Norma on Imposition of Sanctions for Non-Compliance in Matters of Transparency and Protection of Clients and/or Users of Financial Services

Page 1 of 10 Resolution No. CD-SIBOIF-1240-1-ABR06-2021 Dated April 6, 2021

NORMA ON IMPOSITION OF SANCTIONS FOR NON-COMPLIANCE IN MATTERS OF TRANSPARENCY AND PROTECTION OF CLIENTS AND/OR USERS OF FINANCIAL SERVICES

The Board of Directors of the Superintendence of Banks and Other Financial Institutions,

CONSIDERING

I

That in accordance with Article 99 of the "Political Constitution of the Republic of Nicaragua," banks and other financial institutions, both private and state-owned, are under the supervision, regulation, and oversight of the Superintendence of Banks and Other Financial Institutions. Likewise, Article 105, fifth paragraph, of the same Constitution establishes that: "...The State will guarantee the promotion and protection of the rights of consumers and users through the relevant Law."

II

That by express mandate of Article 53, numeral "1", of Law No. 842, "Law for the Protection of the Rights of Consumer Persons and Users," published in La Gaceta, Official Journal No. 129, of July 11, 2013, reformed by Law No. 1061, "Law of Reforms and Additions to Law No. 842, Law for the Protection of the Rights of Consumer Persons and Users," published in La Gaceta, Official Journal No. 27, of February 9, 2021, hereinafter Law No. 842, it corresponds: "To the Superintendence of Banks and Other Financial Institutions the application of this Law in matters of financial services provided by banks, financial companies, and other entities subject to its regulation, supervision, and oversight in accordance with what is provided in Law No. 316, Law of the Superintendence of Banks and Other Financial Institutions, and other applicable financial laws."

III

That in accordance with the faculty established in Article 120 of Law No. 842, reformed by the aforementioned Law No. 1061: "...Regulatory Bodies other than DIPRODEC that do not have established by Law the amounts of monetary sanctions in this matter, will be empowered to establish and execute in their own internal regulations the types of infractions and the amounts of fines, applying for this purpose the minimum and maximum ranges established in Articles 122, 123, and 124 of this Law for minor, serious, and very serious offenses...".

IV

That according to the considerations stated above and based on the faculty established in Articles 3, numerals 2) and 12), and 10, numerals 1) and 2) of Law No. 316, "Law of the Superintendence of Banks and Other Financial Institutions," contained in the Nicaraguan Legal Digest of the Matter of Banking and Finance, published in La Gaceta, Official Journal No. 164, of August 27, 2018, and its updates.

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In exercise of its faculties,

HAS ISSUED

The following:

CD-SIBOIF-1240-1-ABR06-2021

NORMA ON IMPOSITION OF SANCTIONS FOR NON-COMPLIANCE IN MATTERS OF TRANSPARENCY AND PROTECTION OF CLIENTS AND/OR USERS OF FINANCIAL SERVICES

CHAPTER I CONCEPTS, OBJECT, AND SCOPE

Article 1. Concepts.- For the purposes of application of the provisions contained in this norm, the terms indicated in this article, both in uppercase and lowercase, singular or plural, will have the following meanings:

a) Client: (1) natural or legal person, public, private, or mixed, with whom the institution maintains a commercial relationship originating from the celebration of a contract; and (2) natural or legal person, public, private, or mixed, with whom the institution is in phases prior to the celebration of a contract. b) Board of Directors: Board of Directors of the Superintendence of Banks and Other Financial Institutions. c) Institution or financial institution: Banks, bank representation offices, and foreign financial companies, special regime financial companies of financial groups, non-bank issuers of credit cards, financial entities, insurance companies, reinsurance and surety companies, general warehouses, and entities operating in the securities market and other entities supervised by the Superintendence of Banks and Other Financial Institutions that as part of their activities provide attention to the public. d) Law No. 431: Law for the Regime of Vehicular Circulation and Traffic Infractions, published in La Gaceta, Official Journal No. 96, of May 27, 2014, and its reforms. e) Law No. 561: General Law of Banks, Non-Bank Financial Institutions, and Financial Groups, contained in Law No. 974, Law of the Nicaraguan Legal Digest of the Matter of Banking and Finance, published in La Gaceta, Official Journal No. 164, of August 27, 2018, and its updates. f) Law No. 733: General Law of Insurance, Reinsurance, and Sureties, contained in Law No. 974, Law of the Nicaraguan Legal Digest of the Matter of Banking and Finance, published in La Gaceta, Official Journal No. 164, of August 27, 2018, and its updates.

