Consumersinternational.org Consumers and Financial Services: the road to a Model Law for Familiar Insolvency Antonino Serra Cambaceres Consumers International

consumersinternational.org

Consumers and Financial Services: the Consumers and Financial Services: the road to a Model Law for Familiar Insolvency road to a Model Law for Familiar Insolvency

Antonino Serra CambaceresConsumers International

Empowering Tomorrow’s Consumers Empowering Tomorrow’s Consumers CI World CongressCI World Congress

5 May 2011, Hong Kong5 May 2011, Hong Kong



About Consumers International

• Global federation of consumer organisations

• 220 member organisations in 115 countries

• Independent and not-for-profit

• Global research and campaigns through and for our members



About Santiago Office and LAC region

• 40 member organisations

• Main Programmes: Financial Services, Sustainable Consumption, Food, ICT for incidence in policies, CPL.

• Member of the IberoAmerican Consumer Protection Agencies Forum

• Liaison with OAS, IDB, Red Puentes, Oxfam



Summary

• The origin of the Model Law: FS project for LAC

• Key findings

• Insolvency Law


consumersinternational.orgconsumersinternational.org

The origin of the Model Law:FS project for LAC

A national and regional research project on consumer credits, advertising and contracts

In Argentina, Brazil, Chile, Perú and Uruguay

Surveyed 5 banks in each country

At least one bank was present in each of the countries

At least two of them were in 4 of the countries


KEY FINDINGS

Similiar situations and actions taken by financial institutions in all the countries

Lack of public policies related to access to credit, and none related with overindebtedness

A weak regulation and enforcement in relation to credits, credit conditions, contracts, consumer protection (advertising, information)

The idea that the market can be regulated mainly by “persuasion”


Access to credit: problems derived from cost (high interest rates) + granting credits (stricter rules – less

flexible conditions)

Indebtedness: more agressive offers (advertising) + weak control of legal frameworks (abusive clauses in

contracts)

Enforcement: irregularity of controls

Information: confusing, insufficient, inexistent


Advertising: misleading and false ads

Education: weak literacy among consumers on financial matters

Tools: lack of tools to solve problems (contracts, overindebtedness)


Responsible credit: information + education + clear rules and transparency + policy making

Needed tools: legislation: insolvency law + banking and credit cards law + “positive” financial

records + consumer protection


CSR: a common ground for agreement (consumers + banks and financial institutions + regulators +

experts + international institutions/organisations)

Indicators + a system to compare policies and actions (double standards)

Similar facts in Central America and the Andean Community of Nations


Recommendations

Promote the enactment of an insolvency law

Better and thorough regulation

Force banks to adapt information and advertising to comply with legislation

Make contracts available to consumers

Force authorities to control abusive clauses

Develop campaigns for financial lteracy

Foster dialogue among stakeholders

Regulate handling of sensitive data

Develop comparative indicators:

Monitoring Guide for banks


Insolvency Law

A framework, a model

A “principiological” law

To protect individuals and families

A personal “Chapter 11”

Existent in some countries (France, Germany, Colombia)


Insolvency Law

Two stages: ADR + Courts

A small administrative structure with experts

Guarantee a minimum for living

A decent life ensured

Process of admission

Passive Overindebtedness

(unemployment, illness, divorce, unexpected causes)


Insolvency Law

4 years’ maximum for payment of debts

Strong educational + information component

ADR Stage

Creditors can choose to come to the mediation

A single solution for all

Majority is required for agreement

Agreement, when reached, is binding


Insolvency Law

Judicial Stage

Creditors must come to the Court

Judge has to rule the case

Wide range of possibilities

(reduce interests, capital, fix installments, etc.)

Bona fide principle for debtor

2 year’s void period before a new process


[email protected]


Documents

Consumersinternational.org Consumers and Financial Services: the road to a Model Law for Familiar Insolvency Antonino Serra Cambaceres Consumers International