Application of prudential regulations pursuant to article 85 of the Consumer Protection and Defense Code

Lima, 03 June 2011

CIRCULAR
No. B- 2197
-2011
F- 537
-2011
CM- 385
-2011
CR- 253
-2011
EF- 6
-2011
EAH- 12
-2011
EAF- 247
-2011
EDPYME- 140
-2011

-------------------------------------------------------------- Ref. : Application of prudential regulations pursuant to article 85° of the Consumer Protection and Defense Code

---

Sir
General Manager:

Please be advised that, in exercise of the powers conferred by numeral 9 of article 349° of the General Law of the Financial System and the Insurance System and Organic Law of the Superintendency of Banking and Insurance, Law No. 26702 and its amending regulations, and SBS Resolution No. 6389-2011, and pursuant to the provisions of article 85° of the Consumer Protection and Defense Code, Law No. 29571, this Superintendency has considered it pertinent to establish the following provisions regarding the non-contracting, modification and termination of contracts in cases of lack of transparency on the part of users of the financial system. Likewise, the publication of this circular is ordered, by virtue of the provisions of Supreme Decree No. 001-2009-JUS.

1. Scope

The provisions of this regulation are applicable to the companies included in literals A and B of article 16° of the General Law, to the Banco de la Nación and to the Banco Agropecuario, hereinafter the companies.

2. Definitions

For purposes of this regulation, consider the following definitions:

a. Code: Consumer Protection and Defense Code, approved by Law No. 29571.

b. Contract: in accordance with the provisions of the Transparency Regulation.

c. Days: calendar days.

d. Contractual form: in accordance with the provisions of the Transparency Regulation.

e. General Law: General Law of the Financial System and the Insurance System and Organic Law of the Superintendency of Banking and Insurance, approved by Law No. 26702, and its amending regulations.

f. Transparency Regulation: Regulation of transparency of information and provisions applicable to contracting with users of the financial system, approved by SBS Resolution No. 1765-2005 and its amending regulations.

g. Reputation Risk: in accordance with the provisions of the Comprehensive Risk Management Regulation approved by SBS Resolution No. 37-2008 and its amending regulations.

h. Superintendency: Superintendency of Banking, Insurance and Private Pension Fund Administrators.

i. User or consumer: in accordance with the provisions of the Transparency Regulation.

3. Application of prudential regulations pursuant to article 85° of the Code

The companies may choose not to contract or to modify contracts entered into with users in aspects other than interest rates, commissions or expenses, and even terminate them, without the prior notice referred to in article 23° of the Transparency Regulation, as a consequence of the application of prudential regulations issued by the Superintendency, such as those related to the management of the overindebtedness risk of retail debtors, for considerations of the client's profile linked to the anti-money laundering or terrorist financing prevention system or due to lack of transparency of the users.

Such lack of transparency of the users occurs when, in the evaluation carried out on the information indicated or presented by the users before contracting or during the contractual relationship, it follows that such information is inaccurate, incomplete, false or inconsistent with the information previously declared or provided by the user and negatively affects the reputation or legal risk faced by the company.

The companies shall apply the provisions of the first paragraph provided that the users are previously informed, through the contractual forms, about the situations that may affect the contracting or the contractual relationship. Likewise, the personnel of the companies must inform the users thereof before the signing of the contractual form.

4. Procedure

If the companies decide to terminate the contract entered into with the user or modify the contractual conditions for the grounds indicated in the previous numeral, they must send a communication to the clients' address or through the mechanisms established for such purpose in the contracts, within seven (07) days following said modification or termination. This communication must state that the termination or modification of the contract is carried out on the basis of the provisions of article 85° of the Code, in those cases in which it occurs as a consequence of the detection of activities that undermine the anti-money laundering prevention system or due to the lack of transparency referred to in the second paragraph of numeral 3.

5. Responsibility of the Board of Directors and Management

It shall be the responsibility of the Board of Directors to approve and review the policies and procedures applicable to comply with the provisions of this circular, to ensure that they are consistent with the provisions of the Code. Such policies and procedures must be available to this Superintendency.

Management is responsible for implementing the policies and procedures approved by the Board of Directors. Likewise, Management must designate the persons who will be responsible for reviewing the particular cases that may generate greater impact on the company, in accordance with the provisions established in the policies and procedures approved by the Board of Directors.

6. Support for the company's decision

The companies must keep the support for their decisions for the term established in article 183° of the General Law. The respective support must be available to this Superintendency.

7. Request for information by governmental entities

Requests for information by government entities shall be answered in accordance with the provisions of Circular No. G - 146 – 2009, on User Service; notwithstanding the foregoing, in those cases in which the resolution or modification of the contract is associated with the anti-money laundering regime, the entity shall be notified that it is carried out in accordance with the provisions of article 85° of the Code.

8. Term

This circular enters into force as of the day following its publication in the Official Gazette "El Peruano".

Sincerely,

JAVIER POGGI CAMPODÓNICO
Superintendent of Banking, Insurance and
Private Pension Fund Administrators (a.i.)