Actualidad Colombia

Standards for financial costs

Act 1793/2016

The President of the Republic of Colombia has sanctioned Act 1793/2016, better known as the Financial Charges Law.

This law makes three basic provisions: i) a minimum balance in a savings account cannot be obligatory, ii) after 60 days of inactivity in a savings account no financial charges may be levied, and iii) all savings accounts must be interest-bearing.

As far as the first point is concerned, the law sets out that all institutions in Colombia that are authorised to collect funds from the public in online savings and deposit accounts must give their accountholders access to all the money in their accounts. This new regulation makes it illegal for these entities to require their customers, in order for the product to remain active, to leave a minimum balance in their accounts.

The second provision of the law stipulates that financial costs may only be charged for the first sixty (60) days that an account is inactive. Similarly, backdated charges may not be charged, once the account is active again, or when a deposit is paid in that could cover the unpaid part of the financial charges.

We need to bear in mind that for the effects of this law, an inactive account is understood as one with no transactions, either debit or credit, in the same that have been carried out by the accountholder or third parties, not including the bank itself.

Finally, the third provision indicates that financial institutions that are authorised to collect funds from the public must ensure that all fund balances in savings accounts receive interest payments; these in any event may be freely determined by each entity, and may vary depending on the amount deposited in the account. Thus the regulation does not set a floor on the interest rates. So we understand that financial institutions can set these rates at their discretion, provided that they are above 0%, and that the deposit balance is more than one peso (COP1).