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DOI: https://doi.org/10.34069/AI/2022.53.05.30
How to Cite:
Lepekh, S. (2022). Consumers of financial services: features of the legal status in the conditions of financial inclusion. Amazonia
Investiga, 11(53), 308-319. https://doi.org/10.34069/AI/2022.53.05.30
Consumers of financial services: features of the legal status in the
conditions of financial inclusion
Споживачі фінансових послуг: особливості правового статусу в умовах фінансової
інклюзії
Received: May 2, 2022 Accepted: June 10, 2022
Written by:
Svitlana Lepekh128
https://orcid.org/0000-0002-2111-1100
Abstract
The urgency of the study is due to the reform of
the national legislation in the context of
institutional transformation of the financial
services market. The purpose of the study is to
develop a scientific basis for legislative changes
aimed at optimizing the legal status of
individuals as consumers of financial services.
The methodological basis of the study consists of
general scientific and special legal methods, in
particular, dialectical, statistical, comparative
law, formal law, methods of sociological
research, analysis and synthesis. The general
principles of realization of such strategic
direction of development of the market of
financial services as financial inclusion and its
influence on formation of legal requirements to
the person of the consumer of such service are
investigated in the article. The particular interest
are scientific positions, legislative novelties on
the definition of the scope of persons who have
the status of consumers of financial services. The
peculiarities of the acquisition of such status by
minors and young persons, as well as the second
spouse or a third party in the obligation are
clarified. On the basis of the conducted research
the corresponding conclusions are formulated.
Key words: consumer, financial service,
banking service, financial inclusion, bank,
consumer information.
Introduction
The renewal of the civil legislation is taking
place during the institutional transformation of
128
Candidate of Law, Associate Professor, Associate Professor of the Theory of Law and Human Rights Department, Ukrainian
Catholic University, Lviv, Ukraine.
financial services market, legislative changes
aimed at eliminating gaps and shortcomings in
Lepekh, S. / Volume 11 - Issue 53: 308-319 / May, 2022
Volume 11 - Issue 53
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regulating contractual relations in this area,
optimizing the legal status of individuals as
consumers of financial services. The Strategy for
the Development of the Financial Sector of
Ukraine until 2025, presented by the National
Bank of Ukraine, by the Ministry of Finance of
Ukraine and by the Individual Deposit Guarantee
Fund, highlights financial inclusion, which aims
to 1) increase the availability and use of financial
services; 2) strengthening the protection of the
rights of consumers of financial services;
3) increasing the level of financial literacy of the
population (National Bank of Ukraine, 2021).
Exact this direction of the Strategy is aimed at
improving the mechanisms of participation of
individuals in contractual obligations for the
provision of consumer financial services.
It is proposed to consider financial inclusion as a
set of means and methods aimed at achieving a
high level of use of financial services and
financial products among the population
(Marushchak & Latkovskyi, 2020).
In terms of consumer financial services in
Europe, Denmark and Finland have achieved
100% financial inclusion, which means that all
members of the population are fully integrated
into the financial system. Along with Sweden,
the Netherlands and Germany, financial
inclusion is being achieved, while Romania,
Bulgaria, Slovakia, Hungary and Poland have
high levels of financial exclusion (Ozili, 2021a).
Financial inclusion in the United States is greatly
improved and contributes to poverty eradication
and prosperity. Public-private partnerships are
needed to achieve full affordability for low-
income Americans (Ozili, 2021b).
The level of effectiveness of the implementation
of such a strategic direction in Ukraine as
financial inclusion is evidenced by statistics on
violations of the rights of individuals as
consumers of financial services market and their
protection. In the third quarter of 2021, the
National Bank of Ukraine received and
processed almost 29,000 applications from
consumers of financial services. Where, 11,344
were written appeals and 17,462 were calls to the
contact center. Debt settlement and unethical
behavior of collectors and credit institutions is
the most common topic of both written appeals
(47% of the total) and calls to the contact center
(19%). Among the problematic issues in the
work of non-bank financial institutions - the
accrual of interest over the term of the loan, fraud
using lost consumer documents, problematic
issues with insurance companies, strict methods
of collecting bad debts. Among the identified
problematic issues in the work of banks - cases
of fraud with customer accounts, the imposition
of additional services, tough actions to recover
bad debts (National Bank of Ukraine, 2021).
