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The finance committee of Chile's lower house of congress approved by a majority vote an amendment that limits the joint sales of financial products by banks, following last year's controversy surrounding the issue, according to a congressional press release.
With this vote, the Sernac Financiero bill also moves to the full chamber.
Back in September 2010, the head of banking regulator SBIF, Carlos Budnevich, and finance minister Felipe Larrain announced that banks could no longer offer discounted interest rates for would-be mortgage customers who take other banking products with the same institutions - a practice known as tied sales - in a bid to promote competition in the local banking system.
But in November, the regulator reversed course and issued a new regulation that allows banks to tie the sale of one product to a mortgage loan when the loan's monthly installment is paid automatically through a customer's checking account or credit card, in what the regulator called ventas conjuntas, or joint sales.
The issue forced lawmakers from both sides of the aisle to present an amendment limiting this type of sales. Pro-government lawmaker Nicolas Monckeberg said the amendment allows joint sales only in very specific cases, and only with explicit authorization by financial services consumers.
"Joint sales will be limited, in terms of price and conditions, as they will be regulated by [consumer protection agency] Sernac and the banking clients' ombudsman. Before our amendment, the bill was very generic about this issue," opposition lawmaker Pablo Lorenzini said.
Banks and other non-banking lending institutions will have to inform consumers about any changes in conditions, fees or other expenses associated with their products. In the case of the ombudsman ruling in favor of the consumer, banks will have to return to the contract's original conditions and return to the consumer any extra expenses related to the change.
Banks failing to do so will face a penalty of up to 750 UTMs (28.2mn pesos, some US$58,000).