Resolution No. JB-2015-3374 of the Banking Board of Ecuador

Banking Board of Ecuador

RESOLUTION No. JB-2015-3374

THE BANKING BOARD

CONSIDERING:

THAT this appeal is resolved in accordance with the First Transitional Provision of the Organic Monetary and Financial Code, published in the Official Register Second Supplement No. 332 of September 12, 2014, whose text states that resolutions contained in the Codification of Resolutions of the Superintendence of Banks and Insurance and of the Banking Board, and norms issued by control bodies, will remain in force in all that does not oppose what is provided in the Organic Monetary and Financial Code, until the Monetary and Financial Policy and Regulation Board resolves what corresponds, according to the case; and, with the second paragraph of the Third Transitional Provision, which states that the Banking Board will continue to act until it resolves all claims, appeals, and other administrative procedures that it was hearing as of the date of entry into force of the same, within a period of one hundred and eighty days, extendable at the discretion of the Monetary and Financial Policy and Regulation Board;

THAT through a communication entered in the Superintendence of Banks on March 9, 2012, Mr. David Segovia Naranjo, presented a claim to the control body against Banco Pichincha C.A., in which he stated the following:

"(...)

In the month of October of the year 2010 I went to the aforementioned Banking Entity with the purpose of opening an Account called e-generation which corresponded to a promotion by the Bank in which as a stimulus they gave me a VISA PREMIUM Card with an authorized limit of FIVE HUNDRED DOLLARS (...)

Great was my surprise when by notification from the Bank I learned that I had an overdraft in my account; the most serious thing is that I had not requested nor authorized this situation with my signature, and when I approached to complain about such an anomaly, they told me that because I was a good payer, the Collections Department authorized such payments...(sic)

In view of the situation I expose and feeling the serious harm being caused to my economy, on November 8, 2010..., I filed a formal complaint to the Bank for having overdrafted my account by 400% since, in my opinion, it was an ILLEGAL procedure in that I was in a way being required to pay the Bank a debt that was not mine and what is more, where was I going to get the nearly 3,500 dollars that had to be covered due to the IRRESPONSIBILITY of certain employees of the Banking Entity... (sic)

(...)";

THAT the Subdirectorate of User Attention, through letter No. DNAE-SAU-2012-5937 of October 9, 2012, resolved the claim in the following terms:

"(...)

From the information in the case file, it is clear that although values for unrecognized charges were debited, the financial institution

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Banking Board of Ecuador

Resolution No. JB-2015-3374 Page No. 2

subsequently proceeded to reverse them, a situation reflected in the corresponding account statements.

For the above, and having no evidence determining that Banco Pichincha C.A. has incurred omissions in the application of its manuals, policies, and procedures, the claim presented is declared inadmissible and the present administrative process is declared concluded.

(...)";

THAT through a document entered in the Superintendence of Banks on October 23, 2012, Mr. David Segovia Naranjo, filed an appeal for review before the Banking Board against letter No. DNAE-SAU-2012-5937 of October 9, 2012;

THAT through Resolution No. JB-2014-2861 of April 3, 2014, the Banking Board stated and resolved the following:

"(...)

THAT (...) indeed, to the Visa World Card No. 4500810000165273, Banco Pichincha C.A. charged the value of US $ 4,927.62 for the concept of a stolen card whose payment they defer over sixty months, which evidences that the bank erroneously transferred the charges subject of the claim to another card whose holder is also Mr. David Segovia Naranjo, which contradicts the decision adopted by the bank through letter No. BP-ACEC-2012-0321, of May 3, 2012, in whose content Banco Pichincha C.A., not having credit notes, proceeded to credit the claimed values (...)

(...)

THAT in the case at hand, it is evident from the statement of account of the Visa World Card No. 4500810000165273 that Banco Pichincha C.A. incurred an incorrect procedure by transferring to said card the value of charges that were initially debited to the Visa Premium International Card No. 4514320001020034 without support from the charge note...

(...)

IN exercise of its legal powers,

RESOLVES:

SINGLE ARTICLE.- ACCEPT the claim contained in the appeal for review filed by Mr. David Segovia Naranjo; and, consequently, DECLARE WITHOUT EFFECT letter No. DNAE-SAU-2012-5937, of October 9, 2012...; and, consequently, ORDER Banco Pichincha C.A. to return in full the values paid by Mr. David Segovia Naranjo reported on the Visa World Card No. 4500810000165273, of which he is the holder";

THAT through memorandum No. JB-2014-250 of April 10, 2014, addressed to the National Superintendent of the Private Financial Sector, the Secretary of the Banking Board, stated the following:

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Banking Board of Ecuador

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"It is my duty to bring to your knowledge that the Banking Board, in the session held on the 3rd of the present month, when addressing item 10.1 of the agenda 'Knowledge and decision of the appeal for review filed by Mr. David Segovia Naranjo, against the administrative act contained in letter DNAE-SAU-2012-5937, of October 9, 2012, within the claim maintained by the aforementioned against Banco Pichincha C.A.'; at the time of accepting the claim contained in the appeal filed by the appellant, it was decided that the National Superintendence under your charge impose on Banco Pichincha C.A. the corresponding fine for the incorrect behavior observed by having transferred to another credit card the values that initially were charged to the Visa Premium International Card No. 4514320001020034 without the charge note and over which the banking entity, in communication No. BP-ACEC-2012-0321 of May 3, 2012, stated it did not hold the client responsible";

THAT in compliance with the provision of the Banking Board mentioned in the preceding consideration, the National Superintendence of the Private Financial Sector through letter No. INSFPR-D1-2014-0804 of May 8, 2014, imposed on the Adjunct President of Banco Pichincha C.A. a pecuniary sanction of US$ 1,000.00, based on Article 134 of the General Law of Institutions of the Financial System, in force at that time;