According to the analytical review of the state of
civil proceedings by the Civil Court of Cassation
in the first half of 2021, among the considered
cassation appeals by category of civil cases, the
majority are still lawsuits, including disputes
arising from contracts (4.1 thousand cases, or
35.1% of the number of lawsuits), where 1.8
thousand - cases arising from loan, credit, bank
deposit agreements (44.7% of all reviewed
disputes arising from contracts). A significant
percentage of revoked court decisions is
observed in cases arising from loan, credit, bank
deposit agreements (375 court decisions out of
912 reviewed, or 41.1%) (Supreme Court, 2021).
The above statistics on the prevalence of
violations of the rights of individuals as
participants in the financial services market
indicate the relevance of research on the legal
status of consumers of financial services as a
basis for improving relevant legislation to restore
consumer confidence in banks and non-bank
financial institutions.
Literature review
Issues of general legal status of an individual as
a consumer have been studied by such scholars
as I.I. Banasevych, G.А. Оsetynska,
O.Y. Cherniak, G.B. Yanovytska, and features of
the legal status of the consumer of services in
some aspects are covered in the works of
I.M. Stankova, V.Y. Gorblianskyi,
N.B. Patsuriia, V.P. Yanishena.
G.А. Оsetynska (2006), having analyzed the
peculiarities of the legal status of the consumer
in general, she came to the conclusion that it is
necessary to improve the definition of consumer,
which, in her opinion, should be considered a
natural person who buys, orders, uses or intends
to purchase or order goods (works, services), but
also when it is done to meet family, household,
cultural, financial and other personal needs. It is
proposed to understand the legal status of the
consumer as a system of norms, which provides
a comprehensive legal institution that combines
legally established and guaranteed by the state
rights and responsibilities of individuals,
regardless of citizenship, age and gender, to
implement relationships in the field of
consumption (Yanovytska, 2018). There are also
proposals in the scientific literature on the
feasibility of expanding the content of the
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category of “consumer of financial services” and
include in such consumers of micro and small
businesses (Rudenko, Plotnikova, & Schwager,
2021).
According to I.M. Stankova (2021), “consumer
right” should be considered as a specific
subjective right of the consumer or a set of such
rights as, for example, the consumer’s right to
safety of goods (services); the consumer right to
information about the manufacturer (performer /
seller) and about goods (services). Peculiarities
of consumer rights realization under service
agreements were studied by V.Y. Gorblianskyi
(2019), who considers it appropriate to classify
them as follows: 1) consumer rights arising
during the exercise of the right to receive the
service (the right to necessary, accessible,
reliable and timely information about the service
and its performer, the right on fair terms of the
contract, the right to proper quality of service, the
right to security of service); 2) rights arising in
connection with the violation of consumer rights
to receive services, the right to protection by the
state, the right to go to court and other authorized
state bodies to protect violated rights, the right to
compensation for property and moral damage
caused by lack of service the right to unite in
public organizations (associations).
Given the general characteristics of the legal
status of consumers, it is appropriate to highlight
the specifics of participation of individuals in
contractual obligations to provide financial
services and to implement the principles of
financial inclusion to propose mechanisms to
improve legal regulation of consumer contractual
relations in financial services.
Methodology
The methodological basis of the study are general
scientific and special legal methods. The
dialectical method accompanied the whole
research process and allowed us to consider the
trends in the formation of legal requirements for
the consumer as a participant in civil relations.
Methods of analysis and synthesis, as well as the
logical-semantic method were used in connection
with the formulation of the definition of the
consumer of financial services. The comparative
law method was used in the analysis of consumer
legislation of Ukraine and foreign countries
(Germany, France, Italy, the Czech Republic).
The statistical method of research revealed the
most problematic aspects of the implementation
and protection of the rights of consumers of
financial services. The method of sociological
research was used to characterize ways to ensure
proper protection of consumer rights, the
establishment of legislative guarantees of such
protection. In the process of preparing the study,
the formal-legal method was used (for the
analysis of legal regulations governing consumer
participation in contractual obligations for
financial services), and thus to formulate basic
theoretical provisions and conclusions on issues
of legal status of consumers in the financial
services market.
