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Chile's consumer watchdog: Banco Consorcio to cut abusive clauses, compensate clients

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Chile's consumer watchdog: Banco Consorcio to cut abusive clauses, compensate clients

has reached an out-of-courtsettlement with Chile's consumer protection agency, SERNAC, by agreeing to eliminateabusive clauses in mortgage contracts and to reimburse clients for interest andcollection fees charged in the last five years, SERNAC said in a statement on itswebsite April 13.

Around1,500 clients will benefit as a result of the agreement, SERNAC said.

BancoConsorcio will also compensate clients affected by the charges to the tune of 25.4billion Chilean pesos to be distributed among the clients, SERNAC said, adding theamount of interest and other fees to be reimbursed will be adjusted for inflation.

SERNACfiled a class-action lawsuitagainst Banco Consorcio over abusive clauses in its contracts in early April 2015.

Clientscould choose when to pay their monthly mortgage installments during the first 10days of the month, but if they missed the deadline interest was charged startingon the first of each month, SERNAC said, adding the bank also charged clients collectionfees for periods not permitted under the law.

The agency'sfirst attempt to mediate between clients and the bank, which took place in March2014, failed since Banco Consorcio was unwilling to remove clauses that the agencysays violate the rights of consumers.

SERNAChas also launched a lawsuit against BancoSantander Chile over the same dubious practices, and was involved incollective mediation with five banks — BancoBICE, CorpBanca, Banco Itaú Chile, Banco Internacional SA and Banco del Estado de Chile — which all agreed to change theircontracts to meet the agency's standards.

The newagreement with Banco Consorcio is good news for consumers as it meets the agency'sinitial goal, which was to force the bank to eliminate abusive clauses, as wellas ensuring consumers are adequately compensated, SERNAC's national director, ErnestoMuñoz, was cited as saying.

Regardingcollection fees, Muñoz said companies must respect the law and not harass consumersor inform third parties of their debts. They must also make at least one attemptto inform the client of overdue charges without cost to the debtor before startinga debt collection process.

BancoConsorcio is a subsidiary of Chilean financial group, Consorcio Financiero S.A.

As of April 12, US1 was worth679.96 Chilean pesos.