Febraban responds to Abranet and says that the association disrespects BC and banks By Estadão Conteúdo

2023-10-20 00:40:33

© Reuters. Febraban responds to Abranet and says that the association disrespects BC and banks

In a letter released on the afternoon of this Thursday, the 19th, the Brazilian Federation of Banks (Febraban) responded to a statement from the Brazilian Internet Association (Abranet) about possible restrictions on interest-free installments for credit card purchases. The entity that represents the largest banks in the country states that Abranet’s letter has “disrespectful and offensive” content towards the Central Bank, which mediates the debate on the topic, and that it makes “untrue” quotes about Febraban and the banks.

“At the outset, it is worth highlighting that, conveniently, Abranet omits information in its text and seeks to induce the reader to a distorted view on the subject of interest-free credit card installments”, states Febraban, which says that other laws deal with the BC’s competence to discuss the topic, not just the one that regulated Desenrola. “This framework includes the creation and independence laws of the BC, both complementary laws, which cannot even be changed by ordinary laws.”

Febraban also says that Abranet omits that interest-free installments account for 15% of the individual credit portfolio, and therefore requires “prompt action” from the BC.

Banks state that interest-free installment payments for purchases are subsidized by the interest on revolving credit, which explains the high rates on the line, in which customers who fail to pay their credit card bills are retained. Entities like Abranet reject this association, and accuse banks of trying to end installments. In today’s letter, Febraban once again denies this intention.

In another section, the entity says that Abranet defends that the BC remains “arms crossed” in the face of sensitive issues in the credit market. Abranet’s letter stated that the entity is against limitations on purchasing installments, one day after the BC stated, in a meeting with banks, the card industry and retail, that limiting purchasing installments to 12 installments could be a solution for self-regulation of the rotary.

“The recently approved rotating law itself determines that the self-regulation proposal must be intermediated by the BC, with its coordination being essential in mediating the diverse interests that involve the entire card chain, which is complex and full of links with business models not only distinct, but conflicting”, continues Febraban.

Also according to the entity, the BC has the legal, technical and regulatory competence and authority to arbitrate and discipline issues in the card market. He also says that Abranet goes “against common sense” by trying to exclude the BC from conducting the process.

Accusations

In the letter, Febraban again says that Abranet defends a “hidden agenda” of independent machine companies. In a dispute over narratives on the revolving issue, banks accuse these companies of making money with excessive fees on advances on receivables, and higher ones on purchases with longer installments. Therefore, says Febraban, these companies are against the limitation of installments.

Febraban also says that Abranet’s president, Carol Conway, has a connection with “one of the companies” associated with the entity – Conway is director of PagBank (formerly PagSeguro). “At Febraban we have no conflict or confusion of interests in the activities of its directors with associated banks. Unlike Abranet, Febraban’s governance does not allow the entity’s executives to maintain any link – employment, professional or corporate – with the banks that are part of its membership.”

According to the entity, Abranet uses the hat of a sectoral association to defend the interests of “who it actually represents”. It also states that Febraban’s reasons for defending changes in installments are clear, and that Abranet has adopted a stance “based on untruth” since the beginning of the debate.

Febraban also says that unlimited installments have become a “nightmare”, and that it leads consumers into over-indebtedness, especially with several cards on hand. “This is the banner of the business and commercial interests that Abranet defends”, states Febraban.

The entity also responds to Abranet’s statement that intervention by the BC in interest-free installments would be an attack on consumer protection and competition, and that it could validate coordinated action on the part of the banks. “This is a frivolous and criminal accusation, as it affects the reputation and honor of the Central Bank and the banking sector as a whole, which will give rise to appropriate legal measures from Febraban in the part that touches the sector it represents”, says the text .

In yesterday’s letter, Abranet said that Febraban could inform banks that they could individually limit the installments that their customers can make on card purchases.

“Febraban does not need advice from an entity that does not reveal, in a transparent way, what its true agenda is in the card agenda, even though, at this point, the interests that drive Abranet’s operations are already quite intuitive”, says the entity that represents the banks, in today’s note.

In another part of the text, the Federation says that Abranet’s statement that purchases made in installments have the same default rate as those made in cash is “biased and unreasonable”. Finally, he says that the business model defended by Abranet is “anti-competitive and predatory”, as it represents the interests of companies that “retain the interest income embedded in the price of the merchandise”.

Febraban cites an internal study that states that without the anticipation of receivables, independent machines would have had a loss of R$1 billion last year.