Results and discussion
Pursuant to Art. 1 of the Law of Ukraine “On
Protection Consumer Rights” (Law No. 1023-
XII, 1991) a consumer is a person who intends to
order, orders, or uses purchased goods, products,
or services primarily for personal, social, family,
household and similar needs, not directly related
to entrepreneurial or business activities. Such a
definition cannot be considered successful, as it
does not reflect all areas of civil circulation with
the participation of the consumer, although it is
of general importance. Similar approaches to the
essence of the legal status of these participants in
civil relations are supported by O.Y. Cherniak
(2011), who suggests that a consumer is a person
who, in order to meet personal needs not directly
related to business activities or performance of
duties of an employee, purchases, orders, uses
products (goods, works, services). However, the
author does not include consumers who only
intend to enter into a consumer contract.
In the practice of legislation of different countries
there is no unified approach to determining the
place of consumer law in the legal system. Thus,
there are examples of the inclusion of provisions
on the general characteristics of the legal status
of consumers and the legal regulation of
consumer obligations in individual codified acts,
for example, the Consumer Code of France
(Legifrance, 1993), which contains in addition to
characteristics of the general legal status of
consumers, and certain instructions for the
provision of financial, including banking,
services. The Consumer Code of France was
amended by Decree No. 2021-1247 of September
29, 2021 to introduce the introductory part and
these provisions will apply to contracts
concluded on or after January 01, 2022 (Article
21). According to these changes «сonsommateur
: toute personne physique qui agit à des fins qui
n'entrent pas dans le cadre de son activité
commerciale, industrielle, artisanale, libérale ou
agricole» (Consumer is the natural person who
acts for personal and non-professional purposes,
unrelated to entrepreneurial, commercial, craft or
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professional activity carried out). Article 3 of the
Italian Consumer Code of 2005 (as amended on
July 16, 2020 No. 76) for the purposes of this
Code, unless otherwise specified, defines
«consumatore o utente: la persona fisica che
agisce per scopi estranei all'attività
imprenditoriale, commerciale, artigianale o
professionale eventualmente svolta» (consumer
or user: the natural person acting for purposes
unrelated to carried out business, commercial,
craft or professional activity) (Altalex, 2005).
Consumer pursuant to Sec 419 (2012) of
the Czech Civil Code means any individual who,
outside his/her trade, business or profession,
enters into a contract or otherwise deals with an
entrepreneur (Justice.cz, 2012). Among other
general provisions on obligations arising from
consumer contracts
Among other general provisions on obligations
arising from consumer contracts, section 1796 of
the Czech Civil Code “Usurious interest”,
according to which “A contract shall be deemed
invalid if, in its conclusion, somebody takes
advantage of distress, inexperience, intellectual
weakness, agitation or recklessness of the other
party and extracts a promise to provide
performance to himself or somebody else the
value of which is in stark contrast to the mutual
performance”. However, section 1797 provides
that an entrepreneur who has entered into a
contract in the course of his business may not
invoke its invalidity under section 1796. This
ground of invalidity of the consumer contract is
especially relevant in the field of financial
services, where consumers due to low financial
literacy, ignorance, the need for financial
services often due to financial difficulties agree
to extremely unfavorable conditions, significant
disparities in rights and obligations under
contracts for the provision of financial services.
Also, in general, it is advisable to adopt a foreign
legislative approach to distinguish among the
provisions of the Civil Code of Ukraine
provisions on consumer legal status, consumer
obligations and on the basis of such general rules
to define the specifics of their functioning in
certain areas by special legislation.
Directive 2011/83 / EC of October 25, 2011 on
the consumer rights, amending Council Directive
93/13 / EEC and Directive 1999/44 / EC of the
European Parliament and of the Council and
repealing Council Directive 85/577 / EEC and
Directive 97/7 / EC of the European Parliament
and of the Council, “consumer” means any
natural person who, in contracts covered by this
Directive, is acting for purposes which are
outside his trade, business, craft or profession
(European Union, 2011).
The legislative approach to limiting the number
of consumers to individuals has provoked
discussions in the scientific literature.
І.І. Banasevych (2018) suggests that the
consumer is understood not only as a natural
person, but also as a natural person - an
entrepreneur who acquires (otherwise acquires
ownership or use) or orders goods (works,
services) or intends to purchase (otherwise
acquire ownership) or use) or order goods
(works, services) for personal or other needs not
related to business activities. N.B. Patsuriia
(2014a) substantiates the need to extend the
legislation on consumer protection to business
entities, in particular, in insurance, as well as
together with V.V. Reznikova (2020b) proposes
to consider such participants as a natural person,
a natural person - an entrepreneur, a legal entity
as a consumer of financial services. At the same
time, according to G.O. Ilchenko (2016), the
consumer of insurance services is always an
individual, because the insured - a legal entity
cannot be recognized as a consumer in the civil
law sense of the term. However, it is predominant
in science to support the legislative approach to
limiting the range of consumers, including in the
field of financial services, only to individuals.
