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Half banks working in Vladivostok do not meet the criteria important for end-consumers

VLADIVOSTOK. VOSTOK-MEDIA. Half banks working in Vladivostok do not meet the criteria important for end-consumers, says Alexey Ivashkin, President of NGP “Association of Primorye Brokers”.

“For several years in Primorye financial and consulting service sector is rapidly developing. For further efficient development of this sector awareness of the population is necessary” – says Alexey Ivashkin.

According to the data from General Directorate of Central Bank growth dynamics of consumer crediting in Primorye last year was 69%, total sum of consumer credits on January, 1, 2007, comprised 28 billion roubles.

To the expert’s opinion, in order to use all spectrum of up-to-date financial resources Primorye needs to have full awareness. Lack of financial awareness may prevent from developing many financial tools and segments of financial market.” Rising of natural person’s overdue debt repayments means that not all loaners were aware about full cost of credit. It comes obvious in the sector of insurance and individual pension plan”. For instance, majority of future retired people chose a governmental organization to manage their funds. It means people do not know about full range of financial opportunities that nowadays market provides with”, - clarified Alexey Ivashkin.

Social poll showed that people, taking out loans, have no sufficient information about conditions under which the loan is taken. Many believe in what is said on the advertisements spread by banks. But not all the time the information about credit cost written there is reliable. It is necessary to launch a campaign in league with the local administration to extirpate financial illiteracy”.

In November 2006 Council of State held a meeting discussing development of the national bank system. In followup of the meeting President entrusted the Cabinet and Central Bank to work out measures to rise up financial literacy and awareness of population about bank services.
Basing on the knowledge of problems in this sphere local financial community has, NGP “Association of Primorye Brokers” worked out a set of measures how to enrich financial knowledge. A part of this project is being implemented in the framework of grant given by the U.S. government “Our Rights”. This program involves all society groups from schoolchildren and students to middle aged people and pensioners but only in frames of Vladivostok. Social polls and method of “secret consumer” are used. This work helps reveal the most troublesome aspects of consumer service in credit establishments of Primorye”, - says Alexey Ivashkin.
 

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During the global financial crisis, the question of financial security has become very important to citizens. Since February 2008, financial experts led by Alexander Ivashkin, the Director of the NGO the League of Credit Brokers have conduct public education activities to improve ‘financial literacy’ of citizens. This activity is a part of the Protect Citizen’s Economic Rights project implemented with the support of the “Our Rights” Program. The League of Credit Brokers facilitated establishing a committee that developed a set of proposals to the authorities to establish a system of financial education and to protect the economic rights of citizens. Educational seminars, meetings with representatives of financial institutions, and a brochure titled Ways to Avoid Credit Slavery have become very popular in Primoriye.  The implementer of the project has also drafted and submitted to the Vladivostok City Administration a Program to build a positive image of financial institutions in Vladivostok and to improve citizen financial literacy by 2012.

In recent years, Russia has witnessed the accelerated development of the public financial service sector. In the market of new lending and deposit products, many new services and products including electronic services have become available. For example, currently 54 lending institutions (banks), 74 insurance companies, about 30 credit cooperatives, 5 non-state pension funds, 4 managing and 20 credit-brokerage firms operate in Vladivostok. Although the demand for financial services has increased rapidly, financial institutions recently realized that without raising public awareness of financial and banking services and rules of client-institution relationships retail segments of the financial market will not develop effectively. Moreover, many people do not trust financial institutions and have little understanding of financial opportunities created by the modern financial market.

In June and July 2008, the NGO League of Credit Brokers worked with student-volunteers from the Far East Public University and Vladivostok Public University of Economics and Services to conduct a research that confirmed the financial situation described above. The survey conducted among 13,311 residents of Vladivostok showed that about 80% of residents know very little about the financial credit system. At the same time, in the past 2 years 54% of residents had taken loans from banks. Approximately 54% of the population is not very satisfied with the work of credit and financial institutions. In addition to the survey, student-volunteers conducted a study of the work practices of the banks and their affiliates based in Vladivostok. The students used a ‘Mystery Shopping’ tool - a well known approach used by market research companies to measure quality of retail service or gather specific information about products and services.  Student-volunteers visited banks acting as ordinary customers interested in obtaining loans and other services. The goal of the study was to evaluate banks or bank subsidiaries on a set of criteria that important for customers and not for the Chief of the Central Bank of the Russian Federation of the Primorsky Krai. The study showed that:

• Half of Vladivostok banks did not meet criteria important to customers;
• Local banks were most customer friendly;
• The credit and financial community of Vladivostok and Primorskiy Krai need to improve customer service.

