Actualidad Colombia

Bill on financial charges and negative reports

Bill 036/2014-Chamber and Bill 155/2015-Senate

The Bill governing regulations on charges for financial services and negative reports in financial information bureaux is currently awaiting final debate.

The draft text lays down that those institutions authorised to take deposits from the general public may not set a mandatory minimum balance in the online savings and/or deposit account. Similarly, financial charges may only be applied during the first sixty (60) days of the account being unused (ie, when there are no financial transactions).

Among the matters covered in the discussion paper is the inclusion of the ban on credit bureaux being given negative reports about financial obligations whose outstanding balance is less than the current legally binding minimum daily wage (COP 22.981, or about USD 8).

This reading has brought aspects back into the bill that had been deleted from the versions passed in previous Congress debates. In any event, this addition lowered the threshold below which negative reports would no longer be presented to the credit bureaux. The initial draft laid down that obligations below 20% of the legal minimum monthly wage (SMMLV in the Spanish acronym) would not trigger negative reports when the amount in default was equivalent to 20% of the SMMLV (COP 27,578 or approx. USD 9). Furthermore, it laid down that a negative report would not be generated when an obligation of more than 20% of the legal minimum monthly wage had an unpaid balance of less than 5% of a minimum monthly wage (COP 34,472 or approx. USD 12).

The new wording of the Bill, while simplifying and reducing the threshold for not filing financial information, contains a provision that, if passed into law, would distort credit risk assessment systems and NPL portfolio placement. This is something the legislature should not encourage, particularly for institutions with microloans and small consumer loans in their product offering, which, in practice, would not be reported.