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g) Law No. 842: Law for the Protection of the Rights of Consumer Persons and Users, published in La Gaceta, Official Journal No. 129, of July 11, 2013, and its reforms. h) Law No. 974: Law of the Nicaraguan Legal Digest of the Matter of Banking and Finance, published in La Gaceta, Official Journal No. 164, of August 27, 2018, and its updates. i) Policy Norm: Norm for the Authorization of Insurance Policies, contained in Resolution No. CD-SIBOIF-958-2-SEP6-2016, dated September 6, 2016, published in La Gaceta, Official Journal No. 187, of October 6, 2016. j) Norm on Private Risk Centers: Norm on Private Risk Centers, contained in Resolution No. CD-SIBOIF-577-1-MAR18-2009, dated March 18, 2009, published in La Gaceta, Official Journal No. 79, of April 30, 2009. k) Transparency Norm: Norm on Transparency in Financial Operations, contained in Resolution No. CD-SIBOIF-796-1-AGOST30-2013, dated August 30, 2013, published in La Gaceta, Official Journal No. 178, of September 20, 2013, and its reforms. l) Credit Card Norm: Norm for Credit Card Operations, contained in Resolution No. CD-SIBOIF-629-4-MAY26-2010, dated May 26, 2010, published in La Gaceta, Official Journals No. 150 and 151, of August 9 and 10, 2010, respectively. m) Norm on Regulation of Working Days: Norm on Regulation of Working Days for the Provision of Financial Services, contained in Resolution No. CD-SIBOIF-371-1-AGOS18-2005, dated August 18, 2005, published in La Gaceta, Official Journal No. 188, of September 29, 2005. n) Financial services: Deposit services, loans, credits, credit and debit cards, transfers, family remittances, purchase and sale and/or exchange of currencies, insurance, stock operations, services provided by general warehouses, payment systems, payment service fintech, and any other service provided by regulated financial entities, in accordance with their particular laws according to the sector or industry to which they belong. o) Superintendence: Superintendence of Banks and Other Financial Institutions. p) Superintendent: Superintendent of Banks and Other Financial Institutions. q) Unit of measure: As established in Article 5 of Law No. 842, the value of each unit of measure will correspond to the national average minimum wage, which is the simple average calculated based on the Minimum Wage by Activity Sector table, approved by the National Minimum Wage Commission or the Ministry of Labor,

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in accordance with the procedure established by Law No. 625, "Minimum Wage Law," published in La Gaceta, Official Journal No. 120, of June 26, 2007. r) User: Natural or legal person, public, private, or mixed, who, without having a contractual relationship with the financial institution, acquires, uses, or enjoys a specific financial product or service, or who potentially may acquire, use, or enjoy such product or service.

Article 2. Object and Scope.- This norm aims to establish the infractions and sanctions applicable to financial institutions for non-compliance with the obligations established in Law No. 842 and normative provisions and instructions of the Superintendent in matters of transparency in financial operations and protection of clients and/or users of financial products and services, within the ranges established in Articles 122, 123, and 124 of Law No. 842, determined according to the severity of the offense, in accordance with the parameters and criteria indicated in this norm.

CHAPTER II PARAMETERS AND CRITERIA

Article 3. Parameters and Criteria.- The Superintendent will apply and grade sanctions considering the following circumstances:

a) Mitigating factors are considered the motives or causes that allow decreasing or reducing the corresponding sanction, established as such the following:

1. If before the sanctioning procedure begins or before the Superintendent issues a resolution on the matter, the offender had remedied the infringing conduct on their own initiative or had presented an action plan consisting of the aspects that require remediation, indicating a proposal for the maximum date for its completion and the persons responsible for executing it.
2. The historical behavior of the offender in the provision of financial services relative to the object of the norm. b) Aggravating factors are considered the circumstances that make the offense or infraction committed more serious, established as such the following:
3. When the infraction causes damage to the public interest and/or the protected legal good, including the impact on public confidence in the area in which the offender develops its activities.
4. When the offender has committed the infraction with the object of executing or concealing another infraction.
5. When the offender has obtained benefits for themselves or for third parties as a consequence of the infraction.

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4. When the financial institution prevents or obstructs the supervisor from exercising their supervisory faculty, avoiding that the infraction comes to knowledge, whether by hiding information or delaying its delivery, making control actions difficult, or in any other way.
5. When by the nature of the position and functions of the offender, they had specific responsibility regarding the fact that constitutes the infraction.
6. When the offender involves or uses one or more institutions belonging to the financial group to which it belongs, if applicable, to commit the infraction. Likewise, when it involves or uses one or more institutions operating in the financial systems of other countries.
7. When the offender reoffends in the commission of any infraction.

