We have recently discussed this subject at the Bank Association forum, because we are convinced that consumer rights to clear, appropriate and fair financial products are being violated in this case. At this juncture, protecting financial consumers is top priority. We will only stop tightening our conduct supervision when we signal to the financial industry our satisfaction with interactions between financial institution and consumer being transparent and beneficial to both parties. In that area, we intend to take advantage of the legislative changes that have passed, including in the spring session. A very important law, passed recently at the initiative of senators, specifies financial instrument sales rules, including the right to ban sales and demand the repurchase of non-transparent products that are unprofitable for buyers. Thank you very much for this law. From 1 October, testing will be open to unqualified investors who want to buy complex instruments. As you remember, Ms Speaker, you and I discussed this matter with banks. With your support, that law passed very quickly. We understand that the problem is more than just sales of non-transparent financial products to consumers, but also about additionally imposed services and insurance sold together with standard financial products. That problem remains relevant. To stop the practice, a law was adopted to introduce a so-called end-to-end cooling period. Consumers have two weeks to cancel any tied services and receive a refund after they realise that they were misled or deceived.
If leveraged loans experienced loss rates in line with the financial crisis, the equity tranches of CLOs would lose all their principal. Before everyone takes fright at the ‘s’ word, some important context is needed. These securitisations are very different beasts to their ancestors of 2008. CLOs now have much less embedded leverage than they did before the crisis, with equity tranches around 25% thicker. And they are not held in ‘shadow banks’ like investment vehicles that turn out really to be a part of banks. They are held properly outside the banking system, on the balance sheets of non-banks like hedge funds and open-ended funds. Chart 17 shows our map of who holds the loans and in what form. 9  These are estimated five-year loss rates based on observed default rates during the global financial crisis on the S&P leveraged loan indices for the US and Europe and Moody’s data for all corporates. We assume a recovery rate in line with the average on first lien loans.