The League of Credit Brokers has developed steps to improve financial literacy through the project Protect Citizen’s Economic Rights. On July 10, 2008, the League in cooperation with the Department of Economic Development of Primorskiy Krai organized a regional conference to discuss financial education of the population as the main element of economic protection of the rights of citizens. Over 200 participants attended the conference, among which were representatives of almost all federal institutions, Human Rights Representative Agency, Ministry of Internal Affairs, Department of Internal Affairs of the Primorsky Krai, Pension Fund of Primorsky Krai, Federal Antimonopoly Agency,  Central Bank, regional branches of Federal Financial Markets Service, and other officials as well as representatives of the non-governmental organizations interested in creating a customer friendly financial system in Primorskiy Krai. Representatives from insurance agencies, pension funds, credit cooperatives and banks also attended the conference. Vice Chairman of the Legislative Assembly of Primorsky Krai Dzhambulat Tekiev opened the meeting by delivering a welcome speech on behalf of V.V. Gorchakov, the Chairman of the Assembly of Primorsky Krai. He stated that "the 21st century has rightly been called the century of the great economy. At the same time, the level of financial illiteracy in our country is still very high. An average Russian has little understanding of issues related to mortgages, loans, and deposits. He or she does not know how to calculate tax payments. Economic illiteracy of the population hinders the development of the private sector and the economy as a whole. For the growing economic power of the state, it is above all necessary for population to be familiar with basic economic concepts. Citizens need to be skill-oriented in financial products and opportunities that are extremely popular on the modern market. In Russia, there is a need to improve the financial education of the population ...”

The Conference demonstrated that the need for financial education of the population has long been beyond the scope of competency for individual communities and represents a challenge on regional and national levels. The chairman of the NGO the League of Credit Brokers, Alexander Ivashkin was the keynote speaker at the conference. Participants received brochure on Ways to Avoid Credit Slavery developed by theLeague of Credit Brokers. 7,000 copies of the published brochure became of great demand of local population.

One of the most important outcomes of the Conference was a decision to form a committee of representatives from insurance companies, banks, financial institutions, private pension funds, brokerage firms, and other financial institutions of Primorskiy Krai. The Committee would prepare proposals and work together to develop a set of laws that protect financial interests of citizens.

The League of Credit Brokers has also drafted and submitted to the Administration of Vladivostok and the Chief Federal Inspector of the Authorized Representative of the President of the Russian Federation in the DFO (Far East Federal District) in Primorsky Krai a detailed Program to build positive image of financial institutions in Vladivostok and to improve citizen financial literacy by 2012. This program covers all segments and age groups, from schoolchildren and students up to middle-aged people and pensioners.

The Project Manager for the Protection of the Economic Rights of Citizens Project, Alexander Ivashkin:
“In general there is no system of education and financial institution image-building program addressed to residents of Vladivostok. Without this, already existing forms of community outreach for the credit and financial markets will always face difficulties in the development, and the population itself may be easy prey to financial predators. While conducting financial educational program for population, the City Administration can increase the number of investors in the city. The positive reaction of the population to the program will attract more customers. Even municipal loans can become possible. However, we need to organize a number of events that help to balance this process”.

 

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“Our Rights” Program is implemented by Management Systems International (MSI) in partnership with organizations “Initiative Plus” and “ISAR” thanks to the support of the American people through the US Agency for International Development (USAID). The content of this informational sheet is the responsibility of MSI, and the views expressed do not necessarily reflect the views of USAID or the US Government.

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Contact Data:
Natalia Volgusheva, Public Outreach Manager,
Management Systems International
Our Rights Program
18 M-Amursky Street, office 313, Khabarovsk, 680000, RUSSIA
Tel: (4212) 30-61-47, 31-66-06
nvolgusheva@our-rights.kht.ru,
www.advocacy-ru.org

On the grave situation in which the borrower on how the banks' debts knock "and" deceived co "in an interview with RIA Data" Deputy Chairman of the Primorsky branch of the Union of borrowers and depositors of Russia Yevgeny DETSIKA
«Data»: How do the financial institutions to cheat their customers? How is it done?

