Non-Financial Credit Providers: Consumer Protection

Other non-financial credit providers will have to comply with the provisions of the Law on Financial Institutions regarding financial consumer protection, as decided by the Board of the BCRA. They will also have to comply with regulations on disclosure and transparency in respect of interest rates, communication through electronic means, and reporting systems for transparency and complaints.

Other non-financial credit providers are companies other than financial institutions that regularly grant financing to natural or legal persons, as a core or subsidiary activity, for the purchase of goods and/or services, or for other unspecified purposes.

These providers include fintechs, credit card issuers whose financing is not subject to the Law on Credit Cards, and home appliances stores that offer financing. Other non-financial credit providers will have to register as such whenever their total financing exceeds ARS 10 million. Registration will be mandatory, irrespective of whether they request credit facilities from financial institutions or not. The new requirements will become effective gradually through March 2021.

Mutual associations and cooperatives fall outside the scope of this resolution. The BCRA has been working together with the National Institute of Mutual Associations, Cooperatives and Social Economy (Instituto Nacional de Asociativismo y Economía Social, INAES) on a regulatory framework for the protection of consumers borrowing from mutual associations and cooperatives.

Based on a survey conducted by the BCRA, about 4 million people have accessed financing from other non-financial credit providers in Argentina, which stands for 10%-11% of the adult population, 19% of the economically active population, and 30% of total debtors in the financial system.

Another survey has shown that 77% of fintech lending companies charge their clients a total financial cost that exceeds at least 150% annually, while more than half of them charge over 400% annually.

The Board of the BCRA has adopted this resolution with a view to affording the rights of financial consumers in terms of protection, transparency of lending conditions, disclosure, and complaints, regardless of their condition as customers of financial institutions and non-bank credit cards, or other non-financial credit providers. This decision puts all borrowers on an equal footing in terms of consumer protection.

October 22, 2020.