The Credit Card Law, decree 2-2024, which was published on March 1 in the official gazette, will come into effect six months later, and entities such as the Superintendency of Banks (SIB) and the General Inspection of Cooperatives (Ingecop) give their opinion regarding its content and the supervision they carry out, although the latter mentions the need to strengthen itself for the purposes of supervision in general.
In this context, the SIB informed Prensa Libre that as of December 31, 2023, the credit card balance of the entities it supervises reached Q40,252.81 million, while the amount of cards or financing was 3,43,000. 168.
Of that amount, according to the classification by type of entity, the balance of the cards managed by banks reached Q30,562.2 million compared to the same period in 2022. The data represents 2,30,518 financings.
While Q9 thousand 690.6 million corresponds to entities specialized in issuing and managing credit cards, which are part of financial groups, and represented 1 million 12 thousand 650 credits.
According to the data provided by the SIB, the amount of financing considered is those that report a balance.
The monthly statistics bulletin as of December also reflects interannual data. In this case, as of December 2023, the balance of credit cards held by banks was Q30,570 million, a growth of Q8,352 million, around 37%.
And that of specialized entities reached Q9 thousand 103.8 million, that is, Q1 thousand 534.80 million more, which represents a growth of 20.3%.
Comparing these same statistics, the balances as of January 2024, the most updated date of these reports, continue to grow, since in banks they are reported at Q30,613.6 million, with 31% more year-on-year. While in other entities, the amount reaches Q9 thousand 323.1 million, which represents 29% more.
Separately, various savings and credit cooperatives also issue credit cards as part of the tools that allow them to do the business for which they were authorized, and now they were included as issuers or co-issuers in the new Credit Card Law, decree 2- 2024. These are supervised by the General Inspection of Cooperatives (Ingecop).
Opinions
When the SIB was asked if the new Credit Card Law has the necessary force and coerciveness to also avoid possible abuses in collections, the entity explained that this law contemplates an article on harassment or harassment for collection and another on the prohibition of the use of practices collection abuses.
However, he adds that the recommendations regarding the use of credit cards must be taken into account, such as: Remember that it is not extra money but rather a loan that must be paid in the stipulated time and conditions, and precisely, people must inform themselves. regarding the conditions for its use such as interest rates, credit limit, cut-off and payment date, minimum compliance, commissions for making cash withdrawals and late fees for not paying on the indicated payment date.
Other recommendations are to read the card contract before signing it, consult any information that is not clear, and include in your personal budget the payment of consumption or purchases made with the card and make payments on time. It is necessary to try to make the full payment of the credit, since covering only the minimum payment implies that the total has not been paid and therefore additional charges apply.
To obtain and attend to debts in an adequate manner, it must be remembered that “you should not spend more than you receive,” it is added.
In responses provided institutionally, the SIB considers that Decree 2-2024 is a law protecting credit card users and that rules of transparency and standardization of relations between issuers and users are derived from it.
When asked regarding possible unconstitutionality, she said that the Constitutional Court is the only instance with the power to determine it. But, prior to the approval of this law, the industry anticipated and adapted to what the law intended to regulate.
The SIB also considers that the substantive changes in this legislation seek to strengthen transparency for the user of financial services, provide a boost to financial education, standardize the relationships of the credit card issuer with the cardholder and affiliates; as well as establishing a new protection regime for financial users. In addition to classifying crimes for those who carry out cloning, illegal use, distribution and illegal marketing of credit and debit cards.
Juan Bernardo Rivera, president of the Association of Payment Method Issuers of Guatemala (AEMPG), stated, through a written message, that they are in favor of regulating the activity through laws with technical bases, an aspect that they see in the Credit Card Law.
“It is a technical law that promotes consumer protection with the objective that they make an informed decision in accordance with their financial needs. In addition, it promotes financial education for responsible use of credit cards and criminalizes fraud, which will be beneficial for all parties. With clear rules, any sector operates with greater transparency and certainty,” he considered.
Scope of supervisions
The SIB also explained the scope of the different supervisions related to credit cards, which are not only derived from that law, since most of them are already carried out:
- Among the institutions legally authorized to operate in the country and that are under the supervision and inspection of that entity are banks and financial groups, whose list is disclosed and updated on the entity’s website, which includes nine types. of entities.
