Ethical obligations of financial organizations in the process of credit collection

According to the Code of Ethics of Financial Organizations developed by the National Bank of Georgia in 2022, consumer protection mechanisms were defined in the loan collection process.

The code of ethics for financial organizations delineates the permissible scope of action for the financial organization in the event of customer default on loan payments, a circumstance that unequivocally does not absolve the borrower from meeting their contractual obligations

Within legal framework, the financial organization possesses the entitlement to pursue the seizure and liquidation of the borrower's assets and accounts to guarantee loan repayment by the debtor. However, ethical obligations exist, and deviation from these obligations empowers the National Bank of Georgia to enforce supervisory measures and/or sanctions as stipulated by the legislation of Georgia against the financial organization

• Telephone communicationwith the customer or in-person visits conducted by the financial organization are permissible solely between the hours of 09:00 a.m. and 20:00 p.m. Furthermore, the organization is mandated to initiate contact with the customer solely based on the information explicitly outlined in the contract mutually agreed upon by the parties. Additionally, the law mandates the organization to maintain a detailed record of any communication with the customer for a period of two months. Notably, recording is prohibited if the designated contact person refuses consent.
• While communicating, the financial organization is obligated to adhere to universally recognized ethical standards and norms governing business relations. The organization is prohibited from furnishing misleading and/or inaccurate information to the individual in question (be it the user or any third party associated with the user). Any omission, failure to provide, or incomplete presentation of information must not influence the individual to make a decision that they otherwise would not have made if provided with accurate, correct and complete information."
• The financial organization is prohibited from misrepresenting itself, including pretending to be a representative of the National Bureau of Enforcement or a person related to another body;
• The organization is required to exclusively communicate with the individual specified in the contract concerning loan withdrawal. Interaction with any other individual is permissible solely for the purpose of locating or contacting the designated person. During such communication, no details pertaining to the loan, including its name, amount, or any other identifying information, should be disclosed
• If a financial organization contacts a designated individual who is neither a guarantor nor the owner of a mortgage or collateral, said individual retains the right to request the financial organization to cease further communication.
• The organization's visit to the place of residence for the purpose of inventorying the property is allowed only in cases expressly defined by the law.
• The sale of a loan to another financial organization is strictly prohibited; the transfer of credit portfolios is permissible only to entities under the regulatory oversight of the National Bank of Georgia. A financial organization is forbidden from transferring its owned credit portfolio and/or credit to individuals or entities that are not financial organizations. An exception to this rule is allowed if a legal entity applies for the transfer of the loan to a non-financial organization