Institutions will have rules proportional to their size, preserving easy entry for new competitors in the segment and increasing competition in the system
The new rules announced by the Central Bank (BC), which increase prudential requirements for payment institutions (PIs) – according to the size and complexity of the company – should change the practices of fintechs, especially the large ones. The Central Bank claims that the rule has become necessary due to the segment’s diversification and sophistication since the establishment of the IPs legal framework in 2013, when part of this segment created financial subsidiaries and began to assume new risks without proportional prudential requirements.
The rules will come into force in January 2023 and the full implementation will take place in January 2025, time for institutions to adapt their internal controls and adjust their ownership structure. According to the Central Bank, with the new regulations, institutions will have rules proportional to their size, preserving the facilitated entry for new competitors in the payments segment and increasing competition in the system and financial inclusion.
According to the lawyer specialized in Business Law and Capital Markets Marcelo Godke, professor at Insper, FAAP, Ceu Law School and partner of the Godke Advogados law firm, the new regulations of the Central Bank try to avoid in advance that a crisis happens with any institution. “The idea is that the bank has a constant monitoring of what it does and the risks it assumes in each active operation, so that cash flow mismatch problems don’t happen.”
Godke says that some fintechs are already tied to traditional financial conglomerates and others are independent and the Central Bank realised that perhaps it was time to create specific rules for this market, with rules on governance, equity, transparency, appropriate to the size and type of activity of the institution.
The specialist believes that these new rules can serve to offer a little more solidity to the banking market and to the financial market as a whole. But, as a counterpoint, by creating some kind of restriction for the market, it may be that credit becomes, in addition to scarcer, a little more expensive as well. “The market will test this little by little. In theory, there may be an increase in the cost of credit for the consumer. But only time will tell if this will materialize or not. And this is not the intention of the Central Bank, which intends to facilitate access to banking services and reduce interest rates”, he concludes.
For Mariana Lisboa, a lawyer specializing in Means of Payment, payment products and project management at law firm Barcellos Tucunduva Advogados (BTLaw), as the Central Bank intends to differentiate prudential obligations according to the size and complexity of the group, smaller institutions will not need to comply with the same rules as larger institutions, although all are obliged to follow prudential requirements. “The changes aim to bring greater competitiveness to the sector, which is a major focus of the Central Bank’s agenda in recent years.”
The specialist does not believe that there will be a direct change in the supply of credit, with the beginning of the rules. “I think the rule will be raised for these groups, so that they are similar to the prudential rules for financial institutions. We can no longer treat all payment institutions and fintechs as small, as many offer relevant systemic risks and need to be treated appropriately.
* Mariana Lisboa – lawyer specialized in Regulatory Payment Methods, new payment products and project management. Senior lawyer in the Means of Payment area of the law firm Barcellos Tucunduva Advogados (BTLaw). Graduated from Pontifícia Universidade Católica de São Paulo (PUC/SP).