Regarding the legal status of consumers of the
researched services, the attention of scientists is
focused on the analysis of already outlined by the
legislator features of the implementation of
consumer rights of certain types of financial
services (Yanishen, 2017). At the same time,
sometimes attempts to single out certain specifics
of the legal status of the consumer of certain
types of financial services are not entirely
correct. For example, V.I. Kondratiuk (2021)
among the characteristics of the consumer of
banking services calls its consumer nature.
The requirements for participation as a consumer
counterparty is a professional participant in a
certain market of goods, works or services, as
well as the purpose of participation in these
relations of the consumer are generally accepted
for consumer contracts. Regarding the
characteristics of the needs for which an
individual receives, orders or intends to order a
financial service, the consumer effect is achieved
by using the benefits received by the customer to
meet his personal needs of final consumption, not
related to entrepreneurial or independent
professional activities. As a result, the specifics
of the needs of individuals in the field of financial
services does not allow the full application of
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guarantees provided by the Law of Ukraine “On
Consumer Protection”, because only some of its
provisions can be used to eliminate contractual
imbalances, hedge against financial and
economic risks crises, etc.
In accordance with Art. 1 of the Law of Ukraine
“On Financial Services and Financial
Companies” (Law No. 1953-IX, 2021). A
consumer of financial services is a natural person
who applies for financial services to a financial
service provider and / or intermediary or uses the
services of a financial service provider and / or
intermediary to meet personal needs not related
to entrepreneurial or independent professional
activity. The proposed definition is slightly
different from the above general concept of
consumer. It seems that the definition of the
sphere of personal needs, for the satisfaction of
which an individual enters into consumer
contracts, should be agreed in general and special
regulations. In this case, any person who receives
or intends to receive a financial service,
including a consumer of financial services, is
called a client.
The Grand Chamber of the Supreme Court in the
decision of 03.07.2019 (Resolution
No. 342/180/17-c, 2019) uses the concept of
“average consumer of banking services”, which,
given the usual level of education and legal
awareness, does not can effectively exercise its
rights to be informed about the terms of lending
under a specific loan agreement, which is
concluded in the context of the case in the form
of a loan application and the Terms and
Conditions of banking services. Thus, for the
characterization of all consumers of banking
services there are at least such requirements as
the usual level of education / it is not specified
whether it is only a full school education or
another level / and a certain level of legal
awareness.
The Constitutional Court of Ukraine in the case
of the constitutional appeal of a citizen on the
official interpretation of the second sentence of
the preamble to the Law of Ukraine of November
22, 1996 No. 543/96-В “On liability for late
performance of monetary obligations” of July 11,
2013 noted that in view of the provisions of the
fourth part of Article 42 of the Constitution of
Ukraine participation in the consumer contract as
a weaker party subject to special legal protection
in relevant legal relations, narrows the principle
of equality of civil law and freedom of contract,
in particular in consumer credit agreements
(Decision No. v007p710-13, 2013).
Emphasis is placed on the general features of the
legal status of the parties to consumer contracts
in DCFR I.-1:105: “Consumer” and
“entrepreneur”. The term “consumer” means an
individual acting primarily for a purpose which
is not relevant to his trade, business or
profession. The term “entrepreneur” means a
natural or legal person, irrespective of the form
of ownership of the latter (public or private),
acting for a purpose relating to non-employment
commercial, industrial or professional activities,
even if the person does not intend to do so, make
a profit.
Legislation in the field of financial services has
borrowed much of the European experience, in
particular embodied in the EU Directives, and
consumers mean individuals who receive
financial services for the purpose outlined above.
It should be noted that currently the special legal
status of an individual as a consumer is outlined
in the field of consumer lending, taking into
account international experience, including the
principles of Directive 2008/48/EC of the
European Parliament and of the Council of
23.04.2008 on credit agreements with
consumers. Directive 87/102 / EEC. Thus,
according to section 9 of part 1 of Article 1 of the
Law of Ukraine of 15.11.2016 “On consumer
lending” a consumer is a natural person who has
entered into or intends to enter into a consumer
loan agreement, which in accordance with
section 11 of part 1 of this article (borrower) to
purchase goods (works, services) to meet needs
not related to entrepreneurial, independent
professional activity or performance of duties of
an employee.
