Published and draft legislation - Colombia

The new list of abusive clauses and practices

External Circular 018/2016

Colombia’s financial authority (SFC, Superintendencia Financiera de Colombia) in response to complaints made by financial consumers, has identified a number of clauses and practices that it views as infringing consumers’ rights.

It has issued this circular updating and modifying some of the instructions in this subject with the purpose of defining new abusive practices and clauses.

It classifies clauses as abusive when they:

  1. empower institutions to enter into insurance contracts on the debtor’s behalf and at their cost when debtors have not been informed beforehand of this financial product’s basic terms and conditions;
  2. impose a limit on the early payment of instalments and/or on choosing the form of applying these payments;
  3. transfer to the financial consumer the responsibility for transactions carried out with an assigned password;
  4. authorise the sharing of consumer data, without prior authorisation from the title owners to that effect;
  5. legitimise the offer of promotional interest rates that do not last for the duration of the promotion;
  6. impose stricter requirements on cancelling their products than those required to open them;
  7. exonerate institutions from their responsibility for carrying out transactions with unauthorised third parties, for paying out on false cheques or cheques that do not meet the minimum requirements for payment;
  8. legitimise accelerating the recovery of a payment obligation without notifying the debtor beforehand.

The new instructions to the SFC, the financial services authority, consider the following practices to be abusive when they:

  1. make bundled sales  of products and/or financial services;
  2. renew products without explicit customer authorisation;
  3. demand payment for managing collections without showing proof of said management;
  4. charge for certificates when these are required to make early payment of a loan;
  5. do not provide the terms and conditions of collective policies when an insured party or beneficiary asks for them;
  6. oblige financial consumers to provide certificates to prove they are operating from a secure computer before carrying out online transactions.

Any financial institution may be subject to investigation and may be fined if proof is found that its operations have involved abusive practices and/or it has included abusive clauses in its contracts.