Financial Safety Advice

It is no secret ongoing abuses committed by companies against domestic consumers, abuse that seems endless and, unfortunately, has been increasing. The National Institute for the Defense of Competition and Intellectual Property Protection (Indecopi) reported that in the period April 2009 – March 2010 the Citizen Service Centre (SAC) handled a total of 13.205 national claims of the 43.5% which was in Lima and Callao, and 56.5% in other departments.

Of the total of claims that came to the regulator, 59.7% of claims are concentrated in just five economic activities, of which Banking and Financial Services recorded 3.965 claims. Thus, this sector is again, where they make more consumer abuse, either by misleading advertising, improper, among others.

Previously, the university professor ESAN, Miguel Martin Mato, warned of the oligopoly that exists in the local financial market, where three four banks control more than 70% of the sector. According to the specialist, the bank concentration is detrimental to consumers in this sector also avoids that there is greater competition among financial institutions on behalf of users.

Martin Mato said that only the lead bank controls 37% of the market and the three largest banks, 75% of system deposits. “Rn any other country in Latin America there is such concentration indices as in Peru,” he asked. Read the rest of this entry →

With the approval of the Financial Security Act by the plenary of the Legislative Commission, the banking sector is concerned and unhappy, as some representatives of banks believe that the force is put at risk the profitability of the banks and that envisions a reduction in the volume of deposits and a contraction in the placement of credits that could be reduced by average 70% next year. According to the Association of Private Banks of Ecuador (ABPE), the profits of many banks will disappear.

The general manager of Banco Pichincha, Fernando Pozo, adding that these reforms, “coupled with economic measures antitechnic the Government, form a set of elements that are isolated to articulate but can eventually attack the solvency of the financial system.”

Similarly, Cesar Robalino, chief executive of the Association of Banks (ABPE), held that this document is not a technical support “to enable the banks to work with total independence.”

Moreover, Pozo said it is a grave mistake for the Fund of the Deposit Guarantee Agency (AGD) is administered by the State, since income will consist of the shareholders of the banks, not the contributions of depositors. Therefore, “the regime has no right to intervene,” he said.

But the legal document is more specific in stating that “after the extinction of the AGD within 12 months and up to six months renewable, assets, rights and powers shall be executed by the Ministry of Finance.”

Robalino said that these reforms do not reduce systemic risks nor create confidence in the financial market, because “to use these standards should establish clear policies on interest rates, tax incentives and economic policies that encourage production and investment,” said .

At another point, the rule states that state investments, banking and Social Security (IESS) pass through transparent markets or stock exchanges. The holder of the APBE added that a “financial network misconceived and can adversely affect the resources of both depositors and to banks.” (APB)