L&M Finance Group


On the website of the National Bank of Ukraine, the fifth of six sectoral documents has already been published entitled "The future of regulation of pawnshops." Like previous books, it contains information on market conditions, problems, and planned changes that are planned in the near future.
The National Bank of Ukraine informs that as of the end of 2019, there were 324 pawnshops in Ukraine with more than 6,000 branches throughout the country. At the same time, problems existing in this field cannot be ignored by the regulator. Among the key distinguish:
  1. Licensing and franchise issues.
  2. The absence of restrictions on customer liability at the legislative level.
  3. Insufficient information regarding loan conditions.
  4. The high cost of borrowing.
  5. The problem of online lending and the ensuing consequences of such lending.
  6. Pledge of stolen property.
To solve these and other problems, the NBU offers a new model for regulating pawnshop activity, which will include:
  1. Lack of requirements for the legal form of a legal entity - a pawnshop.
  2. Simplification of the licensing procedure and the issuance of one license for all necessary services. In particular, to transfer money without opening an account, and trade in currency values. The expanded list will also include valuation of outposted property, investment of own funds, agency agency for insurance of the subject of pledge, and more.
  3. Additional requirements regarding the transparency of the ownership structure of pawnshops.
  4. Increased requirements for the pawnshop business plan and qualifications of managers, business reputation of owners.
  5. Attraction of additional sources of financing from third parties.
  6. Increased capital requirements - 500 thousand UAH. for a pawnshop without separate divisions and 1 million UAH for those who have such units. In addition, it will become mandatory to maintain equity capital of at least UAH 5 million if the pawnshop provides other financial services.
  7. Strengthening the protection of clients' rights by limiting the liability of the latter to the value of property pledged.
  8. Resolving the issue of properly informing the client regarding the conditions of the pawnshop services.
  9. Creating conditions for the activities of the pawnshop outside the branch and ensuring the security of the provision of services in such conditions.
  10. Increased requirements regarding personal data of clients and ensuring the operation of the mechanism of pre-trial dispute resolution using the organizational structure of a pawnshop.
It is expected that these measures will create conditions for improving the level of consumer protection, simplifying the functioning of the market, as well as attracting additional financing for pawnshops, and ensure their stable activity in Ukraine.