Financial Crime World

Assembly Processes Proposed Amendment to Consumer Protection Act

The Economic Commission has initiated processing a proposed amendment to the Consumer Protection Act, aimed at strengthening financial consumer protection in Nicaragua.

Clarifying Roles and Responsibilities

The proposal seeks to clarify the responsibilities of various government agencies and institutions in ensuring fair competition and protecting the rights of consumers. Article 16 of the Law on Credit Cards (LTC) specifies that the Superintendence of Banks and Other Financial Institutions (SIBOIF) is responsible for regulating credit card operations, considering best practices and consumer protection.

Concerns about Scope and Powers

However, concerns have been raised about the scope and powers of SIBOIF in regulating financial consumer protection, particularly regarding advertising. Both the Law on General Banking (LGB) and LTC regulation require truth in advertising, raising questions about which institution is responsible for enforcing these regulations.

Proposing an Amendment

The proposed amendment aims to clarify these roles and responsibilities, ensuring that consumers are protected from unfair practices and institutions comply with regulations.

OAUSF Struggles with Resources

The Observatory of Financial Consumer Protection (OAUSF), established by SIBOIF in 2009, has been struggling to fulfill its mandate due to insufficient resources. The OAUSF has only two staff members and lacks a clear communication strategy, making it difficult for consumers to be aware of its existence.

  • Despite these challenges, the OAUSF has handled over 224 complaints since its inception.
  • Many of these complaints were previously unaddressed by financial institutions.
  • However, the agency has had to divert resources from prudential supervision of banks to handle these complaints, highlighting the need for additional support.

Amendments Pending Approval

The proposed amendments to the LDC are pending approval and would explicitly assign SIBOIF responsibility on financial consumer protection, including the handling of complaints submitted by clients of financial institutions supervised by SIBOIF. The decision to allocate more resources to OAUSF is also dependent on the approval of these amendments.

Transparency and Accountability

The Economic Commission has emphasized the importance of transparency, integrity, and accountability in the work of the designated agency. The dissemination of OAUSF’s existence is currently limited to SIBOIF’s website, which includes a section describing its articles and responsibilities.

Conclusion

In conclusion, the proposed amendment aims to strengthen financial consumer protection by clarifying roles and responsibilities of government agencies and institutions. The success of this proposal will depend on the approval of the amendments and the allocation of sufficient resources to OAUSF to fulfill its mandate.