How Ukrainians learn to protect their financial rights

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ROSTISLAV DUK

Head of the Ukrainian Association of Fintech and Innovation Companies

Financial illiteracy is a common problem in Ukrainian society

Photo: Entrepreneurship

The world has experienced 2 crises in the last 10 years. However, Ukraine came up with this concept more often, because for us any change of power is a new crisis. While the global economy is going through a recession due to coronaviruses, we are struggling with a permanent crisis, which only intensifies conflict situations and mistrust of the banking system. Consumers are increasingly asking the question: “Where to run?” What else to do? “

This confirms our financial illiteracy – a common problem of Ukrainian society. We do not know who to turn to for help and how to properly file our complaint. In addition, many associate the complaint with an outbreak of conflict, which, in our opinion, always ends with a lawsuit. But very few people reach this stage. After all, there are always risks, both moral and material, to go through and get lost in an endless cycle of action.

To avoid unpleasant situations, Ukrainians need to learn to protect their rights. Our society considers the protection of rights as a type of complaint or deliberate conflict. While in the West, this practice long changed to a culture of “competent response”. If the residents of these countries face problems in the financial sector, then they know what needs to be done. Of course, this response is supported by a quality legislative framework, so people know their rights and are able to defend them.

Active citizens form consumer protection organizations. For example, the UK has a Financial Public Service (Financial Public Service), an independent state body for the fair distribution of complaints between financial companies and their customers. Consumers seek help with insurance and investment in cases of problems with banks and loans. According to the 2018-2019 report, this service received more than 388 thousand new complaints, out of which 376 thousand were resolved. 39% of consumers are related to problems with banks and credit institutions.

Sweden also has a National Council on Consumer Disputes (ARN), which is a civil body and acts almost like a court. In the Netherlands, the Institute for Financial Complaints does this. In addition to conflicts of a financial nature, some organizations consider other types of consumer complaints. In Ireland, France, the Czech Republic, and other countries, complaints have also received attention for a long time and similar arbitration forums have been created. People are not only given a platform to resolve conflicts, but are also taught to be responsible for their financial behavior.


So, last year USAID did a study on financial literacy and the well being of Ukrainians. The results of the survey showed that 61% of respondents in the 18–79 age group wanted to get information on how to properly manage their finances, with 70% believing that the study of financial literacy started from school Should be Apart from this, the indicative fact was that the level of borrowing of population in the country is very high. At the same time, Ukrainians have a very low level of understanding of interest rates and other important information, leading to a lot of ignorance and a lack of confidence in the banking sector. This leads to the conclusion that the state requires current legislation for effective discretionary control of consumer rights and banks. The first ray of brave lights on the road to reform coincided with the signing of the “partition” law, which meant the regulation of all financial companies and credit unions from the National Financial Services Commission to the National Bank. Therefore, after adopting the law on the protection of the rights of consumers of financial services, the National Bank launched a mechanism to develop new requirements for banks, MFIs and other companies in the financial sector. It is logical that it is now necessary to teach Ukrainians how to speak properly about their grievances. An independent assistant should be visible, who will protect our rights as a friend, thereby increasing confidence in the banking system.

One of these Ukrainian projects is planned to start by the end of summer 2020. The FinSkarga National Arbitration Platform will help consumers resolve any financial event directly with banks or MFIs free of charge. Whether or not the platform can become a good tool for consumers to solve their problems in the financial sector, we will find out very soon.

Read: How to increase financial literacy: expert advice

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