The Banking Standards Committee has approved the Standard for Protecting the Rights and Legitimate Interests of Mortgage Borrowers and will soon submit it to the Bank of Russia for approval.
The main purpose of the document is to minimize the proliferation of high-risk mortgage lending schemes and ensure that borrowers have a clearer understanding of loan terms and associated risks.
The mortgage standard specifies what data must be disclosed by banks to borrowers in a clear and simple form before signing a contract, as well as what risks to warn them about. Borrowers will be required to sign a statement confirming that the information stipulated in the standard was provided to them.
Furthermore, the standard sets out principles for developing the terms of a mortgage contract and factors that a creditor must take into account when determining a loan amount, loan term, interest rate, possible fees, and other loan parameters.
The regulator will review the document submitted by the Committee within 30 business days. Following its approval by the Bank of Russia, the Committee will adopt the standard, which is expected to become mandatory for banks starting from January 1, 2025.
"It is important that market participants approved this standard themselves in dialogue with the regulator. In the near future, we will review another document to impose liability for banks failing to comply with the standard," said Mikhail Mamuta, Chairman of the Committee and Head of the Service for Consumer Protection and Financial Inclusion at the Bank of Russia.
The Banking Standards Committee was established in May 2024; two-thirds of its members are representatives of banks and banking associations.
Preview photo: Valentin Antonov / TASS