CHAPTER III INFRACTIONS AND SANCTIONS

Article 4. Infractions and Amounts.- When the Superintendent observes non-compliance with the obligations established in the laws that correspond to the Superintendence to apply, normative provisions, resolutions, and instructions of said authority, in matters of transparency in financial operations and protection of clients and/or users of financial products and services, it will impose an administrative sanction adjusted to the importance of the offense, from 1 to 550 units of measure.

For the purposes of this article, infractions are classified as follows:

a) Minor Infractions: The following are minor infractions: Amount: 1 to 100 units of measure

1. Not having in their branches, counters, and other establishments to provide their services to the public, nor on their Web page, the information on products, interest rates, commissions, expenses, charges, and other related services as established in Article 15 of the transparency norm and Article 21 of the credit card norm; or having it available in the aforementioned places, not being updated.
2. Failing to comply with the obligation to provide periodic information to clients on the financial products or services contracted, in contravention of what is established in Article 36 of the transparency norm and other applicable norms and contracts.
3. Issuing credit card statements that do not comply with the information required in Article 19, item a) of the credit card norm.

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4. Carrying out collection actions, promotions, or service offers outside the hours established by the Superintendence.
5. Not keeping available to the Superintendence the statistical information related to complaints presented by clients and/or users, in the terms established in Article 48 of the transparency norm, Article 31 of the credit card norm, and/or in circulars issued by the Superintendent.
6. Any other infractions of equal or similar gravity that are committed against the legal, normative, and other provisions applicable to them, as well as instructions of the Superintendent. To determine if the level of damage is minor, the particular elements of the case must be taken into consideration, such as whether the affectation harms a single person or a plurality, the characteristics or profile of the affected person(s) and the amount of economic harm; as well as the significance of the fact, the offender's antecedents, and the potential or real damage caused.

b) Serious Infractions: The following are serious infractions: Amount: 101 to 250 units of measure

1. Denying clients and/or users who request it, the information and documentation of the products and services they offer and their corresponding costs, as well as the conditions of the contracts that have such products and services as their object, to validate that it coincides with what was offered or marketed, prior to their contracting, in accordance with what is established in Article 61 of Law No. 842 and Article 5 of the transparency norm.
2. Denying the client the possibility of canceling the product or service contracted by the same means by which it was offered and accepted.
3. Issuing credit card statements that do not comply with the information required in Article 19, item d) of the credit card norm.
4. Not attending to the inquiries or requests for clarifications from clients in the form and through the means established in Articles 45 and 46 of the transparency norm, Article 27 of the credit card norm, and Article 88 of Law No. 733.
5. Not having delivered to clients at the time of signing, a copy of the contracts signed with all their annexes, for active, passive, or service operations that are celebrated, as well as their modifications, in accordance with what is established in Article 62 of Law No. 842 and Article 23 of the transparency norm.
6. Not having delivered to the client a photocopy with receipt acknowledgment signed by them, the informative summary and payment schedule for active operations, or the informative summary for passive operations, referred to in Articles 18 and 21 of the transparency norm.

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7. Not expressing in annual terms the ordinary and penalty interest rates for active operations, in accordance with what is established in Article 12 of the transparency norm, and Article 19 of the credit card norm.
8. Not informing the insured of their right to request within 30 days following the receipt of the policy, the corresponding rectification in case that it does not match the request, in terms of what is established in Article 80 of Law No. 733.
9. Not delivering to the client, within a reasonable time established in their internal policies, the document that proves the cancellation of the granted credit.
10. Not delivering to the user, at the latest within 5 business days counted from the payment of the premium, the documents established in Article 12 of the policy norm.
11. Not delivering to the insured the brochure for presenting complaints referred to in Article 13 of the policy norm.
12. Not maintaining on their website, branches, agencies, and counters, the notice regarding information related to deposit coverage, in the terms established in Article 51 of the transparency norm.
13. Disseminating advertising about financial products or services that is not clear, or that induces or may induce confusion or error to its recipients, as established in Articles 7 and 29 of the transparency norm, Article 20 of the credit card norm, and Articles 86 and 87 of Law No. 733.
14. Not including the Annual Effective Cost Rate (TCEA) in advertising offers of credits in which mention is made to installments and/or interest rate, made by the financial institution itself and/or through third parties that finance the sale of their goods, products, or services with resources of the financial institution, in accordance with what is established in Article 29 of the transparency norm.
15. Including the Annual Effective Cost Rate (TCEA) in advertising offers of credits without complying with the formalities and conditions required in Article 29 of the transparency norm.
16. Not guaranteeing through the control mechanisms that the insurer deems appropriate to apply, the delivery of repair estimates to clients or users of insurance. Without prejudice to the sanction that corresponds to the insurer, the evidence that the respective workshop did not deliver the corresponding estimate to the insured will give sufficient merit for the Superintendence to also instruct the insurer to immediately cease the relationship with said workshop.