Part 4 of Article 13 of the Law of Ukraine of
04.02.2021 “On Financial Leasing” provides that
for the conclusion of the contract with lessee – a
natural person, who is married, the lessor must
obtain from such a person the written consent of
his spouse.
An agreement concluded by one of the spouses
in the interests of the family entails obligations
for the other of spouses if the property received
under such an agreement is used for the benefit
of the family (part 4 of article 65, Code No. 2947-
III), and in case of failure of the lessee to fulfill
its obligations under the contract of recovery may
be imposed on property that is the joint property
of the spouses (part 2 of Article 73 of the FC of
Ukraine), such spouses will be jointly and
severally liable. In this case, the consumer of
financial services should be considered not only
the lessee, but also the second spouse. A similar
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rule should be applied to some other consumer
financial services, primarily credit.
According to O. Yegorycheva (2012), based on
the analysis of the legislative definition of the
consumer, given in the Law of Ukraine “On
Consumer Protection”, it can be concluded that
the consumer may also be a citizen who did not
directly purchase goods or order work (service),
but uses them. Consumers sometimes include not
only an individual as a party to a consumer
contract, but also third parties in whose favor
such a contract is concluded. Thus, in accordance
with section 47 of part 1 of Article 1 of the Law
of Ukraine of 18.11.2021 “On Insurance” – A
consumer is a natural person who has applied for
or receives insurance services to meet personal
needs not related to entrepreneurial or
independent professional activity, as well as
other persons defined by the insurance contract
as insured persons and / or beneficiaries who are
natural persons , or other individuals who are
entitled to receive insurance benefits. At the
same time, the issue of distinguishing features in
their legal statuses as consumers is unresolved in
the legislation, in addition to the well-known
differences in the rights of both parties and third
parties.
A natural person may acquire the legal status of
a consumer of financial services before reaching
the age of majority in terms of concluding
consumer contracts within the scope of his civil
capacity. With regard to the receipt of certain
consumer financial services, such a possibility is
provided by law when a child reaches 14 years of
age. The scientific literature examines the
possibility of using certain banking services
before reaching this age. Also, N.О. Тyshchuk
(2021) proposes in part 1 of Article 31 of the
Civil Code of Ukraine to provide for the right of
natural persons under 14 years of age (minors)
from six to ten years to enter into transactions
using a personal bank card under parental
control. Indeed, some banks in Ukraine allow the
issuance of children’s bank cards, however, a
separate account in the name of the child is not
opened, the card is issued as an additional and the
child is limited to a limited amount from his
account, which issued the main card and
additional – children’s card. However, the
payment of the child with the help of such a card
for purchased goods, services or works does not
go beyond its legal capacity, because it must
relate to small household transactions. Although
such a card is issued in the child’s name, it does
not provide for a minor to enter into a bank
account agreement on their own.
With regard to natural persons aged from
fourteen up to eighteen year (minors), in
accordance with Part 1 of Art. 32 of the Civil
Code of Ukraine a minor has the right to
independently enter into a bank deposit
agreement (account) and dispose of the deposit
made by it in his own name (cash on the account),
and Part 3 of the same article of the Civil Code
of Ukraine provides the right of the minor to
dispose of the money deposited fully or partially
by other persons in financial institution on his
name with the consent of guardianship and
custody body and parents (adoptive parents) or
the custodian. Therefore, a minor may acquire
the rights of a depositor in the case of concluding
a bank deposit agreement directly by him or in
his favor by another person. In addition to
concluding a bank deposit agreement in writing,
to confirm this fact and deposit money into the
deposit account, the bank issues a savings book
or other document to the natural person, which
replaces it and is issued in accordance with the
internal regulations of the bank. It should be
noted that the mechanism of committing this
transaction by a minor defined by law is quite
clear. It is also logical to give such a person the
authority to dispose of the contribution made in
his own name. However, if the terms of the
contract provide for the right to replenish the
deposit and further funds were paid not only by
the depositor but also by other persons in
accordance with Art. 1062 of the Civil Code of
Ukraine, the question arises as to the need to
apply Part 3 of Art. 32 of the Civil Code of
Ukraine in the context of their disposal, because
this rule contains a general rule for all funds
deposited in the name of a minor, regardless of
whether an account is opened in the name of the
child or funds are deposited in an account already
opened. Requiring the consent of not only
parents (adoptive parents, guardians), but also
the guardianship authority significantly
complicates the procedure of early termination of
this agreement as a whole and in part, as well as
closing the account in case of expiration. The
mechanism of acquisition of the depositor’s
rights by a minor in case of concluding a bank
deposit agreement in his favor is unregulated. In
accordance with Part 1 of Art. 1063 of the Civil
Code of Ukraine, a third party shall acquire the
rights of a depositor since the moment of the first
claim producing resulted from the depositor’s
rights or otherwise expressing its intention to
exercise such rights. If the method of expressing
the intention to acquire the rights of the depositor
is at the same time an act of disposition of the
deposit, then to perform such an action a minor
requires the consent of parents (adoptive parents,
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guardians) and the body of guardianship and
custody.
