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Juan Antonio Peribonio, SERNAC

Juan Antonio Peribonio, director of Chile’s National Consumer Service (SERNAC), has had a busy few weeks. It was, after all, SERNAC that blew the whistle on the La Polar department store chain’s unilateral ‘renegotiation’ of customers’ debts and it is still coping with a huge number of people flocking to its main office, just across the road from the La Moneda presidential palace, as well as its other offices around the country, to ascertain their rights.

It is hardly surprising that Peribonio, a lawyer who joined SERNAC in June 2010 after many years at the municipal government of Santiago’s Las Condes district, admits to be being tired. Resources are tight too; SERNAC has an annual budget of only some US$12 million and its 240-strong staff has had to stretch, without reinforcements, to deal with the La Polar crisis. But Peribonio is, he says, convinced that “if only in a small way, we’re helping to make the lives of Chileans better”.

Why was it SERNAC, rather than the financial sector or stock market regulators, that blew the whistle on La Polar?

That’s a result of what I call the ‘life blood’ of our work - the complaints we receive. Our system for analyzing them is designed to pick up unusual events and when we saw we had 123 complaints against La Polar, all for the same reason, we decided that, rather than addressing them individually, we would start what’s called collective mediation with the company. In November, it undertook to put things right but, after the external auditor we’d hired to monitor this process told us they weren’t complying satisfactorily, we filed legal action in May and that’s why, in June, La Polar told the stock market regulator about the problem.

Are you satisfied with what La Polar is offering its cardholders now?

We always say that, in the case of violation of a consumer’s rights, the company should do three things: recognize the error, reverse it and, third, repair the damage. La Polar has done the first two but the latter is complex because there are so many different situations among its customers, so our view is that, in the end, the amount and manner of compensation need to be decided by a judge.

More generally, how do you see the state of consumer protection in Chile as compared to, say, the main OECD countries?

We’ve advanced a lot and, in Latin America at least, Chile stands out for its defense of financial consumers - for example, for what we’ve done in eliminating abusive clauses in contracts. Moreover, I expect the bill creating the so-called SERNAC Financiero to be approved by Congress this year.

What exactly would that do?

It will give us new tools. Basically, it means that providers of financial services of all types will have to provide detailed, clear, objective and understandable information. 

Like how much a television will cost in installments as compared to buying it straight out?

Yes, and it will also make it easier to stop using a financial product and, say, close a bank account, which can be quite difficult today.  

What is SERNAC doing in consumer education and, in particular, financial education, an area in which the OECD has called for Chile to develop a national strategy? 

For a long time now, SERNAC has been providing financial education courses for school teachers - some 16,000 to date - so they pass on that knowledge to pupils and now I’m talking to the Education Ministry with a view to making financial education a compulsory part of the syllabus. We also give other talks, seminars and so on. What we’d also like to see is training on consumer rights for business executives. That’s an issue that hasn’t been addressed.

Going back to SERNAC’s role more generally, can it take the initiative in investigating possible violations of consumer rights or only react in the case of complaints?

When we see something that could potentially prejudice consumers, we act. I’ll give you one example - intercity bus fares. We carried out studies and submitted them to the anti-monopoly authorities because they’re responsible for determining whether prices reflect market forces or are the result of an infringement of free competition. 

Does SERNAC have all the powers it needs?

It doesn’t have the power to impose sanctions directly which I think it should have.

Who’s responsible for product safety, another area in which the OECD has recommended improvements?

At SERNAC, we don’t have anything to do with food or pharmaceuticals but, for other products, we collaborate, for example, with the National Standards Institute (INN) which establishes technical norms. We also verify labeling. For toys, for example, it’s the health authorities that set the standards but, for Children’s Day, we go out and inspect labeling and check things like fire resistance and send samples to the health authorities.

Consumer organizations in Chile are still fragile; is SERNAC doing anything to promote their development?

There are some serious organizations, although financing is a problem for them. We have regular meetings with them and have a funding program, with around US$625,000 a year, to which they can apply for grants for their projects. We finance around 50 projects a year and they’ve included the recent analysis of baby food and the labeling of ice cream. 
   
Class action lawsuits were incorporated into Chilean consumer law in 2004 but none has been ruled on so far; what’s going wrong there?

Yes, there hasn’t been a definitive sentence so far. That’s because of a prior process of ‘admissibility’ before a case actually comes to court. That has been taking an average of three years. In other words, as introduced in 2004, the system isn’t working in the way Chilean consumers deserve, but two senators have just presented a bill that would basically reduce the time by half. 

Small claims courts don’t actually help much either, do they? Cases also take a long time and you have to pay a lawyer.

That system works but, yes, it has weaknesses. You can go without a lawyer, but it’s not easy to fight a company without one.

Which puts the potential compensation floor pretty high before it becomes worthwhile…

Exactly.