As part of the post-pandemic economic reactivation, the national government enacted Law No. 6534/20 which, on the one hand, ensures the full protection of personal and credit information and, on the other hand, expands and modernizes the regulatory framework in a timely manner for its treatment and use in the market.
In general, the law enters into force immediately, and Law 1682/01 and its two subsequent amendments, known in common language as the “Informconf Law”, were derogated.
The new law provides that, within a maximum period of two years (until October 2022), companies involved in processing information must rearrange their statutes, organization and operation to be renamed “Credit Bureaus”. These new companies will become companies supervised by the Central Bank of Paraguay (“BCP”), with minimum capital requirements. However, the regulation of said law by the two enforcement authorities is still pending: the Central Bank of Paraguay and the Office for Defense of Consumers (“SEDECO”), so it would be reasonable to count on some specific issues to be expanded or even become enforceable in the very short term.
The following new facts can be mentioned:
- a) The “right to be forgotten” is created: credit data that may affect a person should not be kept on record for more than 5 years. After that period of time, it must be eliminated or disassociated from the person.
- b) Breach of the “duty of secrecy” is expanded: previously as exclusive power of judges, now is extended to the Comptroller General of the Republic, the BCP, the Tax Administration, Customs, the Attorney General’s Office and the Financial Intelligence Unit (“Seprelad”).
- c) “Information consent” is expanded: companies that collect information must report the destination and purpose of the same and obtain prior express authorization from individuals.
- d) The use of credit information for decision-making related to human resources, as well as for the provision of medical services, is prohibited
With regard to overdue obligations and delinquency in general, the new law provides that:
- e) Delinquency for alimony becomes part of and affects a person’s credit information from the moment the claim begins;
- f) Cancellation of liabilities by debtors must be reported within a maximum period of 24 hours; and,
- g) Publication of overdue debts that have exceeded 3 years since their registration and not legally claimed is prohibited
Other important aspects to be considered:
- h) The law establishes the obligation to inform in advance to those individuals whose credit information will be consulted, about the company that will provide the data, the use that will be given to the accessed data, and deliver a copy of the provided report in the event that the owner of the data requires it.
- i) In case of rejection for entering into a contract, request for work, service, commercial or financial credit, based on a credit report, such circumstance must be reported, and the report must be shown, delivering a copy of it.
- j) The sale or assignment of credit portfolios must be reported to the credit bureaus
The main positive aspect worth to be mentioned is that adjustment to the new legal obligations will be minimal for those companies whose daily business involves granting commercial loans. However, it must be noted that sanctions are more serious than in the previous legislation, with higher fines that can even include the closure of operations and disqualification within the financial system. Therefore, it is BKM|Berkemeyer suggestion to review all processes and documents related to credits, including collections, and take advantage of the opportunity to detect other opportunities for savings and efficiency.
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