Identifying What Is Abusive, Improves Consumer Protection

On November 5, 2024, the Financial Superintendence issued External Circular No. 15 to strengthen access to information, promote fair treatment, and enhance consumer protection within the supervised financial entities.

This objective is achieved by identifying abuses that compromise transparency, consent, and the rights of financial consumers. In this regard, Section 6: Abusive Clauses and Practices, of Chapter I: Access to and Information for Financial Consumers, within TITLE III: Competition and Protection of Financial Consumers, PART I: General Instructions Applicable to Supervised Entities, included the following as abusive clauses, among others:

1. Clauses that stipulate that transactions in foreign currency or abroad with credit cards will be settled at the exchange rate of the settlement date without specifying it, or those that empower supervised entities to set a settlement date or apply an exchange rate not previously disclosed to the financial consumer.
2. Clauses allowing automatic debits from payroll or pension accounts without the explicit authorization of the financial consumer.
3. Clauses conditioning the fulfillment of claims or payment of compensation for total loss coverage due to theft or damage in automobile insurance on the fulfillment or verification of the obligation to transfer the insured asset, whenever such a requirement disregards the timeframe established in Article 1080 of the Commercial Code.

In addition to abusive clauses, the following were identified as abusive practices:

1. Linking financial consumers or modifying the conditions of credit opening contracts (credit cards) with a variable interest rate without prior notification to the financial consumer of this particular condition and its impact on monthly payments.
2. Failing to disclose the validity of pre-approved credit terms or unilaterally modifying the offered conditions without informing the financial consumer prior to disbursement.
3. Practices that restrict or hinder prepayment of obligations, making the operation difficult, as well as those limiting the transfer of mortgage credit or housing leasing contracts for family home acquisition.
4. Denying access to a financial product or service by citing the consumer's disability or requiring documents not provided for by law to verify the chosen support mechanisms for individuals with disabilities.
5. Denying the opening or use of financial products and services to consumers based on sex, race, origin, national or family origin, language, religion, opinion, or sexual orientation.
6. Hindering the cancellation of financial products or services through additional internal administrative procedures beyond those provided by law or the adhesion contract governing their provision, or by charging additional fees after the product has been requested for closure and is no longer in use.
7. Failing to disclose, before contracting a mortgage credit or a housing leasing agreement for family home acquisition, the interest rate or administrative costs associated with the product, such as appraisals, title studies, legal support, among others.
8. Charging remunerative interest on credit card transactions made in a single installment when the cardholder opts to defer the payment of another transaction to a longer term within the billing period.

These modifications strengthen financial consumer protection and limit the ability of supervised financial entities to abuse their dominant position in contractual relationships with consumers.

Furthermore, the reform provides consumers with legal actions in cases where financial entities engage in any of the identified abuses.

In this way, significant progress is made in improving the contractual position of financial consumers.