Banking Board of Ecuador

RESOLUTION No. JB-2015-3400

THE BANKING BOARD

CONSIDERING:

THAT the second paragraph of the Third Transitory Provision of the Organic Code of Monetary and Financial Affairs determines that the Banking Board will continue to act until it resolves all claims, appeals, and other administrative proceedings it was handling on the date of entry into force of this Code, within a period of one hundred and eighty days, extendable at the discretion of the Monetary and Financial Policy and Regulation Board;

THAT by means of a document received at the Regional Intendence of Guayaquil on November 1, 2013, Mrs. María Dolores Mosquera Andrade filed a complaint against the National Development Bank (Banco Nacional de Fomento) regarding unusual withdrawals from checking account No. 3001043246 made through ATMs in the amount of US$ 874.50, of which she is the holder;

THAT the lawyer Federico Sandoval Valverde, Director of User Attention and Education at the Regional Intendence of Guayaquil, through Official Letter No. DAYEU-ISFP-REQ-2013-1515 of November 20, 2013, admitted the complaint filed by Mrs. María Dolores Mosquera Andrade to proceedings; and, to that effect, the Regional Intendence of Guayaquil requested explanations from the National Development Bank regarding the complaint filed by Mrs. María Dolores Mosquera Andrade;

THAT by means of Official Letter No. 022-2014 of February 5, 2014, received at the Regional Intendence of Guayaquil on the 6th of the same month and year, the economist Gloria Flor Suárez, Acting Zonal Commercial Manager of Guayaquil of the National Development Bank, in response to the request from the regulatory body, stated that the withdrawals made from Mrs. María Dolores Mosquera Andrade's account were due to the failure to apply basic security recommendations for the handling of the debit card;

THAT by means of Official Letter No. IRG-DAYEU-V-R-2014-271 of April 3, 2014, the lawyer Humberto Moya González, Regional Intendant of Guayaquil, accepted the complaint filed by Mrs. María Dolores Mosquera Andrade and ordered the National Development Bank to reimburse US$ 874.50 to checking account No. 3001043246 for the unauthorized withdrawals made through ATMs of the Network;

THAT by means of communication entered at the Regional Intendence of Guayaquil on April 28, 2014, the National Development Bank filed an appeal for reconsideration against the content of Official Letter No. IRG-DAYEU-V-R-2014-271 of April 3, 2014, which was rejected through Official Letter No. IRG-DAYEU-V-R-2014-623 of June 17, 2014, since the bank did not provide documentary evidence or new information regarding the merits of the administrative complaint that would change the circumstances under which the appealed letter was issued;

THAT on July 10, 2014, the engineer Erika Palma Portilla, Commercial Manager of the National Development Bank – Guayaquil Branch, with the professional sponsorship of lawyers María Angélica Pazmiño M. and Licenia Rizzo Zambrano, filed an appeal for review before the Banking Board against the content of Resolution No. IRG-DAYEU-V-R-2014-623 of June 17, 2014, which was admitted to proceedings through Official Letter No. JB-2014-1806 of July 11, 2014, and through Official Letter No. JB-2014-1807 of July 11, 2014, the Secretary General informed Mrs. María Dolores Mosquera Andrade of the appeal for review filed;

THAT regarding the appellant's claim that Official Letter No. IRG-DAYEU-V-R-2014-623 of June 17, 2014, violates the principle of legal security provided for in the Constitution of the Republic of Ecuador, it should be indicated that Official Letter No. IRG-DAYEU-V-R-2014-271 of April 3, 2014, being motivated, that is, explaining in a reasoned manner

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and exhaustively the link between the decision adopted by the Regional Intendence of Guayaquil, the factual background, and the legal norms, allows the principle of legal security to be made effective and ensures the right to defense, as provided for in numeral 7, letter l) of article 76 of the Constitution of the Republic of Ecuador;

THAT it is appropriate to note that Official Letter No. IRG-DAYEU-V-R-2014-623 of June 17, 2014, contains all the constitutional norms that guarantee due process provided for in article 76 of the Constitution of the Republic of Ecuador, the first paragraph of which is transcribed above, in addition, from the review of the file, it has been verified that the National Development Bank presented, in response to the requests of the regulatory body, the defenses it considered pertinent before the Superintendence of Banks and Insurance, and exercised its right to defense;

THAT article 52 and numeral 25 of article 66 of the Constitution of the Republic of Ecuador provide as follows:

"Art. 52.- Persons have the right to dispose of goods and services of optimal quality and to choose them freely, as well as to receive precise and non-misleading information about their content and characteristics.

The law will establish the mechanisms for quality control and the procedures for the defense of consumers; and the sanctions for violation of these rights, the repair and indemnification for deficiencies, damages or poor quality of goods and services, and for the interruption of public services that was not caused by fortuitous event or force majeure."**

"Art. 66.- Persons are recognized and guaranteed the following rights:

(...)

25. The right to access public and private goods and services of quality, with efficiency, effectiveness, and good treatment, as well as to receive adequate and truthful information about their content and characteristics.**

(...)";

THAT letter b) of article 180 of the General Law of Institutions of the Financial System provides as follows:

"Art. 180.- The Superintendent of Banks has the following functions and attributes:

(...)

b) To ensure the stability, solidity, and correct functioning of institutions subject to its control and, in general, that they comply with the norms governing their functioning, through permanent off-site supervision and on-site inspection visits, in accordance with international best practices, without any restriction and allowing determination of the economic and financial situation of the entity, the management of its business, evaluation of the quality and control of risk management, and verification of the truthfulness of the information it generates;**

(...)";

THAT numerales 2 and 4 of article 4 of the Organic Law for the Defense of the Consumer,

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provides as follows:

"Art. 4.- Consumer Rights.- The fundamental rights of the consumer, in addition to those established in the Political Constitution of the Republic, international treaties or conventions, internal legislation, general principles of law, and commercial custom, are the following:

(...)

