INEKO: State neglecting financial education of public

Low financial literacy in combination with errors in regulation have put hundreds of thousands of people, including the clients of non-banking financial institutions, at risk of falling into debt under unfair conditions, according to the results of the latest analysis by the Institute for Economic and Social Reforms (INEKO). The analysis showed that Slovaks are unable to perceive the difference between fair and unfair non-banking financial institutions and are unable to recognise an extraordinarily expensive loan offer. Around 700,000 people use the services of non-banking financial institutions in Slovakia. The survey showed that half of the respondents disagree with the assertion that fair non-banking financial institutions are also operating on the market. "This is chiefly caused by the fact that unfair practices in Slovakia aren't associated with the specific firms that apply them, which would disqualify these firms and push them out of the market. Only non-banking financial institutions in general are usually mentioned," explained INEKO analyst Jan Kovalčík. When it came to the main reasons behind problems with loan repayments, as many as 63 percent cited the debtor's failure, with only 20 percent of the respondents blaming the creditors. "The way towards problems primarily starts with the failure to recognise high rates for loans and an overestimation of an individual's ability to repay a loan like this," said Kovalčík.