The regulator recommends that market players disclose the entirety of essential data on accounts, safe deposit boxes and investment in microfinance companies or consumer credit cooperatives (CCCs) in a standard, concise and customer-friendly format.
In their offices and on ‘product passport’ websites, market players are expected to disclose key information documents with simple and clear descriptions of product specifics and risks. The Bank of Russia looks to these passports, once they are rolled out, to enable consumers to make an informed choice of a financial product or a service, which would reduce the risk of misunderstanding essential qualities of such products. A comparison of products by several financial providers would also be possible.
For instance, in a deposit passport, banks should indicate a guaranteed minimum interest rate on deposits and when higher interest rates are possible, including under so-called hybrid products.
It is recommended that microfinance companies attracting individuals’ funds at floating rates should indicate in their key information document forms the minimum and maximum interest rates and their respective applicable periods. They should also mention the minimum investment amount under law (1.5 million rubles).
Consumer credit cooperatives are supposed to make it plain to individual investors that they are shareholders with all the ensuing liabilities, with procedures to be explained for shareholder exit from cooperatives.
Further information in a product passport should include a procedure for settling disputes with the financial company, a statement whether deposited funds are insured with the state and a consumer’s course of action in case of bankruptcy of a CCC.
The Bank of Russia recommends that financial organisations present to consumers a financial product passport concurrently with a request for a service, prior to contract signing and concurrently with contract extension.