Update on AFCCP activities since the end of 2014


Director of the Agency for Fair Competition and Consumer Protection (AFCCP), T.Ayursaikhan, held a meeting with journalists for the first time since his appointment and reported on ongoing inspections focused on ensuring consumer rights.
Lawsuit filed against Energy Regulatory Commission
The AFCCP filed a lawsuit against the Energy Regulatory Commission (ERC) of Mongolia for rejecting the proposal to charge six companies with a 189 million MNT fine for raising electricity rates last year without notifying the AFCCP, defying regulations.
Power distribution companies are obliged to report electricity rate increases to the AFCCP before they become effective. The ERC reported changes the last time they raised rates in July 2013, however, they increased rates three times last year without giving the AFCCP any prior notice, which pushed the agency to impose a fine.

Defrauded real estate buyers to receive compensation

The AFCCP also filed a lawsuit against construction companies which sold apartments that were smaller than they were reported to be. Over 70 companies were found to have been overcharging their customers in a similar way, which resulted in approximately 3.5 billion MNT in losses to apartment buyers.
The companies have issued compensated of 1.5 billion MNT to the victims of fraud so far, while the remaining compensation will be repaid after the court has announced its final trial decisions.
Of the 3.5 billion MNT in damages, 1.5 billion MNT is attributed to three major construction companies.
The AFCCP’s inspection of apartment buildings came following over 700 complaints to the agency regarding overcharging.

National Circus privatization case taken to court

The agency’s lawsuit against administrators of the National Circus for using the building for inappropriate purposes has been taken to court.
The AFCCP reported that the circus was first privatized on the condition that the original purpose of the building would remain in place after privatization. However, the recent launch of a night club attached to the circus and the reduced number of circus performances has resulted in public opposition.
The agency proposed to the State Property Committee the annulment of the privatization and returning the building’s ownership to the state as a result of the illegal operations. The AFCCP later requested a court trial for the case, as it hasn’t received a reply from the committee.

Commercial bank inspections begin

A trial was held for AFCCP allegations against local commercial banks charging illegal service fees equal to one percent of loans taken out by bank customers.
Administrators of 13 banks opposed the allegations and submitted a complaint to the court, which later found the banks guilty on December 25, 2014. The court ruled that customers who took out loans within the last three years be free to request compensation for the service fees, but bank administrators have opposed the ruling and report that they will file for an appeal.
Following the decision, commercial banks will soon have to lower their loan service fees.
“It is certain that commercial banks will appeal the court decision. If the Supreme Court confirms that charging one percent of each provided loan is illegal, customers will be able to receive a refund of the fees paid,” said T.Ayursaikhan.
Several other banks have been inspected by the AFCCP, as residents complained that some banks are violating the Competition Law.
The inspection revealed that the annual profit of some commercial banks was between 25 to 30 percent, while it should range between 10 to 15 percent, according to international standards in the banking market.
If profits are less than ten percent, it results in deficits for banks, and if profits are above 15 percent, it causes financial damage to customers. The average annual profit is 25 to 30 percent, or 80 to 100 billion MNT, in Mongolia.
The inspections are not complete yet and the results of investigation of normal profits have yet to be officially announced.

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Posted by on Jan 26 2015. Filed under Domestic. You can follow any responses to this entry through the RSS 2.0. You can skip to the end and leave a response. Pinging is currently not allowed.

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