On 16 December 2020, the State Duma adopted a bill* after the third reading that clarifies powers of the Bank of Russia and strengthens its control over financial market organisations, including insurers.
As a whole, these provisions will help the regulator respond with greater accuracy and speed to situations threatening the rights of consumers of financial services.
The following article describes the main provisions of this bill.
Prevention of actions threatening policyholders and stability of the insurance market
In accordance with the Law on the Organisation of Insurance Business, the objectives of insurance supervision include protecting the rights of consumers of insurance services and preventing insurance organisations from precarious financial situations. This represents a broad formulation of the powers for the Bank of Russia.
The bill specifies these tasks. As a result, the Bank of Russia now has the right to analyse the activities of insurance entities to identify situations that threaten consumers of insurance services or the stability of the insurance market. If such actions are detected, the Bank of Russia has the right to take measures, ranging from prohibiting certain transactions to suspending licences. In addition, if necessary, the Bank of Russia can take measures to prevent the bankruptcy of insurance organisations.
According to the bill’s explanatory note, the powers of the Bank of Russia were clarified to ensure a timely and effective response to any situation in the financial market.
The main directions for the development of the financial market
The Board of Directors of the Bank of Russia previously worked out the main directions for the development of the financial market. However, the bill expands the competence of the National Financial Council, which is a collegial body of the Bank of Russia that includes representatives of the Federal Assembly, the President and the government. The National Financial Council will now consider the main directions for the development of the financial market and make appropriate recommendations.
At the same time, the Bank of Russia will send the draft for the main directions of the development of the financial market to the State Duma each year instead of the previous practice of once every three years.
Control over the amount of remuneration for payment system operators
The Bank of Russia (represented by the Board of Directors) is empowered to determine the maximum amount of remuneration for making transfers using cards, which payment system operators set for payment by credit institutions.
Continuity of financial services
To ensure the continuity of the provision of financial services, the Bank of Russia is endowed with new powers: it receives the right to establish mandatory reliability requirements for both credit institutions and non-credit financial institutions.
The bill does not specify these requirements. We expect that they will be set out in more detail in the regulations of the Bank of Russia.
If you have any questions on this eAlert, do not hesitate to contact CMS Russia experts Leonid Zubarev and Darya Lukoyanova or your regular contact at CMS Russia.
* In Russian