Banking Board of Ecuador

RESOLUTION No. JB-2015-3360

THE BANKING BOARD

CONSIDERING:

THAT on April 29, 2014, Ms. Estefany Vanesa Fiallos Avilez filed a complaint against Banco Pichincha C.A., seeking that the financial institution return the sum of USD $200.00, due to an unauthorized debit that occurred on April 1, 2014, from her savings account No. 2200903956, using her debit card No. 4381082100289916;

THAT with letter No. IRG-DAYEU-V-R-2014-742, dated July 8, 2014, lawyer Humberto Moya González resolved the complaint of Ms. Estefany Vanesa Fiallos Avilez favorably and ordered the financial institution to return USD $200.00. In this regard, through a document submitted to the control agency on July 22, 2014, lawyer María Elena Franco San Lucas, Judicial Attorney of Banco Pichincha C.A., filed a request for reconsideration of the aforementioned letter, whose claims were rejected with letter No. IRG-DAYEU-V-R-2014-891, dated September 3, 2014;

THAT with a document submitted to the Superintendency of Banks and Insurance on September 11, 2014, Mr. Antonio Acosta Espinosa, Deputy President of Banco Pichincha C.A., filed before the Banking Board a review appeal against letter No. IRG-DAYEU-V-R-2014-891, dated September 3, 2014;

THAT the order for the return of funds by the Superintendency of Banks, in the context of an administrative complaint, is a possibility within the framework of a contractual relationship between two subjects of rights: a user and the financial entity. From the legal transaction emanate obligations that today exceed the temporal limit of validity of the General Law of Institutions of the Financial System. In attention to numbers 6 and 18 of article 7 of the Civil Code and to the theory of acquired rights, more so when mere expectations do not constitute Law, it is appropriate to pose this legal analysis in attention to the acquired rights by the parties of the General Law of Institutions of the Financial System, in its moment of validity;

THAT articles 52, 66, and 213 of the Constitution of the Republic of Ecuador and article 4 of the Organic Law for Consumer Defense guarantee the right of users of the financial system to have access to services of optimal quality, with efficiency, effectiveness, and good treatment. At the same time, the Superintendency of Banks is called upon to supervise that the services provided by the institutions of the financial system are subject to the legal framework and attend to the general interest;

THAT integral risk management is one of the responsibilities attributed to financial institutions that are part of the system, by virtue of which, the Codification of Resolutions of the Superintendency of Banks and Insurance and of the Banking Board, in articles 2 and 3 of chapter I, of title X, of book I, provides as follows:

"Article 2.- For the purposes of the application of this chapter, the following definitions are determined:

---

Resolution No. JB-2015-3360

Page 2

2.1 Risk.- It is the possibility that an event generating losses that affect the economic value of institutions occurs;

2.2 Risk Management.- It is the process by which financial system institutions identify, measure, control/mitigate, and monitor the risks inherent to the business, in order to define the risk profile, the degree of exposure that the institution is willing to assume in the development of the business, and the hedging mechanisms, to protect own and third-party resources that are under its control and administration;

(...)

2.9 Operational Risk.- It is the possibility that losses occur due to events originating from failures or insufficiency of processes, people, internal systems, technology, and in the presence of unforeseen external events. It includes legal risk but excludes systemic and reputational risks.

It groups a variety of risks related to internal control deficiencies; inadequate systems, processes, and procedures; human errors and frauds; failures in computer systems; occurrence of adverse external or internal events, that is, those that affect the institution's capacity to respond to its commitments in a timely manner, or compromise its interests (...)."

"Article 3.- Financial system institutions have the responsibility to manage their risks, to which effect they must have formal integral risk management processes that allow identifying, measuring, controlling/mitigating, and monitoring the risk exposures they are assuming.

(...)."

THAT additionally, articles 1, 4, 5, 6, and 18, of chapter III, of title XIV, of book I, of the Codification of Resolutions of the Superintendency of Banks and Insurance and of the Banking Board, in the present case valid by virtue of the First Transitional Provision of the Organic Monetary and Financial Code, provide as follows:

"Article 1.- The present Code aims to establish the principles and rules that govern the exercise and protection of the rights of the user of the financial system, considering that financial activities are of public order and must be subject, in particular, to principles of sound practices applied by the corporate governance of the institutions that make up the financial system. Its scope of application involves the relationships between users and financial institutions controlled by the Superintendency of Banks and Insurance of Ecuador, without prejudice to other legal provisions that contemplate measures and instruments of protection for the user of the financial system.

For the purposes of this Code, the legal terms contained in its text shall be understood in accordance with the glossary contained in the final article."

---

Resolution No. JB-2015-3360

Page 3

"Article 4.- The rights of the user of the financial system contained in this Code are irrenounceable as financial services are considered of public order, social interest, and mandatory observance throughout the country. Any stipulation to the contrary shall be considered null."

"Article 5.- The rights of the user of the financial system regarding the financial products and services offered by financial system institutions, in accordance with the law and sound practices, will be protected, in the first instance, by the client defender of the financial institutions, and by the Superintendency of Banks and Insurance, and for this purpose, it may act ex officio or at the request of a party according to what is expressly mandated by the Constitution and applicable laws, without prejudice to the competencies that other authorities exercise in accordance with the law.

Nevertheless, any public authority, in application of its competencies and in accordance with the law, will protect the rights of the user of the financial system.

(...)."

"Article 6.- Users of financial products and services will exercise their rights within the framework of the universal principle of good faith."

