Tribune’s guest is a member of the Federation Council Committee on the Budget and Financial Markets, the senator from the Kirov region, Oleg Kazakovtsev, who speaks about the activities of debt collection agencies and the law on collectors, which is under discussion in the Parliament.
- There are news from different regions of Russia about the awful things people working in debt collection agencies have done. Do they commit excesses against people who owe more or less large amounts, who have got into a situation as a result of an assignment by banks, or is it about small debts?
- The law we are going to discuss is not a law about the activities of debt collection agencies. A law on the activities of debt collection agencies has been developed in the last year to streamline the market, because there was no understanding of what the collection activity is, who is engaged in it and how. I sent this law to the State Duma, but it has remained unconsidered for a long time, as it has received support only when the media started to promote this problem across the country. There have been provocative cases of throwing Molotov cocktails or violence against people. But I think all these cases are not related to the activities of debt collection agencies. They fall under the scope of the criminal law. And people who have committed these acts should respond in accordance with the criminal law.
- In your opinion, the people who committed these acts, do they have something in common with collectors?
- They may call themselves 'collectors', but the market has not settled, and it could be individuals, it could be security services, it could be organizations with a registered capital of 10 thousand rubles, which gathered different people, who could have criminal records or could be former police officers. They received a task – if you get the money, you will get a bonus. These organizations don't bear any financial responsibility or reputational liability.
The law that will be considered in the State Duma is a law to protect the rights and interests of individuals while carrying out activities to collect debts. This law indicates that only legal persons can be engaged in such activities. They must have a minimum paid authorized capital amounting to 10 million rubles.
- This is not such a small amount.
- Yes, and the owners of the companies will recruit the staff. There will be staff requirements, requirements for managers. The authorized government agency will conduct supervisory activities on the work of organizations that will collect debts, and they will be included in the register. That is, the state registry will create a register of organizations engaged in debt collection. In addition, the liability will be insured. Now, even if you win the case, if you suffered any damage – for example, someone set fire to your door – you have almost nothing to reimburse this damage. Now professional liability will be insured.
In addition, the law provides a lot of moments which protect the rights of citizens during debt collection. It is important that this law is not in conflict with the Civil Code, the law 'On consumer credit' and so on. Therefore, I believe that this law will be working, and I think, if desired by law enforcement, the practice will be successful if the rights of our citizens are violated somewhere during the debt collection.
Thanks to this law we will alleviate the violation of the rights of citizens during debt collection, but the problem is that the majority of citizens who get involved in unpleasant incidents during collection are poor, needy people who take loans from microfinance institutions.
- Shouldn't the activity of microfinancial organizations be regulated?
- We must protect citizens, but people will still borrow money from microfinancial organizations and get into debts. Amendments have already been made to the Law on Microfinancial Organizations; and the marginal debt will be limited by ‘four X.’ The problem is that marginal rates established by the Central Bank are quite high today. If you take a loan of up to 30 thousand rubles for 30 days in a microfinancial organization, the marginal rate which is established by the Central Bank is 806 percent per annum. I.e. if you take 1 thousand rubles and didn’t return it in time, your debt will be very big. Thus, today the law which requires that the marginal debt must be the initial sum which is quadruplicated is operating.
However, the law has no reverse force. It began its operation on April 1st. And now we often receive citizens’ complaints that microfinancial organizations have already won lawsuits, and a person who has taken 5 thousand rubles must pay 200 thousand rubles, considering the interest. How can he pay it? These citizens are on focus of indecent organizations which are dealing with collecting debts. We have to go on working on our legislation to set people free from the involuntary servitude.
- In fact it turns out that people get into this involuntary servitude not due to a fraud or the fine print which is not used in banking documents anymore. They willingly sign documents which they are not reading or which are not being explained to them. Any individual can write such a contract. And if the individual certifies the contract at a notary office, it will become legal.