Thus, in a significant number of cases, the
exercise of the depositor’s rights by a minor is
complicated by control not only by the parents
(adoptive parents, guardians), but also by the
guardianship authority and guardian. Given the
various factors in the functioning of such a
mechanism (for example, the lack of a clear list
of cases where the guardianship authority may
refuse to give consent, uncertainty of
requirements, and sometimes delays in
considering this issue), control of property
management of a child who is not deprived of
parental care and is not an orphan, it should be
recognized that it is necessary to conceptually
partially change the legal regulation of deposit
relations with the participation of a minor
depositor. For example, the German Civil Code
(BGB) (Federal Ministry of Justice, n/d) contains
different approaches to the disposal of a minor's
contribution depending on whether the child is
cared for by a parent or guardian (if the child is
deprived of parental care or is an orphan). Thus,
according to section 1666, if the child’s physical,
mental or spiritual health or property is exposed
to a risk of improper parental care, neglect of the
child, the conduct of a third party or the fact that
the parents are not to blame cope with their
responsibilities, the family court must take the
necessary measures to eliminate this risk, as
parents are unwilling or unable to eliminate it.
According to section 1667, the family court may
decide that the child's money must be invested in
a certain way and his permission is required to
withdraw it from the accounts. Therefore, such
measures are taken by the court only in case of
threat to the goods (in particular, property) of the
child. Section 1809 is also provided, that the
guardian should invest money held in trust for a
ward under section 1807 (1) no. 5 only subject to
the provision that the approval of the supervisory
guardian or of the family court is required for the
collection of the money. Such restrictions do not
apply in the case of exemption from guardianship
provided for in section 1852. It seems
appropriate to borrow foreign experience and,
given the peculiarities of the contractual
regulation of deposit relations, to optimize the
conditions of participation of minors. In
particular, Part 3 of Art. 32 of the Civil Code of
Ukraine to read as follows: “3. A minor may
dispose of cash means deposited by other persons
to the financial institution to his/her favor by the
consent of parents (adoptive parents) or
guardians. The guardianship authority may
decide that the child’s permission is required to
withdraw money from the child’s accounts.”
Also Art. 1063 of the Civil Code of Ukraine
should be supplemented by part 3 of the
following content: “A minor in whose favor the
bank deposit agreement is concluded has the
right to acquire the rights of the depositor
independently. The contract may stipulate that
the withdrawal of money from the account in full
or in part before the expiration of the contract by
such a minor requires the permission of a
guardianship and trusteeship body.” Credit
services are also of interest to minors as
consumers. In the Law of Ukraine of 15.11.2016
“On consumer lending” the consumer is
understood as an individual who has entered into
or intends to enter into a consumer credit
agreement. As the special legislation does not
contain additional requirements for such a
natural person, the general provisions on the
scope of legal capacity of a minor apply. This is
confirmed by litigation practice. Thus, the
mother of a minor applied to the “Consumer
Center” LLC with a claim to invalidate the loan
agreement (Case No. 161/7810/19, 2019). She
substantiated her claims by the fact that on
January 10, 2019, a loan agreement
No.10.01.2019-100005143 in the amount of
UAH 3,000 was concluded between her daughter
and Consumer Center LLC with a maturity date
to January 23, 2019, including the payment of
interest on the loan in the amount of UAH 840,
which is 28% for 14 days of the loan. She
considers that this agreement is invalid on the
grounds that at the time of concluding the
agreement her daughter was a minor and lived
with her, was dependent on her. She also stated
that she did not approve her daughter committing
the transaction. The court decided to satisfy the
claim, arguing that the commission of other
minors, not provided for in Articles 31, 32 of the
Civil Code of Ukraine, requires the consent of
parents or guardians. At the same time, the
mother did not give her consent to the conclusion
of the loan agreement dated January 10, 2019. At
the same time, the case file does not contain any
evidence that she would have given such consent
or subsequent approval of the transaction.