"Article 18.- The Superintendency of Banks and Insurance, in the exercise of its constitutional and legal functions of regulation and supervision, preventive and corrective, will have as a fundamental principle the protection of the rights of the user of the financial system."

THAT number 40.11, of article 40, of chapter I, title II, book I, of the Codification of Resolutions of the Superintendency of Banks and Insurance and of the Banking Board, provides as follows:

"40.11 Video recording system.- For its operation, each automated teller machine (ATM) must have an exclusive video recorder, which must register the recording without degrading the definition captured by its cameras."

THAT in application of what is established in letter o), of article 180 of the General Law of Institutions of the Financial System, the Banking Board issued resolution No. JB-2005-747, dated January 25, 2005, which was reformed with resolution No. JB-2009-1303, dated May 14, 2009, regarding the procedure for the attention of complaints against financial system institutions, which is contained in Chapter IV, Title XX, Book I of the Codification of Resolutions of the Superintendency of Banks and Insurance and of the Banking Board, whose article 5 provides:

"Article 5.- If the result of the analysis carried out by the Superintendency determines the need for the controlled institution to introduce corrective measures that require the situation that motivated the complaint, the Superintendent of Banks and Insurance or the official who has the delegation of said authority, will issue the corresponding disposition.

---

Resolution No. JB-2015-3360

Page 4

If the situation that motivated the complaint referred to in the previous paragraph originated in an incorrect procedure of the controlled institution, which caused harm to the complainant, the Superintendency of Banks and Insurance may order the return of the claimed values, in the exercise of the functions and attributions contemplated in letters b) and o) of article 180 of the General Law of Institutions of the Financial System, granting the legal representative of the entity a period that cannot exceed fifteen (15) days from the notification to send, under the legal warnings, the proof of compliance with the order issued." (Emphasis added);

THAT by virtue of the cited norms, the client delivers money to a financial institution with the option to withdraw it, in part or in total, at the moment it is required, while the depositary entity assumes the obligation to keep or safeguard the deposited values and satisfactorily attend all withdrawal operations required by the holder, with diligence and professional care;

THAT the financial institution has the obligation to safeguard the deposited values and satisfactorily attend all withdrawal operations required by the client; likewise, it is responsible for providing with efficiency and responsibility the services offered to users of the system, among which is withdrawal through different channels such as automated teller machines. In this line, the Bank is obliged to evaluate and demand the appropriate securities in order to fulfill its obligations as a depositary of the monies that its clients have entrusted to it, with the purpose of providing a quality service;

THAT in letter No. IRG-DAYEU-2014-328, dated October 13, 2014, lawyer Humberto Moya González, Regional Intendant of Guayaquil, holds that Banco Pichincha C.A., as an entity dedicated to exercising financial activities, has among its purposes the obligation to keep or safeguard the deposited values and satisfactorily attend all types of operations, with diligence and professional care. Literally, he states that: "...it is determined that it has not been possible to verify if the complainant, Ms. ESTEFANY VANESA FIALLOS AVILEZ, has been responsible for the lack of custody of her debit card and personal key to make the withdrawal, due to the non-compliance with the regulations by the financial entity, regarding the video recordings of the automated teller machine of its property; even accepting in its explanations, that the automated teller machine where the impugned transaction was made does have an incorporated video camera; reason why, by virtue of the article mentioned in the preceding number, BANCO PICHINCHA C.A. must return the value of the transaction that has caused harm to the complainant...";

THAT the withdrawal subject of the controversy is unusual within the transactional profile of the user;

THAT from the previous analysis, it has been evidenced in the present case that Banco Pichincha C.A. is subject to article 5 of chapter IV, title XX, book I of the Codification of Resolutions of the Superintendency of Banks and Insurance and of the Banking Board, by virtue of which the transactions carried out caused

---

Resolution No. JB-2015-3360

Page 5

economic harm to the client, originated by an incorrect procedure of the controlled institution;

THAT the Superintendency of Banks is in charge of supervising and controlling the operations of the institutions that are part of the national financial system, as well as protecting the interests of the users of this sector;

THAT both the Constitution of our country, the General Law of Institutions of the Financial System, and the Codification of Resolutions of the Superintendency of Banks and the Banking Board ensure the compliance and implementation of procedures and mechanisms that protect and disseminate the rights of financial users, attributing corrective, controlling, and sanctioning faculties to the Superintendency of Banks, so that it carries out such functions;

THAT the National Legal Intendency, through memorandum INJ-DNJ-SAL-2015-0102 of February 3, 2015, recommended to the Banking Board to reject the claim contained in the review appeal filed; and,

IN exercise of its legal attributions,

RESOLVES:

SINGLE ARTICLE.- REJECT the petition contained in the review appeal filed; and, consequently, CONFIRM letter No. IRG-DAYEU-V-R-2014-891, dated September 3, 2014, which, in turn, ratified the order for the restitution of values contained in letter No. IRG-DAYEU-V-R-2014-742, dated July 8, 2014.

NOTIFY.- Given at the Superintendency of Banks, in Quito, Metropolitan District, on the fifteenth of April of two thousand fifteen.

Signature

Econ. Rodrigo Landeta Parra GENERAL INTENDANT, S PRESIDENT OF THE BANKING BOARD, E

I CERTIFY.- Quito, Metropolitan District, on the fifteenth of April of two thousand fifteen.

Signature

Lcdo. Pablo Cobo Luna SECRETARY OF THE BANKING BOARD