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consumersinternational

Consumers and Financial Services: the road to a Model Law for Familiar Insolvency. Empowering Tomorrow’s Consumers CI World Congress 5 May 2011, Hong Kong. Antonino Serra Cambaceres Consumers International. consumersinternational.org. consumersinternational.org.

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consumersinternational

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  1. Consumers and Financial Services: the road to a Model Law for Familiar Insolvency Empowering Tomorrow’s Consumers CI World Congress 5 May 2011, Hong Kong Antonino Serra Cambaceres Consumers International consumersinternational.org consumersinternational.org

  2. 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 consumersinternational.org consumersinternational.org

  3. 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 consumersinternational.org consumersinternational.org

  4. Summary • The origin of the Model Law: FS project for LAC • Key findings • Insolvency Law consumersinternational.org consumersinternational.org

  5. 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 consumersinternational.org consumersinternational.org

  6. 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” consumersinternational.org consumersinternational.org

  7. Access tocredit:problemsderivedfromcost (highinterestrates) + grantingcredits (stricter rules – less flexible conditions) Indebtedness: more agressiveoffers (advertising) + weak control of legal frameworks (abusiveclauses in contracts) Enforcement: irregularity of controls Information:confusing, insufficient, inexistent consumersinternational.org consumersinternational.org

  8. Advertising: misleading and false ads Education: weak literacy among consumers on financial matters Tools: lack of tools to solve problems (contracts, overindebtedness) consumersinternational.org consumersinternational.org

  9. Responsiblecredit:information + education + clear rules and transparency + policymaking Neededtools:legislation: insolvencylaw + banking and creditcardslaw + “positive” financial records + consumerprotection consumersinternational.org consumersinternational.org

  10. 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 consumersinternational.org consumersinternational.org

  11. 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 consumersinternational.org consumersinternational.org

  12. 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) consumersinternational.org consumersinternational.org

  13. 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) consumersinternational.org consumersinternational.org

  14. 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 consumersinternational.org consumersinternational.org

  15. 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 consumersinternational.org consumersinternational.org

  16. aserra@consumidoresint.org consumersinternational.org consumersinternational.org

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