Agreement No. 5 (2019). Guidelines for Banks and Trust Companies Acting as Alternative Insurance Marketing Channels

Republic of Panama
Superintendence of Banks
AGREEMENT No. 005-2019
(of April 30, 2019)
"By which guidelines are established for banks and trust companies that provide services as alternative channels for the marketing of insurance"

THE BOARD OF DIRECTORS in the exercise of its legal powers, and

CONSIDERING:

That as a result of the issuance of Decree-Law No. 2 of February 22, 2008, the Executive Branch prepared a systematic ordering in the form of a single text of Decree-Law No. 9 of February 26, 1998 and all its modifications, which was approved through Executive Decree No. 52 of April 30, 2008, hereinafter the Banking Law;

That in accordance with numeral 1 of Article 5 of the Banking Law, it is the objective of the Superintendence of Banks to ensure the solidity and efficiency of the banking system;

That in accordance with Article 4 of the Banking Law, the Superintendence of Banks will have exclusive competence to regulate and supervise banks, the banking business, and other entities and activities assigned to it by other laws;

That in accordance with numeral 5 of Article 11 of the Banking Law, it corresponds to the Board of Directors to establish, within the administrative scope, the interpretation and scope of legal or regulatory provisions in banking matters;

That through Law No. 1 of January 5, 1984, the trust business in Panama is regulated;

That Law No. 21 of May 10, 2017 establishes the rules for the regulation and supervision of trustees and the trust business, and modifies Law No. 1 of 1984;

That in accordance with Article 1 of Law No. 21 of 2017, the Superintendence of Banks will have exclusive competence to regulate and supervise trustees holding trust licenses or those other entities authorized by law to conduct the trust business;

That in accordance with Article 5 numeral 3 of the Banking Law, as well as Article 4 numeral 3 of Law No. 21 of 2017, it corresponds to the Superintendence of Banks to promote public confidence in the banking and trust systems;

That it is common practice in the Republic of Panama for some banking and trust entities to enter into alliances for the offering and promotion of financial products and/or services related or complementary to the respective banking or trust business, in some cases on behalf of other financial or commercial entities;

That in accordance with Law No. 12 of April 3, 2012 "That regulates the insurance activity and dictates other provisions," general license banks as well as financial companies and companies in the commercial system may constitute themselves as alternative marketing channels for insurance companies with which they sign a marketing contract, to promote products on behalf of the insurer among the clients of the alternative channel company;

That in accordance with Article 192 of the Banking Law, banks are obligated to provide their services to banking clients with transparency, probity, and equity, in accordance with the norms and principles of Title V of the aforementioned Law;

That in concordance with the preceding point and with the provisions established in Law No. 12 of 2012 which allows certain financial entities to constitute themselves as alternative marketing channels, and taking into consideration that the Superintendence of Banks of Panama has exclusive powers to regulate the banking and trust business, in working sessions of this

Agreement No. 005-2019
Board of Directors, the need and convenience of establishing the guidelines that banks and trust companies must follow when offering and promoting products on behalf of an insurer has become evident, in order to avoid confusion with the activities inherent to the banking and trust business.

AGREES:

ARTICLE 1. SCOPE OF APPLICATION. The provisions of this Agreement shall apply to the following regulated entities:

1. General license banks
2. Trust companies.

ARTICLE 2. ALTERNATIVE MARKETING CHANNELS. Banks and trust companies that offer services as alternative marketing channels (for companies that are not part of their economic group), by virtue of a contract signed with an insurer under the parameters and conditions established in Law No. 12 of April 3, 2012, shall, without prejudice to the precise compliance with applicable laws and regulations, ensure to take the necessary precautions to comply with the following:

1. The management of the products or services referred to in this article shall be offered in a delimited physical space, within the public service area (front office), by specific personnel previously trained for this task, in such a way that the customer can clearly recognize at all times that they are carrying out a transaction in which their counterparty is the Insurer and not the bank or the trust company; and

2. The stationery used for the management of the products offered to the public shall be letterheaded in such a way that the customer can clearly identify that the entity with which they contract is distinct from the one offering the product or service, in this case the bank or the trust company.

Paragraph: In the event that the bank or trust company offers the products through technological means, it must ensure that the recipient can correctly interpret that the bank or trust company is acting as an alternative channel for the marketing of insurance and that in the event that the insurance is contracted, it will be with the insurance company identified by the bank or trust company.

ARTICLE 3. SANCTIONS. Non-compliance with the provisions contemplated in this Agreement shall be sanctioned in accordance with what is established in Title IV of the Banking Law and its respective regulation.

ARTICLE 4. VALIDITY. This Agreement shall enter into force from its promulgation.

Given in the city of Panama, on the thirty (30) days of the month of April of two thousand nineteen (2019).

LET IT BE COMMUNICATED, PUBLISHED, AND COMPLIED WITH.

THE PRESIDENT, THE SECRETARY,
Luis Alberto La Rocca Joseph Fidanque III