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17. Requiring the client's authorization to debit from accounts they hold in other financial institutions as a condition for the granting of the requested product or service.
18. Any other infractions of equal or similar gravity that are committed against the legal, normative, and other provisions applicable to them, as well as instructions of the Superintendent. To determine if the level of damage is serious, the particular elements of the case must be taken into consideration, such as whether the affectation harms a single person or a plurality, the characteristics or profile of the affected person(s) and the amount of economic harm; as well as the significance of the fact, the offender's antecedents, and the potential or real damage caused.

c) Very Serious Infractions: The following are very serious infractions: Amount: 251 to 550 units of measure

1. Using adhesion contract models that have not been authorized by the Superintendence for the purposes of what is established in Article 35 of Law No. 842.
2. Using insurance policies and/or modifying existing ones without having the respective authorization of the Superintendent, in contravention of what is established in Article 73 of Law No. 733.
3. Issuing credit card statements that do not comply with the information required in Article 19, items b), c), and e) of the credit card norm.
4. Authorizing credit lines or increasing their limits without evaluating the payment capacity and the level of indebtedness of the interested party, as established in Article 8 of the credit card norm.
5. Increasing or decreasing credit card limits without previously and verifiably notifying the cardholder of such modifications.
6. Not applying the interest calculation methodology in accordance with the criteria established in Article 16 of the credit card norm.
7. Modifying interest rates, commissions, expenses, payment schedules, and other contractual stipulations without complying with the provisions established in Chapter VIII of the transparency norm and Article 14 of the credit card norm.
8. Denying the contracting of a financial product or service previously requested by the client and/or user, or canceling or suspending the product or service already contracted, without legal cause justifying such decision, except in the cases established in the corresponding legal framework, in accordance with what is indicated in Article 9, numeral 10, and Article 54, numeral 3, of Law No. 842, and Article 5 of the transparency norm.

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9. Not notifying the interested parties in a verifiable manner of the negative decision issued by the financial institution regarding the contracting of financial products or services requested, or doing so without revealing the legal cause that justifies the negative decision of the contracting, except in the cases established in the corresponding legal framework, in accordance with what is indicated in Article 9, numeral 10, and Article 54, numeral 3, of Law No. 842, and Article 5 of the transparency norm.
10. Not attending to requests for rectification, modification, or cancellation of data presented by the debtor or guarantor, in accordance with the procedure and deadlines fixed in the norm on private risk centers.
11. Not having respected the privacy of the data of clients and/or users that they have not expressly authorized to financial institutions, in contravention of what is established in Article 10, numeral 2, of Law No. 842, and in Article 3 of the transparency norm.
12. Charging additional fees, surcharges, or fines for services not contracted or not established in the payment receipt or in the contract, in contravention of what is established in Article 10, numeral 22 of Law No. 842.
13. Prohibiting, limiting, or penalizing advance payments of the balances of their obligations, in total or partial, except in the cases expressly indicated in Article 68 of Law No. 842, or when applying other abusive clauses in accordance with what is provided in Article 64 of said law.
14. Imposing on user persons the insurer or insurance intermediary, as applicable, for credits that require the contracting of an insurance policy to guarantee them, in contravention of what is provided in Article 64, numeral 8 of Law No. 842; Articles 84 and 89 of Law No. 733; and Article 22 of the transparency norm.
15. Not informing the insured about the investigation diligences that the insurance company must carry out to determine the validity or not of the complaint.
16. Delaying the indemnification of a complaint resolved in favor of the insured, for causes not imputable to them or their beneficiary, in contravention of what is provided in Article 82 of Law No. 733, Article 76 of Law No. 431, and the relevant norm.
17. Not providing within the deadlines and/or conditions established in each case, the information and/or documentation that is required by the Superintendent and/or delegated official, in writing, email, or any other means that evidences the requirement.
18. Conditioning the contracting of operations or services to the contracting of another operation or service not required by the client and/or user, as established in Article 10, numeral 11, of Law No. 842.

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19. Not attending to the complaints of clients and/or users in the form and pl