May 4, 2020 / COVID-19 / Finance and Banking
“Accession Agreements and Collection Offices”
As a result of the health emergency generated by the COVID-19 virus, several financial institutions have sought to implement additional support measures for their current and prospective customers —whether individuals or legal entities— mainly in granting loans to help improve the current economic situation.
The Multiple Purpose Financial Institutions and Non-regulated Entities (“SOFOM, E.N.R.”) support their customers by extending the payment deadlines of the loans granted, without causing any deterioration in their credit history. The SOFOM and ENR must comply with the guidelines properly issued by the regulating authority applicable to the sector to implement such supports.
- Amendment to the Accession Agreement.
A first option is that the SOFOM and ENR amend the initial obligation formalized through an Accession Agreement[1] (the “Agreement”) – i.e. credit restructuring –. The General Transparency Provisions, Article 17, applicable to the the SOFOM and ENR, (the “Transparency Provisions“) establish that, to make such amendment, users must be given a prior notice thirty (30) calendar days in advance through the account statement or any other previously agreed means and with the specifications indicated in such regulation.
- Agreements documented by Collection Offices.
Another option to amend the Agreement, impacting the credit restructuring without affecting customers and without having to adhere to a specific deadline given the current situation, is established in the General Provisions applicable to the financial entities in Collection Offices matters (the “Provisions of the Collection Offices“) in which the power to support the SOFOM and ENRis granted to the Collection Offices (the “Offices“) for negociating the relevant credits. Based on the foregoing and in order to provide legal certainty to customers, the Law on Financial Service Transparency, Article 17 Bis, (the “Law“) indicates that the SOFOM and ENR must have sufficient data to identify their offices available for their customers.
Additionally, the Provisions of the Collection Offices, Provision 4, Section V, establishes that such Offices must “Document in writing with the Debtor the payment, negotiation, or restructuring agreement of the credits, loans or financing; indicating the terms and conditions that allow identifying the offer, discount, forgiveness, or write-off if the agreement includes any of these concepts…” (hereinafter, the “Covenant“).
In this same way, once the Offices have agreed with the customer on the credit restructuring, they must deliver to the SOFOM and ENR the Covenant stating the forgoing. Additionally, the SOFOM and ENR must contact the Credit Information Agency (“SIC“) to which they report to communicate such Covenant.
In addition to the foregoing, and in accordance with the Law to Regulate Credit Information Corporations, Articles 69 and 70, the SIC must include the relevant annotation in the database; and, in case the restructuring obeys an offer made by any to the SOFOM and ENR, such situation must be indicated in the Credit Reports and Special Credit Reports issued on the customers, if applicable.
Nowadays, some SICs are issuing a specific key to identify the credits receiving the financial support from the SOFOM and ENR, due to the health emergency.
[1] Document prepared unilaterally by the Multiple Purpose Financial Institution and Non-regulated Entities to establish in uniform formats the terms and conditions applicable to the execution of one or more active transactions or services carried out with users, with the understanding that the latter may not negotiate such terms and conditions.