- Indeed, according to the Civil Code, nobody is forbidden to provide loans at interest to anybody. However, this is a problem of the system. Offices of microfinancial organizations are usually situated in crowded places and bear the low cost. The Central Bank is a supervising structure and regulates the process. However, we have more than three thousand microfinancial organizations, including its branches. It is a huge network in the country. They give loans to people who have failed to take loans in banks. They are not interested in people’s loan history. The business model is built in such a way that the high interest allows writing off unpaid debts. It means a part of loan debtors who pay their debts also pay for people who haven’t return their loans.
The financial literacy is at a very low level. However, people often take loans because they have to – some of them need to buy food, other need medicines. We cannot say that people take the loans on purpose not to pay them back. Sometimes a person takes a loan because his salary has been delayed; overdue interests begin to accumulate, and he cannot pay them in time; some additional expenditure emerges, and so on. There are a lot of reasons for taking such loans.
I agree that the market cannot be absolutely restricted, but it is necessary to regulate the interest rate. So, we will go on working on amendments to the Law on Microfinancial Organizations. And after adoption of the Law on Protection of Rights and Legal Interests of Individuals under Return of a Debt, we will see what law-enforcement practice emerges. Probably, we will have to go on improvement of the law.
- In addition to outrageous cases when they set doors on fire or beat people, there are also cases when they start to cut off phones ...
- Law enforcement agencies and the prosecutor's office, as well as supervisory authority as represented by the Central Bank, should not ignore these cases. They should be punished for all these cases.
- What does the new federal law say?
- The new law describes ways of interacting with the debtor. It is a direct interaction – personal meetings, telephone conversations, text, voice messages transmitted through electronic communication, including mobile radio communications, as well as sending mail to the place of residence or the place of stay of the debtor. That's it! There will be no other ways of interaction.
The law prohibits the actions of a creditor, or a person acting on his behalf, aimed at the return and associated with the use of physical force or the threat of its use against a debtor, threat of murder or cause of harm to health, destruction or damage to property, or the threat of such destruction or damage. It is prohibited to use methods that are dangerous to the lives and health of people. It will be prohibited to put psychological pressure on the debtor, prohibited to use words or commit other acts humiliating the honor and dignity of a debtor. It is prohibited to deceive a debtor regarding the legal nature and the size of a debt. It is also prohibited to cause harm to the debtor or abuse power through other unlawful ways.
I think that debtors should carefully read this law to defend their rights. They should know that if their rights will be violated they can contact the supervisory authorities, the Central Bank. The government will establish an authorized agency that will monitor the actions of the law firms engaged in debt collection.
Regarding the frequency of interaction, during working days they are not allowed to disturb people by telephone from 10pm to 8am, during the holidays – from 8pm to 9am. Personal meetings are not to take place more than once a week, by telephone – no more than 8 times a month. In other words, there can't be 50 calls at any one time.
- But it is still necessary to prove that there were these 50 calls. How? Caller ID?
- The law says that they can't hide their number during a call. If they call from an unknown phone number, you must contact the supervisory authorities. You must learn to defend your rights. The law is very detailed. The number is not displayed? File a complaint. They are not giving the number? They don't tell you where the debt came from? A man does not tell you who he is and starts to talk to you about a debt? Then don't talk to him. He must tell you who he is, say the nature of the debt, tell you whose interests he represents. The law explains a lot of details that will truly protect the rights of debtors.
- Should the debtor also record conversations during the personal meetings? They may tell him: "There is a possibility that the next time you pass by this place, a brick will drop on your head."
- A company dealing with debt collection must archive all of its appeals to the debtor and negotiations with him. And the debtor has the right to record this conversation and contact the police if he thinks that his rights were violated.
- So collectors are moving from taking money by force to notifications and requests to repay the debt. How effective will it be?
- But notifications are 90% of collectors' work even now – calls, reminders that it is necessary to repay the debt, direct communication by phone. Outrageous cases that we see are in violation of the current law. They must be criminally prosecuted, and the law enforcement agencies should work more actively and defend the rights of citizens.