/ New Regulation Empowers Consumers: Creditworthiness Assessment and Consumer Information

On August 3, 2023, the Creditworthiness Assessment Regulation was published. Discover how the regulation transforms credit operations and protects consumer rights, as established in the Pro Consumer Act.

Maria Ignacia Ormeño Sarralde
Associate Attorney
Alessandri

The recent publication of the Creditworthiness Assessment Regulation, in accordance with the Pro Consumer Act, represents an important milestone for consumer rights, as it introduces a crucial obligation for credit transaction providers: to assess the creditworthiness of consumers before entering into any credit transaction. The assessment is based on available information obtained by providers from official sources including:

• List of debtors from the Financial Market Commission.
• Commercial Information Bulletins of Decrees No. 950, 1971 and 4368 issued by the Ministry of Finance.
• Any other information collected in accordance with Law No. 19,628, known as Law on Privacy Protection (hereinafter “Personal Data Protection Law”).

The creditworthiness assessment evaluates essential factors, such as the consumer’s current and foreseeable income during the period of validity of the loan agreement, debt levels and history of credit defaults. It may also consider employment status, assets, savings, fixed expenses, payment behavior, and the existence and quality of collateral, among other objective conditions previously and publicly established by the provider.

The regulation establishes the obligation to provide clear and unequivocal information on each credit operation, both in physical and digital format, accompanying quotations, portability offers and content on websites. In addition, providers must inform consumers about the results of the analysis, delivering a detailed report along with the result of the credit application.

The regulation covers:

• Providers of credit operations, whether supervised by the Financial Market Commission (CMF) or not.
• Consumers as final recipients of advertising, offers, promotions, quotations or proposals for credit operations.

The protection of personal data in creditworthiness assessment is fundamental. Providers must handle personal data in accordance with the Data Protection Law, Law No. 20,575 (which emphasizes the purpose of data processing) and other applicable regulations. The personal data processed must be accurate and up to date, collected only for creditworthiness assessment, business risk assessment or to comply with legal requirements established by authorities.

The regulation prohibits requesting information from third parties unless they are contractually obligated or consumers base their ability to pay on the income of others. In these cases, the third parties must consent to the disclosure of information.

For institutions of higher education, providers may only promote credit transactions directly related to the financing of educational services. In addition, providers are required to establish internal guidelines and monitoring mechanisms to ensure full compliance with the regulation. The National Consumer Service oversees this compliance.

Failure to comply with the regulation may result in penalties of up to 1,500 UTM. It will be in effect as of May 4, 2024, so that the impact of the regulation on consumer rights and financial practices will develop progressively.