Central Bank introduces draft project to regulate installment trade market

The Central Bank has published a draft code of conduct for participants in the installment trade market for public discussion.

According to the draft, the FinTex Association will introduce a “Trust mark” system for market participants. This mark will indicate that installment services are transparent and in compliance with the law. To obtain the mark, a business entity must be a member of the association.

It is also proposed that every installment trade organization provide open information on its official website about all products, payment procedures, commissions, and penalties.

Before a contract with a client is concluded, the following must be presented:

• the full price of the product or service if paid upfront;
• the total amount payable including all markups and commissions;
• the payment schedule;
• all types of fees and penalties;
• the full cost of the installment service expressed as an annual percentage equivalent;
• the conditions for early termination of the contract;
• information about the consequences of late payments;
• the installment trade organization’s “Trust mark” number;
• contact details for inquiries.

In addition, advertising materials must not contain misleading phrases such as “0 percent,” “free,” or “suitable for everyone.”

Under the new requirements, installment services may only be provided to citizens aged 18 and above, with an initial limit set at UZS 2 million. If a client wishes to increase the limit, their debt burden must not exceed 50 percent. The use of threats or pressure during debt collection is strictly prohibited. All interest and fees must not exceed half of the principal debt annually.

Clients with overdue debts on previous loans will not be eligible for new installment services. Installment trade organizations will develop mechanisms to work with overdue debts (Soft-Collection, Hard-Collection, Legal-Collection).

Furthermore, to prevent fraud, new clients will be registered through biometric methods, and organizations will operate dedicated information security and cybersecurity departments. Information exchange with credit bureaus will also be established.