The National Commission for Regulation of the Financial Services Market under the decision No.1602 has cancelled seven licenses for voluntary insurance that have been issued to Farlong LLC insurance company (Kyiv). As the regulator reported on its website, the decision comes into force in 30 days, on September 27, 2019.
The licenses were cancelled for company’s failure to fulfill order of the financial market watchdog as of July 23, 2019 on removal of violated license conditions.
Farlong was put into the State Register of Financial Organizations of Ukraine in March 2016.
According to the State Register of Legal Entities and Individual Entrepreneurs, Adamant Trading LLC is the main shareholder of insurer with 99.99% of its charter capital.
The charter capital of the company is UAH 35 million.
A new bill amending some laws regarding the public regulation of financial service market (No. 8415) would not reduce the number of fair market players, but it would expand powers of the national commission for financial service markets regulation, according to lawyers polled by Interfax-Ukraine.
“The non-banking financial market, which actual neglect is currently at some stage discrediting the NBU’s impressive work on streamlining and cleaning up the banking sector, will obtain a regulator with the stronger powers in the person of the national commission for financial service markets regulation,” Adviser to the Asters law firm Diana Holanova said.
“At the same time, the situation that has developed in the financial market certainly requires taking measures to clean it up, bringing its participants to European standards. The reduction of participants cannot affect the financial market negatively on the condition that this reduction will be carried out with the aim of identifying the structures of owners of commercial banks and taking adequate measures, insolvent insurance companies and other participants, creating risks for consumers of financial services and financial markets in general,” she said, adding that “not all the provisions of the bill guarantee the neutrality of possible measures, underscoring the need for their revision.”
In turn, Senior Lawyer of the Evris law firm Kateryna Breduliak said that the rules of the current law on financial services and public regulation of financial services markets have long been outdated, not to mention that some financial service markets use specialized laws, in particular, laws on insurance, credit unions, and private pension provision. Thus, the introduction of changes to the current legislation of the non-banking financial market would streamline legislation in this area.
“The bill will not affect the reduction in the number of fair market players. The legislative initiative is aimed at making changes to the framework law, since the requirements are duplicated in several laws. If it is presumed that all operating non-banking institutions comply with the law, the adoption of the law will not affect the number of players on the non-banking market in the future. If it is a question of those financial institutions that avoid taxation, then, with changes, the activity of fictitious financial institutions will be stopped,” she said.
Breduliak said that, in accordance with the bill, in addition to measures of influence and sanctions, if the circumstances and risks affecting the solvency of a market player are negative, the national commission will be able to apply corrective measures. These measures are recommendatory in nature and are not binding on the market player, but if applied, the financial service market player automatically falls under the suspicion of the commission.
Commenting on the effectiveness of the supervision mechanisms of players in the non-banking financial market prescribed in the bill, Breduliak said that the regulator plans to implement public control measures in the form of planned inspections, unscheduled inspections and unscheduled field inspections, and the bill determines the procedure, deadlines and rules for conducting these inspections.
“Preventive and corrective measures will certainly contribute to the observance of the requirements of legislation by players of the non-bank financial market,” the lawyer said.
At the same time, according to the expert, at present not all players of the non-banking market are ready to confirm the transparency of the financial services provided.
“In any case, equal conditions for both banks and non-bank financial institutions will only contribute to competition in their provision. The regulator should rule out the sudden disappearance of financial market players, since in the end the consequences and losses are borne by consumers,” she said.