Actualidad Colombia

Unification of Reporting on Financial Costs

Decree 1854/2015, amending Decree 2555/2010 on Standard Total Value of savings and loan transactions

The Colombian Government has established new rules regarding the Standard Total Value of financial products. The concept of this standard value, known in Colombia as the VTU was created under Law 1748/2014, (analysed in Progreso 2, in line with Resolution on transparency of information, in Progreso 1) which obliged financial institutions to use a standard methodology to inform their customers of the real and the potential financial costs of their products on the market. The points regulated include the division of the VTU over lending-side transactions and savings-side transactions.

The standard value of financial costs on lending transactions (VTUA) must be expressed both as a percentage and as a number of Colombian pesos. The value includes the instalments, insurance premiums, fees and any other such costs  that a potential customer would have to pay to the financial institution during the life of the loan, that are inherent or associated to the borrower's liabilities on the transaction.

The VTU must be given both to current customers and potential customers and is linked to the annual reporting on costs for customers that is mandatory for institutions under the oversight of the Colombian supervisor, Superintendencia Financiera de Colombia.

The Standard Total Value as part of Financial Education

 This way of giving information forms part of the Colombian Government's financial education programme. It started the programme some years back to try to keep financial consumer's informed of the true financial costs of the products that they acquire in the financial system.