2. Right to have public and private providers offer competitive goods and services of optimal quality, and to choose them freely;

3. Right to receive basic services of optimal quality;

4. Right to adequate, truthful, clear, timely, and complete information about the goods and services offered in the market, as well as their prices, characteristics, quality, contracting conditions, and other relevant aspects thereof, including the risks they may present;**

(...)";

THAT numeral 9.6 of article 9 of paragraph II "Right to information on financial products and services", of chapter V "Code of user rights of the financial system", of title XIV "Code of Transparency and User Rights", of book I "General norms for the application of the General Law of Institutions of the Financial System", of the Codification of Resolutions of the Superintendence of Banks and Insurance and the Banking Board", establishes the following:

"ARTICLE 9.- Access and receive directly clear, precise, timely, reasonable, adequate, validated, truthful, and complete information related to the products and services offered by financial system institutions, especially in financial, legal, juridical, operational, fiscal, and commercial aspects, among others, including associated risks:

(...)

9.6 Receive clear, non-misleading advertising that does not induce error, which collects the necessary, complete, and adequate conditions of the advertised product or service. Advertising will have binding force when contracts or agreements are based on the advertising offer; and,**

(...)";

THAT the Superintendence of Banks is a technical entity for surveillance, auditing, intervention, and control of economic activities, and of the services provided by private entities, with the purpose that these activities and services are subject to the legal framework and attend to the general interest, in accordance with what is provided in article 213 of the Constitution of the Republic of Ecuador, it is appropriate that this regulatory body observe the National Development Bank so that the services provided to the client are of optimal quality, which can also be chosen freely; therefore, the appellant's assertion that prior to the disposition of reimbursement of values, the Superintendence of Banks and Insurance must coordinate with the Comptroller General of the State is not appropriate;

THAT what is stated above is corroborated by the fact that the public interest has

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to be protected by the Superintendence of Banks and Insurance, in accordance with the first paragraph of article 1 of the General Law of Institutions of the Financial System, which textually provides as follows:

"Art. 1.- This Law regulates the creation, organization, activities, functioning, and extinction of private financial system institutions, as well as the organization and functions of the Superintendence of Banks, the entity in charge of the supervision and control of the financial system, in all of which the protection of public interests is taken into account.

(...)";

THAT the appellant's assertion that the withdrawals made through ATMs were made with the PINs and with debit card No. 6031600050000098, the exclusive responsibility of Mrs. María Dolores Mosquera Andrade, is not appropriate, since according to letter a) of article 51 of the General Law of Institutions of the Financial System, which is transcribed below, the National Development Bank is the depositary of its clients' money and is also responsible for the coverage services offered through ATMs of the Network, whose operational risk cannot be transferred to the clients of banking entities in the country, since it is its obligation to require that they have the necessary security measures:

"Art. 51.- Banks may carry out the following operations in national or foreign currency, or in accounting units established in the Law:

a) Receive public resources in demand deposits. Demand deposits are banking obligations, comprising monetary deposits payable upon presentation of checks or other payment and registration mechanisms; savings deposits payable upon presentation of savings books or other payment and registration mechanisms; and, any other payable within a period of less than thirty days. They may be constituted under various modalities and mechanisms freely agreed upon between the depositor and the depositary;**

(...)";

THAT the Banking Board issued the regulations inherent to the presentation of complaints against controlled institutions, currently contained in Section I, Chapter IV, Title XX, Book I of the Codification of Resolutions of the Superintendence of Banks and Insurance and the Banking Board, whose article 5 in its second paragraph establishes:

"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 Superintendence of Banks and Insurance may order the return of the claimed values, in exercise of the functions and attributes 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 may not exceed fifteen (15) days from notification to send, under the precautions of the Law, proof of compliance with the order issued.

THAT there is no evidence allowing to affirm that the holder of checking account No. 3001043246, Mrs. María Dolores Mosquera Andrade, has failed to comply with her preventive obligations with the use of PINs and debit card No. 6031600050000098, since the National Development Bank itself stated that the withdrawals present an atypical transactional scheme and that they could have been exposed to third-party manipulation;

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THAT the National Legal Intendence, through memorandum INJ-DNJ-SAL-2015-0103 of February 3, 2015, recommended the Banking Board reject the claim contained in the appeal filed by the Commercial Manager of the National Development Bank – Guayaquil Branch; and,

IN exercise of its legal attributes,

RESOLVES:

ARTICLE ONE.- REJECT the claim contained in the appeal for review filed by engineer Erika Palma Portilla, Commercial Manager of the National Development Bank – Guayaquil Branch; and, consequently, CONFIRM Official Letter No. IRG-DAYEU-V-R-2014-623 of June 17, 2014, through which the appeal for reconsideration against the content of Official Letter No. IRG-DAYEU-V-R-2014-271 of April 3, 2014, was rejected, through which lawyer Humberto Moya González, Regional Intendant of Guayaquil, accepted the complaint filed by Mrs. María Dolores Mosquera Andrade and ordered the National Development Bank to reimburse US$ 874.50 to checking account No. 3001043246 for the unauthorized withdrawals made through ATMs of the Network.

NOTIFY.- Given at the Superintendence of Banks and Insurance, in Quito, Metropolitan District, on May 8, 2015.

Epon. Rodrigo Landeta Parra
GENERAL INTENDANT (S)
PRESIDENT OF THE BANKING BOARD SESSION (E)

I CERTIFY.- Quito, Metropolitan District, on May 8, 2015.

Lcdo. Pablo Cobo Luna
SECRETARY OF THE BANKING BOARD

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Banking Board of Ecuador