The new regulations will improve the protection of clients of this type of credit, which is characterized by automatic renewal and payment of a fixed monthly fee. The modification of the rule reinforces the information that the borrower receives from the entity and reduces the risk of excessive extension and increase of credit.
The Ministry of Economy and Business has published in a public hearing the proposal to modify Order 2899/2011 on transparency and customer protection of banking services. The objective is to reinforce the protection of users of credits that are characterized by having an indefinite duration or automatic renewal, by the possibility of the client to determine the fixed fee to pay periodically within certain parameters, and that are associated with payment instruments. , such as those called “revolving cards”, increasing the transparency and information that entities must provide to these users and reducing the possibilities of over-indebtedness.
Specifically, the draft Order reinforces the information that the borrower receives from the entity, which will allow him to have specific and clear knowledge of the content and effects of the service that he is going to contract, as well as to know precisely the debt that he maintains periodically with the entity. In this sense, new transparency obligations which include more detailed pre-contractual information, which reflects, among other things, a representative example of revolving credit with two installment options. Likewise, the entity must send the client quarterly information specifying the evolution and situation of specific aspects of the credit, such as the amount of the loan, the estimated date of completion of the credit payment if there are no modifications to the contract and various scenarios. depending on the variation in the monthly payment. In any case, the borrower will have the possibility of requesting information about their loan at any time, as well as the amortization schedule or the amounts paid and pending. Finally, the obligation of the entity to inform the borrower in advance of each extension of the credit limit not requested by the client, including the new installment and the accumulated debt, is established. The modification of the rule also aims to reduce a possible excessive extension of credit and increase in the final debt load beyond the reasonable expectations of the person who contracts this product. To this end, the order incorporates specific guidelines aimed at financial institutions in relation to the solvency evaluation for this type of products, so that a more prudent estimate is made that ensures the client's sufficient payment capacity and avoids over-indebtedness.
SOURCE: EL DERECHO.COM (SEE THE NEWS ON THEIR WEBSITE)
