NBU to Regulate Non-Banking Financial Services Market

On July 1, 2020, the National Bank of Ukraine (NBU) replaced the National Commission for State Regulation of Financial Services Markets (NCFS) as the regulator of non-banking financial services markets in Ukraine.

Non-banking financial services include, among others, the activities of insurance companies, credit unions, financial companies and credit bureaus.

The transfer of the regulator’s power to the NBU took place due to the reform of financial market regulations, also known as the “split”, adopted last year. The same reform transfers part of the NCFS’ powers to the National Securities and Stock Market Commission (NSSMC).

On January 16, 2020, the National Bank of Ukraine, the National Commission for State Regulation of Financial Services Markets, the Ministry of Finance of Ukraine and the Deposit Guarantee Fund of Ukraine approved the Strategy for Ukrainian Financial Sector Development until 2025.

In order to ensure the stable operation of the non-banking services market during the transition period, the NBU has adopted several “transitional” resolutions. In particular, the NBU has identified the application features of the NCFS’ regulatory acts, which will be valid until the NBU approves its own regulations.

Thus, from July 1, 2020, the “transitional” resolutions came into force, being adopted in the following spheres:

1. Licensing and registration (Resolution № 83).
2. Information disclosure and reporting (Resolution № 84).
3. Supervision (Resolution № 85).
4. Inspections of market participants’ activities (Resolution № 86). Inspections will be carried out only after the National Bank has adopted special regulations on inspections.
5. Application of regulatory measures (Resolution № 87). NBU will take into account the regulatory measures previously applied by the NCFS, and will continue to monitor the implementation of influence measures applied before July 1, 2020.

Decisions that used to be adopted by the NCFS will be made by the NBU’s Board and the NBU’s Committee on Supervision and Regulation of Non-Banking Financial Services Markets.

NBU is now actively developing proposals for key laws regulating non-banking financial services markets. Amendments to the Laws of Ukraine “On Financial Services and Activities for Provision of Financial Services”, “On Credit Unions”, “On Insurance”, “On Financial Companies” and “On Compulsory Civil Liability Insurance of Motor Vehicle Owners”, “On Insurance Distribution” are expected in the near future.

If you have any questions about risks, opportunities and compliance with the requirements of the new Law, please contact Taras Tertychnyi, Associate Partner, by email tertychnyi@hillmont.com.ua  or by phone +380 44 277 2447.