as a limit of no more than 10 SIM cards per individual.

Kazakhstan demonstrates a steady increase in the population's interest in insurance services. In 2024, more than 7 million people were covered by insurance services, and the amount of insurance premiums totaled 915 billion KZT. The bulk of insured persons are voluntary types of insurance, such as accident insurance (45.2%) and life insurance (16.5%).

"Along with that, in this segment, rules and conditions for making insurance payments are established by the insurance companies themselves, which creates the risk of imposing excessive insurance services. In this regard, the Agency has developed legislative amendments designed to prevent unfair practices in provision of insurance services.

In order to reduce the cost of insurance products, it is envisaged to limit the commission fee of any insurance intermediaries, including banks and microfinance organizations, down to 10% of the amount of the insurance premium under contracts related to obtaining loans," added M. Abylkasymova.

The securities market is becoming increasingly accessible to the population: over the past five years, the number of retail investors has tripled and reached 700 thousand people. Against the background of this growth, the need to protect their rights from fraud and investment risks is increasing.

In order to combat illegal practices, FOREX intermediaries have been regulated and it is prohibited to give investment advice without a license. The Agency's website publishes a list of organizations with signs of unlicensed activity – it already contains 295 names, including 100 pseudo-brokers.

Since January 2023, brokers are required to assess the client's investment profile before making recommendations in order to protect unqualified investors from risky investments. The requirements for obtaining the status of a qualified investor have been tightened.

After the speech, the Agency Head answered relevant questions from members of the Human Rights Commission about enhancement of protection of the rights of consumers of financial services.

External Communications Directorate

press@finreg.kz

Source : https://www.gov.kz/memleket/entities/ardfm/press/news/details/1019494?lang=kk