Disclosure Mandates for Consumer Credits Drawn With Payment Cards: Does It Have Sense? Russian Perspective

Abstract

It is commonly recognized that special legislation shall be crafted to regulate consumer credit and financial services. Disclosure mandates have always been considered the preferred method of regulation in comparison with the substantive restrictions. Russian law is no exception. Most of the provisions of the Federal Law No. 112-FL of 05 May 2014 on Consumer Credit deal with the information duties of financial institutions. The problem is that only a small part of these duties reflect the specific features of the credits drawn with payment cards. Considering the fact that these types of credit have become more popular in Russia ignoring of these features by a law maker can lead to dramatic consequences.The purpose of the paper is to assess the effectiveness of disclosure mandates provided by the Federal Law No. 112-FL and, based on the results of such an assessment, propose possible changes to disclosure regulation which can improve the protection of consumers" rights.The paper starts with a description of the features of credit drawn with payment cards which influence the consumers" ability to understand and use information. It proceeds with a general description of disclosure rules to give certain guidelines for further analysis of the provisions of Russian law. Then a detailed description of the disclosure mandates stipulated by the Federal Law No. 112-FL and applicable to credit cards and overdrafts is presented. The assessment of the current provisions and proposals for their improvement are provided in the final part of the paper.

Information disclosure and credit card repayments: evidence from Malaysia

“…Given the importance of this, regulators often mandate disclosure by financial service providers. However, although disclosure aids decision-making, skeptics argue that cognitive biases related to bounded rationality hinder consumers from making optimal decisions when presented with excessive or complex information (Mikoni, 2020). Acknowledging this limitation, studies have looked into ways to improve the effectiveness of disclosure by making it simpler (Perry and Blumenthal, 2012), more salient (Salisbury and Zhao, 2020;Seira et al, 2017), more timely (King and Singh, 2018) and more personal (Busch, 2019).…”