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Nicaragua: Transparency in financial services

Rodrigo Taboada
On September 20 2013, the Superintendence of Banks of Nicaragua approved the Regulation for the Transparency of Financial Operations.

The Regulation aims to promote the disclosure of accurate financial terms to users of financial services, allowing them to make a knowledgeable choice between financial alternatives and financial institutions. This also includes insurance services and insurance companies.

The Regulation lays out the duties of financial institutions regarding the information that should be provided before, during and after the execution and delivery of any financial agreement. It includes a scheme that clearly explains and summarises all the conditions to be agreed.

Among the general principles of the Regulation for the Transparency of Financial Operations are: (i) clear, complete, timely and adequate information about the scope and consequences of the financial services to be rendered; (ii) freedom to select between financial services in an environment of free competition; (iii) information on any rejection to provide a financial service that the user has requested; (iv) timely and diligent attention to claims, demands or inquiries presented by users; (v) information on the status of any request or claim by the users: (vi) appropriate treatment towards the user in the filing of any claim or presentation of any request; and, (vii) protection of personal private data.

The transparency of financial services refers in particular to the disclosure of the application and modification of interest rates, fees, expenses and any other charges related to any operation in which users are involved. Any modification of such terms should be notified to the user of the financial services before their application is submitted.

The board of directors of every financial institution is responsible for authorising and approving general policies that facilitate an adequate system for client services under the Regulation for the Transparency of Financial Operations. The general manager is in charge of developing and implementing the policies stated by the board of directors.

Contracts of adhesion that evidence transactions with financial institutions may not contain abusive clauses which clearly represent an advantage to the service provider. Among its definitions, the law defines abusive clauses as: (i) those that allow financial institutions to vary the interest rate, fees, expenses or other charges without prior notification to users; (ii) those that allow financial institutions to vary interest rates without complying with the procedures established by law; and, (iii) those that allow financial institutions to charge interest rates, fees and expenses that are not regulated by law.

Rodrigo Taboada

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