According to what was presented, the proposal to reform the Law Against Usury contemplates renewing four existing articles, creating seven new provisions to be added to the regulations and establishing a transitory provision.

Therefore, fines will be established for those who charge higher interest rates than allowed. The Superintendencia del Sistema Financiero (SSF) will be empowered to supervise sanctions ranging from 300 to 1,000 minimum salaries, while the non-supervised sector will be sanctioned from 100 to 500 minimum salaries.

With this update of the regulations, the Banco Central de Reserva (BCR) will include the Fondo Social para la Vivienda (FSV) and the Fondo Nacional para la Vivienda Popular (FONAVIPO) in the maximum rates.

"With this third act of financial justice we seek to reform the Law Against Usury, since it is an article created in 2013, so it has been nine years that it has not been modified", commented the President of the commission, Dania González. "This renewed law will regulate three things: prohibit usury, prevent it and sanction usurious practices", she said.

Usury is an illegal practice that consists of charging excessively high interest rates on loans, thus implying an unfair profit for the financial entity that has lent the money.

Prohibition of charging interest on interest

The law prohibits the charging of interest on interest and will be subject to the corresponding legal sanctions.

This is mentioned in the current regulation, but the sanctions are not determined. In view of this and in order to apply them, the deputies suggest that the Defensoría del Consumidor (DC)be the supervising entity to carry out audits to the unsupervised subjects without the need of prior notice.

In addition, said institution will be able to carry out inspections in the place it determines, and will be assisted by the Fiscalía General de la República (FGR) if necessary.

Compensation may be requested when it is proven that interest on interest is being collected. That is to say, if after the approval of this reform and if the practice of charging high interest continues, the debtor may request the payment of such interest that has been excessively requested.

The regulation establishes that prepayment of loans will only be penalized when they are made in an amount less than 25% of the agreed term.