New Regulations Apply to Non-Financial Credit Suppliers

On October 22, 2020, the Argentine Central Bank (the BCRA, after its Spanish acronym) issued Communique “A” 7146 that expanded the range of application of the provisions of Financial Institutions Law No. 21,526 (the FIL) to include non-financial credit suppliers and non-financial companies issuing credit or purchase cards with a scope limited to the financing granted within the framework of the regulations on “non-financial credit suppliers.”

On November 4, 2020, the BCRA, through Communique “A” 7156, approved the new Amended Text (the “AT”) of the regulations for “non-financial credit suppliers.” In point 1.1, it defined non-financial credit suppliers as legal persons who are not financial entities but whose main or ancillary business is to offer credit to the general public in the form of financing as defined in the regulation.  Point 1.2 of the AT established that these financings are granted to human and/or legal persons; do not require a specific destination; and include loans granted by non-financial companies issuing credit and/or purchase cards.

Registration of other non-financial credit suppliers

Consequently, pursuant to Communique “A” 7146 and Communique “A” 7156, as of December 1, 2020, non-financial credit suppliers and non-financial companies that issue credit and/or purchase cards —for financings that are not included in Credit Cards Law No. 25,065— must be registered in the “Registry of other non-financial credit suppliers.” Registration is through an app on the BCRA website and is required when the financed amount exceeds AR$ 10,000,000 (ten million Argentine pesos), regardless of: i) whether the recipient receives assistance from financial entities or not; and/or ii) whether the offer is made face-to-face or remotely. That registration in no way authorizes them to act as financial intermediates, receive deposits from the public, advertise or use the names reserved for authorized entities or names that otherwise create doubts about their nature, individuality or purpose.

Application of the regulations on “Interest rates in credit operations”

Pursuant to Communique “A” 7146, as of January 1, 2021, certain advertising and information measures established in Sections 1, 3 and 4 of the regulations  apply to financings granted by other non-financial credit suppliers (e.g., clear and accurate advertising of the nominal annual interest rate, effective annual interest rate, CFT, fixed or variable interest rate, formula of calculation, among others).

Regulations on “Protection of users of financial services”

Pursuant to Communique “A” 7146, as of February 1, 2021, the BCRA’s regulations on “Protection of users of financial services” will apply to financings granted by other non-financial credit suppliers.

Information regimes

In accordance with Communique “A” 7146 and Communique “A” 7156, as of March 1, 2021, and for 90 calendar days from their registration, all other non-financial credit suppliers will be required to meet the information regimes set forth in points 2.1. and 2.2. of the AT and to report any relevant changes within 15 business days of that change. Point 2.1 of the AT establishes that the relevant information must be submitted to the BCRA’s Central Debtors of the Financial System (CENEDU, after its Spanish acronym) registry in accordance with the BCRA’S “Classification of debtors” criteria. Point 2.2 of the AT requires compliance with the “Monthly accounting information regime” and the special annual external compliance audit report conducted by registered professionals or associations of registered professionals.

Sanctions

In accordance with Communique “A” 7146 and Communique “A” 7156, as of December 1, 2020, both non-financial credit suppliers, as well as their governing, administrative and supervisory bodies, will be subject to sanctions under the FIL for incompliance.

Without prejudice to these sanctions, the AT establishes that any breach of Sections 1 and 2 of the AT will restrict other non-financial credit suppliers’ access to financing from financial entities.

Other relevant regulations

In accordance with Communique “A” 7146, as of February 1, 2021, the BCRA’s rules on “Electronic communication of environmental care measures” apply to other non-financial credit suppliers.

Pursuant to Communique “A” 7156, if financing portfolios are transferred when an operation is arranged, the non-financial supplier will have to notify the assignee of the worst classification assigned over the previous 6 (six) months to the debtors included in the transfer and the last classification communicated to the CENEDU. If the assignor remains in charge of collection management, it must continue to provide the CENEDU with data on that transferred portfolio.

Mutual associations and cooperatives are not governed by these measures; however,  certain specific exceptions regarding their registration in the “Registry of other non-financial credit suppliers” apply if they grant financing for an amount greater than AR$ 20,000,000 (twenty million Argentine pesos). Exceptions also apply with respect to Chapter 1 of the “Monthly accounting information regime” for “Transparency” subsequent to its registration.