On October 12, 2022, the Chilean Congress approved the Fintech Bill (Fintech Law), which now only needs to be approved by the President of the Republic to become a law. In this information notice, we describe the highlights of this new regulation.
Goal
The Fintech Law maintains the guidelines proposed by the Financial Market Commission (the Chilean Financial Supervisory Agency, CMF) to the Ministry of Finance, and mainly aims to:
- Establish a general framework to encourage the delivery of financial services through technological means, and empower the CMF for this purpose.
- Establish an open banking system for the exchange of customer information between the entities participating in such a system
- Amend and update other laws to adapt their content to the provisions of the Fintech Act
Regulated business
The services regulated by the Fintech Act are:
- Crowdfunding platforms
- Alternative transaction systems
- Mediation of financial instruments
- Order routing
- Credit advice
- Investment advice
- Custody of financial instruments.
In particular, the following aspects should be taken into account:
- Registration in the CMF register
Entities that intend to offer one or more of the regulated services must register in the register of providers of financial services maintained by the CMF.
CMF has a deadline of 30 working days to decide on applications for registration, which period must be suspended if it requests changes. When the deadline has expired, CMF must take a decision on the application and possibly register the applicant within three working days.
- Authorization to provide regulated services
In addition to registration with the CMF, in order to offer regulated services, prior approval must be obtained from the CMF, which will be granted when the general requirements set by the Fintech Law and the specific requirements that the CMF will define for each regulated service by means of a general rule .
Other conditions related to regulated services:
- Guarantees and equity requirements. CMF may require guarantees and/or minimum equity from those who offer regulated services, depending on their business volume or number of customers.
- Violations. A specific regime is established for infringements which include, among other things, offering services without being registered or without obtaining prior approval to provide the specific services, failing to provide the necessary guarantees, submitting false information and disseminating false, incomplete or misleading information
Open economic system
An open financial system is created to allow the exchange of information from financial clients who have expressly consented to it, through external and automated access interfaces that allow interconnection and direct communication between the institutions participating in the system.
Participants in the system
Only those units that qualify as:
- Information providers (banks, credit card issuers, payment cards with the supply of funds, and those defined by the CMF as broker-dealers, fund managers, etc.).
- Institutions that offer information-based services (units to be registered in the new register to be kept by CMF for this purpose).
- Account Providers.
- Providers of payment initiation services (entities responsible for instructing payment orders or electronic transfers on behalf of their customers, registered in the new register to be kept by the CMF for this purpose).
These entities must allow consultation and access to the information, in accordance with the terms, conditions and specifications to be defined by the CMF.
Composition of the system
The system must include:
- General information about financial products and services offered to the public.
- Information on the identification and registration of clients and their representatives.
- Information about the commercial conditions entered into the contract and the use or history of transactions carried out by customers.
- Communication between providers of financial services covered by the Act on Financial Portability.
- Data or information necessary for the provision of payment initiation services.
- Other data or information relating to financial products or services as determined by CMF.
The CMF should issue rules on information exchange interfaces, cyber security measures, how to provide free, informed, express and specific consent and means of customer authentication.
Changes in other laws
The Fintech Act establishes changes in various legal bodies, among other things we find:
- Law No. 20 950, which refers to the issuance and operation of means of payment with the supply of funds or another similar system by non-banking companies.
- Law No. 18,840, Organic Law of the Central Bank of Chile.
- Act No. 18 045 on the securities market, which, among other things, establishes a simplified registration regime for debt securities that meet certain requirements to be determined by the CMF.
- Act No. 18,046 on companies, which changes, among other things, the number of shareholders to be considered an open company from 500 to 2,000 shareholders.
- Legislative Decree No. 251, which includes, among other things, the so-called parametric insurance policies.
Validity
The rules relating to regulated services and the system will be in force from the date of entry into force of the corresponding regulations issued by the CMF. The rules relating to the system must be issued within 18 months of the publication of the Fintech Act.