At the same time, the reference of the Consumer
Center LLC to the fact that the conclusion
between the parties to the disputed loan
agreement does not go beyond a small household
transaction was critically assessed by the court.
According to the case file and the defendant
points out, the minor received a loan in the
amount of UAH 3,000. Also, taking into account
the interest rate for the use of credit funds, as well
as the complexity of the content of credit
relations, including the consequences of default
or improper performance by the borrower of its
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obligations under the contract, the loan
agreement in any case cannot be attributed to
small household transaction. The above
circumstances of this case as one of a number of
similar ones suggest that consumer credit
agreements, as a rule, go beyond small household
transactions. Taking into account the specifics of
such agreements, it seems appropriate to
establish the right of an individual to enter into a
consumer loan agreement only with the
acquisition of full civil capacity.
In education, young people need to gain
knowledge about individual financial behavior -
the pension system, the financial banking system
and taxes (Koćwin J., 2021). Financial awareness
and prudence are not only to have a broad
knowledge of financial matters, plan your budget
and rationally manage your money and other
assets, but also to know your rights and
responsibilities (USAID, 2020).
According to the USAID “Financial Sector
Transformation Project” for September 2021,
“Financial Literacy, Financial Inclusion and
Financial Welfare in Ukraine in 2021”, it is noted
that the awareness of financial institutions of
their responsibility for unfair behavior towards
consumers of financial services, in particular, in
terms of disclosure of financial services, will be
a solid basis for increasing confidence in
financial institutions (USAID, 2021). The
importance of informing customers about the
advantages and disadvantages of consumer
financial services in order to assess potential
risks has become obvious to their providers as a
result of the financial and economic crisis.
According to Part 3 of Article 12 of the Law of
Ukraine of 12.07.2001 “On Financial Services
and State Regulation of Financial Services
Markets”, the information provided to the client
must provide a correct understanding of the
essence of financial services without imposing its
acquisition.
A positive step is the detail of the legal regulation
of the scope and procedure of information. Thus,
the procedure for posting information on the
websites of non-banking financial institutions, as
well as in places of providing services to
customers is regulated by the Regulation on non-
banking financial institutions, approved by the
Resolution of the Board of the National Bank of
Ukraine dated 05.11.2021 No. 114. Such
information in accordance with paragraph 4 of
part 1 of Article 24 of the Law of Ukraine of
03.07.1996 “On Advertising” is not considered
advertising. Peculiarities of disclosure of
information about certain financial services are
regulated by certain legislative acts that specify
such information. For instance, according to the
Regulation on information provision of
consumer financial institutions for consumer
lending services, approved by Resolution of the
Board of the National Bank of Ukraine dated
05.10.2021 No.100, consumer information is the
provision (disclosure) of information by financial
institutions to consumers in accordance with
Ukrainian legislation on consumer services
credit, providing a minimum amount of
information about the conditions and essential
characteristics of this service, defined by this
Regulation, by placing such information on the
financial institution’s own website, in
advertising, providing information when using
the consumer credit service, and providing other
information provided by internal documents of
the financial institution. Thus, the consumer
exercises the right to information at the stages of
concluding and executing the contract, as well as
after its termination. It is the responsibility of the
intermediary and the financial service provider to
disclose such information.
The implementation of important principles of
financial inclusion in practice is possible only if
the legislative mechanisms for informing
potential customers about the choice of financial
services among those offered by banks and non-
bank financial institutions are improved. Law of
Ukraine of 14.12.2021 “On Financial Services
and Financial Companies” Articles 6 and 7
provide for the right of the consumer to receive
necessary, complete, accessible and reliable
information about the financial and / or
intermediary service and its provider sufficient
for acceptance a conscious decision to receive
such a service or to refuse to receive it.
