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    CMF Updates Address Sustainability Standards and Open Finance System

    October 12, 2022

    The Commission for the Financial Market (CMF) in Chile issued a statement on the Fintech Law and open finance system, along with a guideline on the implementation and supervision of sustainability standards for supervised entities.

    The guideline on sustainability standards aims to improve the quality of the information that CMF supervised entities will deliver to the market regarding their actions in the area of ​​sustainability and corporate governance in their annual reports. As a first step, CMF enacted the General Character Standard No. 461 in November 2021, the first at the international level, to make the disclosure of the Standards of the Sustainable Accounting Standards Board (SASB Standards) mandatory. The SASB Standards determine in a materiality map the combination of environmental, social, and governance factors relevant to 77 different industry sectors and the way in which they should be measured and reported. The SASB Standards have now been absorbed by the International Financial Reporting Standards (IFRS) to form part of the global accounting standard related to sustainability. This guideline clarifies some of the most common doubts presented to CMF regarding compliance,, standardizes the disclosure criteria according to the SASB Standards, and lays out the best practices expected by the CMF. The guideline establishes three general principles that entities must keep in mind to implement the SASB Standards in their annual reports—that is, the reports must be consistent, present complete information, be clear and easy to understand.  The guideline also addresses what entities are expected to do if they consider that a topic or parameter is not applicable to them or, failing that, they need to adapt it to communicate properly. In addition to the above, it addresses what entities with activities in more than one industrial sector must do to report correctly. Lastly, it addresses a subset of industrial sectors representative of the local reality for which guidance is provided regarding the accounting parameters that correspond to them under the SASB Standards.

    A statement issued by the CMF Council explains that the Fintech Law establishes a flexible regulatory framework for financial services firms, such as crowdfunding platforms, financial transaction platforms, and brokerage companies, that CMF currently does not regulate or supervise. The Fintech Law ensures consistency between the regulatory requirements proportional to the service provided, the size of the entity, and the associated risks. The Law also creates a legal framework for an open finance system that will force financial institutions to make financial data available to other industry players with the prior consent of their clients. CMF highlighted that the Fintech Law is based on the successful experiences of fintech and open finance in other jurisdictions at the global and regional levels and was developed with the support of international organizations such as the Inter-American Development Bank (IDB), the International Monetary Fund (IMF), and the World Bank. The Fintech Law is the result of a long process that began with a policy document and workshops organized by the CMF in 2018, the submission of a legislative proposal to the Ministry of Finance in 2019, and careful subsequent legislative work by the Ministry of Finance with the support of the CMF and the Central Bank.

     

    Related Links (in Spanish)

     

    Keywords: Americas, Chile, Banking, Open Finance, Regtech, Disclosures, ESG, SASB Standards, IFRS, Fintech Law, CMF

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