- In the case of savings and credit cooperatives, in financial matters they will continue to be under the supervision and supervision of Ingecop, which allows them to raise and place resources.
- In matters of money laundering, it will always be up to the Special Verification Office (IVE) to require information related to financial, commercial or business transactions that may be linked to that crime, as they are obligated persons.
- Issuers that are not included in the categories mentioned above will have the obligation to provide information to the SIB Risk Central to determine the level of indebtedness of each person; as well as the obligation to report interest rates.
Necessary strengthening in the Diaco
Separately, the Ministry of Economy (Mineco) gave its position regarding strengthening the Directorate of Consumer Attention and Assistance (Diaco), for the new function assigned to it, since it must create a Financial Supervision Unit to address the complaints from users and what the law indicates, and which includes three aspects:
- Human resource: Provide the Diaco with the necessary personnel and specialize the current personnel in financial matters.
- Financial resource: Make budgetary arrangements to increase your budget ceiling and operating expenses.
- Technological feature: Strengthen the current complaints system with the implementation of electronic notifications and minimum necessary adjustments, such as communications with suppliers.
“Since March 1, with the entry into force of the law, special attention is paid to complaints from financial users,” responded Mineco when asked when it will begin to create the aforementioned Financial Supervision Unit.
Ingecop: “We must strengthen ourselves to supervise cooperatives”
The General Inspector of Cooperatives, who directs Ingecop, Leonardo Enrique Canastuj, explains that they already carry out supervision and inspections of cooperatives and must adapt to the new legislation, but that this entity needs to be strengthened to carry out its work, and not only by the new provisions.
When referring to the impact and importance of including savings and credit cooperatives in article 3 of this law, as issuers and co-issuers of credit cards, he mentioned that this activity has already been carried out for some time, as of co-issuers, since it is part of a service or tool that is provided to associates based on their own regulations.
However, he stated that the article in question “gives legitimacy to the action of issuing credit cards to first and second degree Savings and Credit cooperatives to act as issuers and co-issuers; and based on this, supervision over the management of these processes must be part of the inspection carried out by Ingecop.”
It states that the supervision they already carry out includes different actions such as monitoring through Surveillance and Early Warning, which consists of the quarterly analysis of the financial statements of the cooperatives, which includes liquidity, delinquency, assets, portfolio and other indices, and They are analyzed through a so-called traffic light and heat map that indicates how the cooperative is located.
In addition, a preventive report is issued that will help the cooperative to improve accounting, financial and decision-making processes. However, it explains that the cooperatives that carry out this process are not supervised because they allow them to be monitored with the exception of cases in which the heat map indicates more than five indices in red consecutively during the following quarters.
If so, it is audited to review its accounting, administrative, legal and fiscal processes and others that the Cooperative Inspector considers.
The process of dissolution or liquidation of cooperatives is also carried out and for example, 65 have been liquidated that were no longer carrying out activities and were in the process of dissolution 72. However, although there are some that resist being audited, none have been suspended or dissolved for that reason.
After the approval and validity of the Credit Card Law, it is stated that it is necessary to present a regulatory proposal in which the sector must be taken into account. “As General Inspector of Cooperatives I see that in this sector what is needed is support and giving it the input to continue improving the work it does.”
He adds that it is necessary to strengthen the supervisory capacity of cooperatives in general and now that relating to cards, so they see an opportunity since it is necessary to reform the General Law of Cooperatives through initiative 6000, which is why they ask that it be approved in the third debate and the process is finalized. This is made up of 18 articles and was approved in the second debate in 2022.
For its content, consensus was reached with the savings and credit sector and the institutions that regulate them such as Inacop and Ingecop. “I know there is still a lot to do, but that would be a good start.”
Ingecop is a small institution that supervises 2,571 cooperatives, a sector that manages assets for Q100 billion. Of that total, 902 are savings and credit and 705 of them provide this type of services to their members, but 197 have not presented documents to Ingecop and are not carrying out activities for which they were established, Canastuj said.
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