Acquaintance with such information should
create conditions for the consumer to assess their
own ability to fulfill obligations and responsibly
choose a financial service. According to a
USAID survey in 2018, only 2.4% of consumers
received written information about a loan that
complies with the law (USAID, 2018). In 2021,
during 76% of visits, information on important
issues provided orally by the consultant differed
from information in the consumer loan passport
or contract (in 2019, 66% of visits provided oral
information different from the passport and / or
contract) (USAID, 2021).
The information provided to the potential
consumer is divided into two groups: 1) on the
provider and the intermediary; 2) on consumer
financial service. The above-mentioned draft law
proposes to specify which types of up-to-date and
reliable information about the provider or
316
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intermediary should be posted by them at the
place of customer service and / or on their own
website, including its mobile version, and in
mobile applications (if available). An
intermediary discloses such information about
the provider and about itself (additionally
specifying the list of services it may provide as
an intermediary) in similar ways as the provider
or by posting a hyperlink on its own website to
redirect (link) to the financial service provider’s
website.
The second group includes information on
consumer financial services disclosed by the
provider, intermediary, in particular: 1) a list of
services and products, the procedure and
conditions for their provision; 2) cost, price /
tariffs, amount of payment (interest,
remuneration) for products depending on the
type of financial service; 4) mechanisms for
consumer protection. Financial service providers
and intermediaries shall ensure the availability of
information posted on their own websites (web
pages) for at least the last three years. Article 8
of the same law prohibits the dissemination of
misleading information on financial and / or
related services in the financial services market.
Such information includes, but is not limited to,
incomplete or inaccurate information about
financial or related services, features of such
services, costs and discounts, and / or material
terms of the contract for those services,
incomplete or inaccurate information about
financial performance of activities of the
provider of financial and / or related services and
/ or its financial condition, inaccurate data on the
activities of the provider of financial and / or
related services, falsely reflect the scope and
content of powers and rights of financial and / or
related services providers relationships in which
they are not. However, this article does not
contain civil consequences of such actions. As
you can see, the legislator is trying to maximize
the amount of information available to potential
customers, however, there are issues that are not
taken into account, for example, potential
financial risks of the consumer in case of
exchange rate fluctuations, in case of
replacement of the party in the obligation,
establishment of a moratorium, etc.
Upon termination of the financial service
agreement, including due to the expiration or
performance of such agreement, the client has the
right to receive written request from the financial
service provider regarding the parties’
performance of their contractual obligations. In
fact, sending such information to the consumer
should be an imperative of the financial service
provider, because sometimes the client does not
make such a request, because he does not know
about this possibility or believes that he has
fulfilled the obligation in full, but finds out about
the debt only as of expiration of a certain time.
Conclusions
The statistics provided by the National Bank of
Ukraine on the prevalence of violations of the
rights of natural persons as participants in the
financial services market and obstacles to the
implementation of financial inclusion strategy in
our country as opposed to positive foreign
experience indicate the relevance of research on
the legal status of in order to restore consumer
confidence in banks and non-bank financial
institutions, to provide favorable conditions for
them to exercise their rights.
Legislation regulations to determine the legal
requirements for the categories of persons who
may acquire the status of a consumer of financial
services, the procedure for informing such
consumers about the legal and economic nature
of financial services still need to be discussed and
further refined. Thus, attention is paid to the
peculiarities of the acquisition of such status by
minors, whose interest is primarily credit, deposit
services. It is proposed to improve the
mechanism of realization of the depositor’s
rights by a minor in whose favor the bank deposit
agreement has been concluded, in particular, to
limit the need to obtain a permit from the
guardianship authority to dispose of the deposit
amount. Taking into account the specifics of such
agreements, it seems appropriate to establish the
right of the natural person to enter into a
consumer loan agreement only with the
acquisition of full civil capacity. The issue of
concluding agreements on the provision of
consumer financial services by one of the
spouses in the interests of the family is
considered and emphasis is placed on the need to
obtain the written consent of the other of them.
The article analyzes the legal norms and
scientific positions on the characteristics of the
legal status of consumers in general and in the
field of financial services. It is proposed to
consider a consumer of financial services as the
natural person who personally or through a
representative applies for financial services to a
financial service provider and / or intermediary
and / or in favor of his or another person receives
the services of a financial service provider and /
or intermediary to meet personal, family needs
not related to entrepreneurial or independent
professional activity.
Volume 11 - Issue 53
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