MIL OSI Translation. Region: Spanish / Latin America / UN –
Source: Chamber of Deputies of Chile
A broad and intense framework of hearings is being developed by the Economic Commission of the Chamber of Deputies in order to advance the processing of the Executive’s bill that regulates financial portability (bulletin 12,909).
The Commission for the Financial Market (CMF), represented by Commissioner Rosario Celedón, said she shared the objectives of the initiative and felt that it could be beneficial, both for users / consumers and for the financial system as a whole, by increasing the flow of information between institutions, increase the decision-making power of clients and their mobility and promote competition, by delivering better and better value offers, among other points.
It was argued that the materialization of the expected benefits, in terms of cost and time reduction, will depend in large part on the operational implementation of the initiative; and assessed that a Portability Regulation is essential to operationalize the law.
The commissioner considered that, although the universe of financial products and services to be considered is wide, one would expect a greater impact on loans with mortgage collateral and massive loans (automotive for example). In this context, he considered that the proposed legal subrogation figure is key to issuing processes related to products with mortgage guarantees.
Among other issues, he called for clarifying the concept of “provider”; to generate effective coordination between State bodies and Financial Education; ensure correct data processing; and, in the matter of insurance, it raised as something relevant that the coverage associated with the credits may be covered in case the client decides to behave to a new provider.
Association of Banks and retail
The Association of Banks and Financial Institutions (ABIF) was represented by its general manager, Luis Opazo, who, in the first place requested that the Portability Regulation that must be issued by the Ministries of Finance and Economy, also be endorsed by the CMF .
He noted that portability presents complexities associated with products or contingent operations, a situation that may lead to the debt payable by the new creditor being greater than that estimated in the settlement certificate. In this event, they propose that it be explained that the eventual new bidder may retract from its portability offer.
ABIF also called for flexibility in portability terms and to consider that the new credit will not accrue interest for the period elapsed between the holding of said credit and the payment of the initial credit by the new provider. Faced with this last point, it is requested to establish that the accrual of interest is made from the acceptance of the credit agreement with the new offeror.
In addition, among other observations, it is suggested to specify that the different procedures and certificates can be performed or recorded in digital media.
The financial retail, through its executive vice president, Claudio Ortiz, said assessing and supporting the initiative, estimated that the impact on the day to day of credit card users will be less.
They proposed establishing criteria for the portability of this financial service in the case of transactions pending charge, especially those from international purchases, by face-to-face or distance. In addition, together with calling for effective regulatory coherence, they considered that, in order for the general portability system to function, operating standards and protocols that regulate and arbitrate the migration process should be established, (deadlines, offers, execution of mandates, product closure and data deletion, etc.).
In consideration of the operational complexity of the different financial products, they proposed the issuance of a specific portability regulation for each type of product: Mortgage Loans, Automotive Credits, Consumer Credit in Fees, Consumer Credit with Credit Cards, Current Account, etc.
“It should be done gradually, prioritizing its execution in those products whose portability generates more benefit to the debtors. The drafting of these regulations should be done by the Ministry of Finance and Ministry of Economy, in consultation with the CMF, ”he said.
The president of the Organization of Consumers and Users (Odecu), Stefan Larenas, said that there is a great interest among consumers to have an effective alternative to change their financial products and services to another financial institution and realizes the barriers that they exist for the expedited change of supplier in our country “The possibility of changing the supplier of a financial product through a debt refinancing acquires special importance for Chilean homes and small businesses,” he said in his presentation.
Likewise, it was valued that greater competition in the financial market be promoted, which could result in improvements in the conditions offered to users. “What seems most remarkable to us about the project is the diminution of costs and procedures for the clients that the subrogation system entails,” he said.
To avoid any interpretation, it was suggested to formally clarify the need for the new supplier to generate and deliver a copy of the adhesion contract, complying with the legal formalities. The foregoing, since it is necessary to rule out the possibility that in the market the operators may consider that the settlement certificate or portability offer is sufficient.
Regarding the settlement certificate, it was considered necessary that any supplier with a request signed by the consumer can request it from another supplier and that it is expressly established that “it is free and can be delivered to any financial provider”.
It was also proposed that the law says that the aforementioned certificate is apt to terminate in all its aspects the relationship between the client and the bank, if the client so requests.
Meanwhile, the National Corporation of Consumers and Users (Conadecus), represented by its president, Hernán Calderón, requested that the norm promoted is not supplementary with respect to the Consumer Law, since it will make it impossible for clients to defend themselves properly.
Regarding the portability process, they considered it necessary to expressly state that the “exit” of the client that decides to opt for a new financial services provider must be at zero cost and thus avoid generating costs that discourage the obtaining of a new provider. In addition, it is considered that in order to speak of portability there can be no denial of access to the change of provider (non-discrimination) to the extent that it meets the minimum risk requirements.
It was also considered necessary to specify the concept of subrogation established in the legal proposal, leaving open the options of the users to carry their credits with one provider or another.
EDITOR’S NOTE: This article is a translation. Apologies should the grammar and / or sentence structure not be perfect.