Due to the significant potential impact of the draft Regulation on the application of measures to influence non-banking financial services market participants on the financial services market, S&P compliance lawyers joined in its development.

The purpose of the Regulation is to regulate the procedure for applying sanctions for offenses committed by participants in the market of non-banking financial services.

The new provision is designed to regulate the procedure for applying sanctions for violations of laws and other regulations governing the provision of non-banking financial services, including legislation on the protection of consumers of financial services and advertising of financial services. The Regulation stipulates that measures of influence for the relevant offenses will be applied to market participants in non-banking financial services, which are supervised by the National Bank. Such participants include:

non-bank financial institutions;
persons who are not financial institutions, but have the right to provide certain financial services;
persons providing intermediary services in the financial services markets;
individuals – entrepreneurs who provide financial services;
permanent representative offices in the form of branches of foreign insurance companies.

The Regulation will also determine the procedure and conditions for the application of enforcement measures for violations committed by non-bank financial groups, supervised on a consolidated basis by the National Bank, and introduce a proportionate approach to the application of enforcement measures.

Impact measures that can be applied to all market participants in non-banking financial services include:

the obligation of the violator to take measures to eliminate the violation;
imposition of fines;
suspension or revocation of the license.

At the same time, the following measures of influence will be able to be applied to high-risk market segments, namely insurance companies and credit unions: approval of the plan to restore the financial stability of the institution, removal of management from the institution and appointment of interim administration. These measures enable the financial institution to resume its operations and meet its obligations to its customers and creditors. In addition, in order to eliminate the violation, the financial service provider will have the right to initiate a written agreement with the National Bank. Also, certain measures of influence will be applied depending on the category of the object of supervision.

In particular, for violation of the legislation on supervision on a consolidated basis, the National Bank will apply to non-bank financial groups such a measure of influence as the establishment of higher economic standards, limits and restrictions on certain types of operations.