THAT through communication entered in the Superintendence on May 19, 2014, the Adjunct President of Banco Pichincha C.A. filed an appeal for reconsideration against letter No. INSFPR-D1-2014-0804 of May 8, 2014, which was rejected by the National Superintendence of the Private Financial Sector through letter No. INSFPR-D1-2014-1288 of July 29, 2014, in which the pecuniary sanction imposed in the appealed letter was ratified;

THAT through a document received in the Superintendence on August 6, 2014, Mr. Antonio Acosta Espinosa, Adjunct President of Banco Pichincha C.A., with the professional sponsorship of Dr. Pablo Cadena Merlo, filed an appeal for review before the Banking Board against letter No. INSFPR-D1-2014-1288 of July 29, 2014, arguing principally that there was a lack of motivation in the appealed administrative act; that in the first administrative instance the control body did not find an incorrect procedure by the bank; and, that Article 134 of the General Law of Institutions of the Financial System only provides for sanctions in case that financial entities infringe laws or regulations or in cases where they contravene instructions issued by the Superintendence;

THAT regarding the appellant's argument that there was a lack of motivation in the appealed administrative act, it is necessary to point out that the pecuniary sanction on the Adjunct President of Banco Pichincha C.A. was imposed based on Article 134 of the General Law of Institutions of the Financial System, in force at that date, for the bank's incorrect procedure by having transferred to another credit card belonging to Mr. David Segovia Naranjo the values that initially were charged to the Visa Premium International Card No. 4514320001020034 without the charge note and over which the banking entity, in communication No. BP-ACEC-2012-0321 of May 3, 2012, stated it did not hold the client responsible. Therefore, the fine imposed by the National Superintendence of the Private Financial Sector on the Adjunct President of Banco Pichincha C.A. is duly founded and does not contravene what is provided in Article 76 of the Constitution of the Republic;

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Banking Board of Ecuador

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THAT regarding the appellant's argument that in the first administrative instance the control body did not find an incorrect procedure by the bank, it is necessary to point out that the administrative act referred to by the appellant, contained in letter No. DNAE-SAU-2012-5937 of October 9, 2012, was left without effect when the Banking Board issued Resolution No. JB-2014-2861 of April 3, 2014, in whose analysis the bank's incorrect procedure was observed by having transferred to another credit card belonging to Mr. David Segovia Naranjo the values that initially were charged to the Visa Premium International Card No. 4514320001020034 without the charge note and over which the banking entity, in communication No. BP-ACEC-2012-0321 of May 3, 2012, stated it did not hold the client responsible. Therefore, the administrative act issued in the first instance by the Subdirectorate of User Attention lost its legal effects, as it was left without effect by the Banking Board by accepting an appeal for review that was filed against the content of said letter;

THAT regarding the appellant's argument that Article 134 of the General Law of Institutions of the Financial System, in force at that date, only provides for sanctions in case that financial entities infringe laws or regulations or in cases where they contravene instructions issued by the Superintendence, it is important to transcribe the relevant part of the mentioned legal article, whose text states:

"Art. 134.- When in an institution of the financial system its directors, administrators, officials, or employees infringe laws or regulations governing their operation and said laws or regulations do not establish a special sanction, or in cases where they contravene instructions issued by the Superintendence, the latter will impose the sanction according to the gravity of the infringement, which will not be less than 50 UVCs and will not exceed 3,000 UVCs.

(...)"

THAT in the present case, Banco Pichincha C.A. by charging values that did not have supports evidencing an obligation, transferring the value of the claimed charges to another credit card belonging to Mr. David Segovia Naranjo, did incur a non-compliance with the regulations in force at the time, since numeral 12.2 of Article 12, Chapter IV "Code of Rights of the User of the Financial System", title XX "Of the Superintendence of Banks and Insurance", book I "General Norms for institutions of the financial system", of the Codification of Resolutions of the Superintendence of Banks and Insurance and of the Banking Board, established that the user has the right to have entities of the financial system proceed to "Reject and not pay products that have not been expressly requested by the user of the financial system (...)". Therefore, in the present case the National Superintendence of the Private Financial Sector correctly applied Article 134 of the General Law of Institutions of the Financial System in the administrative act through which the pecuniary sanction was imposed on the Adjunct President of Banco Pichincha C.A.;

THAT it is necessary to point out that the filing by Banco Pichincha C.A. of each and every one of the administrative appeals granted to it by the law are actions that evidently demonstrate the entity's reluctance to comply with the provisions dictated both by the Banking Board and by the Superintendence of Banks;

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Banking Board of Ecuador

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THAT the National Legal Superintendence, through memorandum INJ-DNJ-SAL-2015-0208 of March 12, 2015, recommended to the Banking Board to reject the claim contained in the appeal filed by the Adjunct President of Banco Pichincha C.A.; and,

IN exercise of its legal powers,

RESOLVES:

SINGLE ARTICLE.- REJECT the claim contained in the appeal for review presented by the Adjunct President of Banco Pichincha C.A.; and, consequently CONFIRM the administrative act contained in letter No. INSFPR-D1-2014-1288 of July 29, 2014.

NOTIFY.- Given in the Superintendence of Banks and Insurance, in Quito, Metropolitan District, on the twenty-second of April of two thousand fifteen.

(Signature) Econ. Rodrigo Landeta Parra, GENERAL SUPERINTENDENT (S) PRESIDENT OF THE BANKING BOARD SESSION (E)

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

(Signature) Lcdo. Pablo Cobo Luna SECRETARY OF THE BANKING BOARD