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NBU Launches Public Discussion of Proposals on Draft Law On Financial Services and Provision of Financial Services

The NBU, which will regulate nonbank financial institutions starting 1 July 2020 as part of the Split project, has published its proposals on the Draft Law On Financial Services and Provision of Financial Services in an effort to launch a public debate. The proposals aim to significantly update the existing framework for the operation and regulation of financial services markets.

The draft law will be the first of a package of bills the NBU is planning to draw up and get through the Parliament in a bid to streamline the legislation governing the market for nonbank financial services (NFS). Once enacted, these laws will be a game changer for participants of the NFS market, expanding the range of their services, securing their development prospects, and improving their regulation and supervision.

The NBU’s proposals on the Draft Law On Financial Services and Provision of Financial Services reflect the NBU’s overall perspective on approaches to the regulation of the financial services market. Key requirements will aim to safeguard consumer rights, to monitor market conduct for compliance with quality standards, to ensure that ownership transparency and the quality of corporate governance are up to par, and to implement a risk-based supervisory approach that applies the proportionality principle.

Overall, the central bank’s proposals can be broken down into three main groups:

  • The first group deals with the principles of provision of financial services and a list of their types, and gives an elaborate description of regulations governing customer relations. In what comes as a continuation of changes that went into effect with the adoption last year of the Law of Ukraine On Amendments to Certain Laws of Ukraine Regarding the Protection of Consumer Rights in Financial Services, the new regulations will significantly strengthen the laws that safeguard the rights of these consumers.
  • The second group is directly concerned with providers of financial services. It lays out requirements for financial service providers, specifically as regards ownership structure, capital, the organization of corporate governance and control, and accounting and reporting practices. Apart from introducing new requirements, this group of proposals is also intended to open up new possibilities for market players: the ability to create self-regulatory organizations (SROs), simplified registration and licensing, and an option to combine a range of financial services in a single license. In addition, this group of proposals introduces a proportionality approach to requirements for financial institutions that eases the regulatory burden on companies operating with little to no risk.
  • The third group of proposals covers the government regulation and supervision of the provision of financial services. These proposals identify the overall principles of supervision and government regulation, a procedure for cooperation and coordination of efforts between regulators, major regulations on supervision and inspections, and approaches to the application of corrective actions and sanctions.

The Draft Law On Financial Services and Provision of Financial Services is a framework document that lays the groundwork for the adoption and implementation of the following draft laws that describe regulation at the level of individual sectors of the NFS market: on credit unions, on payment services, on insurance, and a draft law on financial companies that is set to govern all other segments of this market (activities of leasing companies, pawnshops, credit institutions, and others).

The new law is intended to replace the existing Law of Ukraine On Financial Services and State Regulation of the Financial Services Markets, which was passed in 2001 and which is outdated, fails to account for how these markets operate in the new reality, and allows for the emergence of legal gray areas.

The bottom line: the NBU’s proposals on the Draft Law On Financial Services and Provision of Financial Services will create a reliable, efficient, and transparent market for financial services that protects consumer rights and facilitates the development of market participants.

The public debate on the proposals will last until 1 May 2020. Please send your comments and suggestions to

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