Such cases indeed exist, and we often hear about them. For example, some insurance companies have estimated the company, and through their insurers issuing smaller amounts than the damage suffered. Recently SZVR receiving a large number of downloads of Nakhodka, where it is rumored, «burst» credit cooperative, and this case - only the first swallow. A separate issue - «deceived co». Full cases where people have paid money, and build a house no. Experience in solving problems of equity participants, there is perhaps only in Moscow from Luzhkov, and even a few central areas.

Now we receive many requests from people that have mortgages for 14% of «floating» rates, which, after the crisis popolzli up and reached 33%. You want to have to ask the bankers: a person who earns 90 thousand a month, before the crisis paid 60, and now must pay 120? How do you conduct an assessment of the borrower? When they sold the mortgage, the customer is not saying that will have to pay twice as much. We are actively working with such treatment, and in June the first Court of the borrower and the credit institution, and we intend to win it.

There is still a great, beneficial for fraudsters bed - it imported life insurance companies and so-called hedzh funds. They work here, and the money they allegedly kept abroad. We have now treated a large group of customers of such pseudo-investment companies, which hold meetings in the hotel Hendai. Recently in Moscow we have a list of companies showing signs of financial pyramids, which are available to anyone.

«Data»: How come that a large number of inhabitants of the province was in «credit bondage»? After all, if I am not mistaken, the arrears primortsev banks exceeded 4 billion ...

E. Detsik: Many experts felt that the aggressive policies of banks, which took place in anticipation of the crisis will not lead to anything good. At the end of last year, and at the beginning of this, loans were given was not clear to whom and how is unclear - if only to sell. And it affects how the mortgage, and consumer, and auto.

This led to what we now have - 4 billion of overdue debts to banks of Primorye residents, and this is just the beginning. When the crisis began, people began to lose his job. To help us coming girls, single mothers, who for 20 years, with huge debts on the mortgage. There is already a question for the banks: where did they look when issuing loans? What happens next? The Bank should take the apartment, sell it, of course, but real estate prices fell, and people before the end of life will pay the debt for an apartment, which he did not have.

«Data»: So in this situation blame themselves, and financiers, who were disastrous credit policy?

It must be said that we have neither in school nor in the institutions do not learn how to align their financial lives. On this play, many unscrupulous managers of banks which are supported by advertising, by the savings on the risk assessment issue loans to those who do not then they will be able to pay.

Suppose that there are two banks, each issuing one billion of loans. The first kept the rate of 18%, he conducted a qualitative assessment of the creditworthiness, it provides loans only to people with good credit history, stable employment. A second bank has issued to all contractors, but only by 25%. So the first arrears less per cent, while the second - 10%. And the financial results is the same. Why? Because good second bank borrowers at higher rates of full payment of damages on the overdue debt.

And here it is necessary to pay attention to the social dimension: the rationale for a second bank? Building such a policy, he drive people «Credit slavery».

«Data»: How can people protect themselves, became the victim of fraud by the financial institutions? Чем ему может помочь ваша организация? How it can help your organization?

E. Detsik: First of all, there are specific state agencies which should protect the interests of citizens. For example, when the assistance comes in the «Union of borrowers and investors», we analyze the situation which occurred with the debtor. Then decide where you want to apply for protection of the rights of citizens: the Public Prosecutor's Office, a court or other regulatory authorities.

As part of our organization, we are actively monitors the market, looking at how to conduct various financial institutions in Primorye. Also we have a telephone hot line, 77-33-84, on which anyone can apply. We are negotiating with the Seaside Bar Association, and will attract qualified lawyers who can professionally help people. Before you enter into a contract, the future, though, can come to us, we will see a document, say, good or bad it is for him.

By the way, we are actively conducting round tables, increase the financial literacy of the population. For example, there are pension funds, but not all are aware of how they work.

Information: Non-Profit Organization «The Union of borrowers and depositors of Russia» (SZVR) was established in 2007 in Moscow. The purpose of the organization - to protect the rights and interests of citizens who are customers of financial institutions. In Primorsky Krai branch of «Union» has in the past year. The main directions of the organization - legal, counseling and psychological assistance.