One of them, and which is open for public consultation until tomorrow, focuses on making the fee collection mechanism transparent. death balance insurance that users usually pay when accessing a loan or using a credit card.
Currently, in Uruguay, card issuing entities and those that grant loans require their clients to contract and pay for insurance that is added to the costs that they pay monthly for the financial product to which they accessed.
This insurance is not contracted directly by the user, but the financial entities themselves have incorporated it into their services after direct agreements with the insurers.
On these two central points, which are part of the so-called implicit interest rate, is that the Central Bank wishes to advance in its modifications.
What changes does the BCU plan for debt balance insurance?
The BCU project establishes that the sums reimbursed by the insurance companies to the beneficiary lending institutions of debit balance life insurance cannot be excluded from the calculation of implicit rate. Currently there are retrocessions for commission and administrative expenses, among others.
In addition, the monetary entity plans to reduce from the current 6,000 Indexed Units on the outstanding balance to 2,000 the maximum amount of the monthly premium that can be excluded from the calculation of the implicit rate.
According to studies carried out by the BCU, it was verified that the amount covers the net items collected by the majority of the companies
insurers. That is to say that, as of today, there is almost a 67% extra cost in the premium.
The other significant change proposed by the BCU has to do with breaking the opacity of the agreement between insurers and lending entities, since the latter They will be obliged to inform clients of all the insurance conditions debit balance that requires you to pay.
When applying for a loan or a credit card, the financial user must know:
- Name of the insurance company contracted to grant the insurance coverage.
- The premium paid broken down into its components, distinguishing what the insurance company actually receives from what is reimbursed to the institution that grants the credit.
- Scope of insurance coverage. In particular, it should be clarified if it covers the entire debt on the date of death of the debtor, including the credits to expire.
- Detail of how the amount of insurance to be paid will be calculated. When the premium is paid on a monthly basis, it must be detailed whether the agreed premium percentage will be applied to the entire amount owed, including credits to expire.
Other modifications prepared by the BCU for financial institutions
The plan, which seeks to renew before December all the sectors covered by the BCU regulation, has the objective of contributing industry predictability. The other four changes that will affect banks and financial institutions are:
- Financial transaction report: Thus, the report format will be modernized and the repetition of data provided in other reports will be avoided. In the second quarter there will be a public consultation and in the third quarter the initiative will materialize.
- Suspicious transaction report form: It will be restructured, modifying the way STRs are presented. Meanwhile, the document will be customized for each type of financial institution, all relevant information will be systematized and errors will be minimized. The changes will become effective in the third quarter of the year.
- Review of the regulations on restructuring of credit operations. It will seek to contemplate “situations that would merit the exposure of the restructuring as current and a cure period for restructurings that are not exposed as current.” In the second quarter there will be a public consultation and between April, May and June the regulations will be issued.
- Analysis of Annex 1 of the Roadmap Impairment Standard IFRS 9and the provisioning percentages by risk category provided in Annex 2 of the Accounting Framework. At this point, it will also seek to align the regulations with international standards, something that is expected to be completed in the second half of the year.
Source: Ambito
