Kazakhstan to Give Borrowers 14 Days to Cancel Unsecured Loans Without Penalties

"Cool off" impulsive buyers and protect Kazakhstanis' wallets from aggressive marketing – the country is changing the rules for issuing unsecured loans and arranging related insurance policies. The Agency for Regulation and Development of the Financial Market has approved new requirements for banks, microfinance organizations, insurers, and brokers. Borrowers will now have a legal two-week period to cancel a loan without penalties or additional charges, 24KZ reports.

How does the two-week "cooling-off period" work, and why will lenders now have to think twice before approving a loan? All these measures are being implemented as part of a broader reform of behavioral supervision in Kazakhstan.

CANCELLING A LOAN AND INSURANCE POLICY WITHOUT PENALTIES

Took out a loan but changed your mind? Starting October 12, Kazakhstanis will have the legal right to cancel an unsecured loan within two weeks. The relevant rules for banks, microfinance organizations, insurance companies, and brokers have been approved by the Agency for Regulation and Development of the Financial Market. There will be no fines or penalties: borrowers will only need to repay the principal and interest accrued for the actual days the funds were used. Financial experts emphasize that the measure will help protect consumers from impulsive decisions and unnecessary debt.

Bauyrzhan Iskakov, economist:

- First and foremost, this is being done for ordinary Kazakhstanis. People often take out loans impulsively, on emotion, and then realize a few days later that they don't actually need the loan. This often happens under the influence of aggressive advertising such as "buy today while it's cheaper" – people fall for marketing tricks. Then, for the next three to five years, they struggle to repay these debts. In this regard, an analysis was conducted. Now, if within 14 days a person decides to return the product or the money, they can contact the bank and return everything – without any fines or sanctions from the financial institution.

Similar conditions apply to voluntary insurance, which is often arranged as an add-on to an unsecured loan. The new requirements strictly prohibit concealing the actual cost of loans, material terms, and associated risks. Pre-ticked boxes can no longer be used to obtain consent – Kazakhstanis must make an informed choice themselves. In addition, banks and microfinance organizations are now required to inform customers in advance about their right to cancel within 14 days.

Venera Zhanalina, financier, Qazaq Expert Club expert:

- This is being done as part of a broader behavioral supervision reform because Kazakhstan is now adopting best practices from countries such as the United Kingdom and Austria. The government must make sure that a bank not only sells a financial product to an individual in accordance with the law, but also that it does not violate that person's rights. The government wants to make sure that the loan is actually needed by the individual and that they did not take it because of some marketing strategy or because they were simply misled. That is why people are given two weeks to look things over and make a decision.

BANKS MUST TAKE CUSTOMERS' FINANCIAL CAPACITY INTO ACCOUNT

The Agency for Regulation and Development of the Financial Market is also introducing strict oversight of how banks and microfinance organizations sell their products. Lenders will now be required to thoroughly assess customers' financial capacity by taking into account their income, expenses, debt burden, purpose of the loan, and potential risks. If a loan is clearly unaffordable or objectively unnecessary for a person, offering it will be strictly prohibited.

Olzhas Ramazanov, Head of the External Communications Department and Press Secretary of the Agency for Regulation and Development of the Financial Market of the Republic of Kazakhstan:

- The main objective is to strengthen the protection of the rights and legitimate interests of individual consumers of financial services at every stage of a financial product's life cycle – from its development, promotion, and provision to monitoring and termination. Additional requirements are also being introduced for the advertising and promotion of financial products. Advertising must contain complete information about the characteristics, cost, and risks of a financial product and must not mislead consumers. The document is also aimed at preventing unfair practices.

KAZAKHSTAN STRENGTHENS CONSUMER PROTECTION IN FINANCIAL SERVICES

Experts agree that the new rules introduced by the Agency for Regulation and Development of the Financial Market will provide a strong incentive to improve financial literacy and consumer awareness. For years, the market operated in an environment where loans or unwanted insurance policies could be arranged in just a few clicks, often under the influence of aggressive advertising or emotions. Now, the government is effectively introducing a "cooling-off period" culture. Two weeks to think things over is not simply a legal pause, but an important opportunity for everyone to stop, objectively assess their income and expenses, and determine whether they really need the loan.

Venera Zhanalina, financier, Qazaq Expert Club expert:

- The government wants to protect people because not everyone has financial literacy. Most of our population does not have a high level of financial literacy, and they shouldn't necessarily be expected to. Laws and regulations should be designed so that ordinary people without financial training do not end up in a difficult financial situation. Since the consumer lending boom affects inflation, introducing certain restrictions on consumer lending could help combat inflation. As you know, if something isn't selling, for example, retailers introduce installment plans, and then sales begin to grow. People don't necessarily look at how much they will have to pay in total. They simply look at the monthly payment. If they can afford that amount based on their monthly income, they think everything is fine. How much extra they will ultimately pay is often not important to them.