The National Commission for the Defence of the Rights of Financial Services Users (CONDUSEF) has issued rules regarding abusive clauses contained in non-negotiable contracts used by financial institutions, including insurers.

'Abusive clauses' are defined as covenants, terms or conditions that result in unequal rights or obligations between the parties. These terms are generally included in the template texts of products, which are non-negotiable. Clients thus cannot negotiate the terms of such contracts and are consequently forced to accept the abusive terms.

The new rules consider two types of abusive clause:

  • those contained in any type of financial product, such as clauses which impose non-specific obligations on the customer, advance waivers of rights, amendments without client consent or similar terms; and
  • those used by specific financial institutions.

With regard to insurers, abusive clauses include general insurance contract provisions which condition payment of a claim on whether the insurance policy is valid at the time that the claim is made. In the case of life insurance products, clauses which limit the insurer's obligation to pay death benefits if other benefits have previously been paid (eg, for accidents or disability) are prohibited where the insured has paid a premium for such benefits. In the case of accidental death coverage, the rules prohibit the inclusion of clauses which deny payment to beneficiaries if the insured's death is a result of criminal acts against the insured.

The regulator is now empowered to inspect all insurance products and – where it deems necessary – order the use of a product to be suspended, with 10 days' prior notice. If CONDUSEF confirms the regulator's decision after hearing any arguments put forward by the insurer, the insurer will be required to modify the product in accordance with the CONDUSEF decision. The regulator's decisions will be published on its website.

For further information on this topic please contact Carlos Ramos Miranda at Hogan Lovells BSTL SC by telephone (+52 55 5091 0000), fax (+52 55 5091 0123) or email (crm@bstl.com.mx). The Hogan Lovells BSTL SC website can be accessed at www.hoganlovells.com.

Carlos Ramos Miranda.

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