Chile legislation watch: Card fraud, AFP funds, unemployment insurance

Chile’s constitutional court has given the green light to a bill that modifies existing card fraud legislation.

The bill – which should shortly enter the statute books – places liability for card fraud on the shoulders of the card issuer, not the cardholder.

Banking association Abif had claimed some rules in the bill were unconstitutional and that responsibility should be shared.  

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By a margin of one, lower house lawmakers voted as unconstitutional a proposal that the assets of the country’s seven AFPs be declared of national interest.

Communist Party lawmaker Camila Vallejo had put forward the initiative, with the aim of starting nationalization.

In a tweet, Vallejo said some sectors “would do anything so that this business is untouched.”

Those in favor of the proposal said AFP profits could be used to help in post-crisis efforts.

AFP Habitat has branded the move “populist.”

At the end of April, the AFPs had almost US$186bn in assets under management, according to watchdog SP.

The government has a bill in congress that reforms the pension system to boost pension size but keeps the AFP system in place.

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Congress approved a bill that prohibits companies that take advantage of an employment law, drawn up in response to the health crisis, from distributing dividends.

Under the employment law, rules governing access to unemployment insurance funds are eased, targeting those who temporarily stop working altogether, as well as those with reduced working hours.

The news comes as retail giant Cencosud, some of whose employees had taken advantage of the law, did a U-turn after receiving criticism for distributing 80% of its 2019 profits among shareholders.

Cencosud said it would not use the law and would return sums already paid out to workers by unemployment insurance fund AFC and start paying employees out of its own pocket.

The company said it had acted in good faith and in accordance with the rules in place at the time.

The law is part of a US$17bn package of measures to support companies and families during the crisis.