Banking Board of Ecuador

RESOLUTION No. JB-2015-3474

THE BANKING BOARD

CONSIDERING:

THAT the second paragraph of the Third Transitional 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 procedures it was hearing on the date this Code came into force, within a period of one hundred and eighty (180) days, extendable at the discretion of the Monetary and Financial Policy and Regulation Board;

THAT by Resolution No. 054-2015-F, published in the Official Register Supplement No. 467, on March 26, 2015, the Monetary and Financial Policy and Regulation Board extended by one hundred and eighty (180) additional days the deadline for the Banking Board to continue acting and resolve all claims, appeals, and other administrative procedures within its competence;

THAT by communication entered into the control body on February 11, 2014, Ms. Ibeth Amparito Hinojosa Terán filed a claim against Banco de la Producción S.A. PRODUBANCO, in which she relevantly stated the following: "(...) On January 1 I left the city and upon returning I realized I did not have my credit card, so I proceeded to cancel it accordingly; when I reviewed my statement I was able to verify that several purchases were made within the Scala shopping center on January 1, 2, 3, and 4 (...)". In virtue thereof, she requested that the control body order the aforementioned financial institution to restore USD $1,379.50;

THAT by letter No. DNAE-SAU-2014-02567, dated April 24, 2014, Dr. Mirian Muñoz Solano, Acting Subdirector of User Attention and Education, accepted the claims contained in the complaint of Ms. Ibeth Amparito Hinojosa Terán and ordered Banco de la Producción S.A. Produbanco to "...refund the value of 1287.39 (One thousand two hundred eighty-seven US dollars and 39/100) to Ms. Ibeth Amparito Hinojosa Terán...";

THAT with a document entered into the Superintendency of Banks on May 8, 2014, lawyer Sergio Aguilar Díaz, offering ratification on behalf of Banco de la Producción S.A. PRODUBANCO, filed an appeal for reconsideration against letter No. DNAE-SAU-2014-02567, dated April 24, 2014. The claims contained in said appeal were rejected with letter No. DNAE-SAU-2014-04711, dated July 28, 2014;

THAT by communication entered into the Superintendency of Banks on August 8, 2014, Ms. Martha Cecilia Paredes Díaz, Executive Vice President of Banco de la Producción S.A. Produbanco, filed before the Banking Board an appeal for review against letter No. DNAE-SAU-2014-04711, dated July 28, 2014;

THAT in the documentation attached to the administrative complaint, Ms. Ibeth Amparito Hinojosa Terán states that "...all highlighted purchases are

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those that have been made without my authorization...". The highlighted purchases sum a value of USD $1,393.48. To this value must be subtracted USD $33.35 that Banco de la Producción S.A. Produbanco credited to the claimant; in virtue thereof, the claim amounts to the sum of USD $1,360.13, hence, since there is a return by the bank independent of the amount, it is the tacit recognition of an incorrect procedure by the institution;

THAT upon verifying the charge notes (vouchers) supporting the claimed transactions, it is apparent at first glance that the registered signatures are notably different and do not bear any similarity to the client's signature, from which it follows that indeed the commercial establishments through their responsible sales personnel failed to comply with the "Safe Sale" qualification procedures, considering that the commercial establishment is responsible during the transactional process as determined by Article 15, numeral 15.2, of Section III, Chapter V, Title I, Book I of the Compilation of Resolutions of the Superintendency of Banks and the Banking Board;

THAT Article 15, numeral 15.2, of Section III, Chapter V, Title I, Book I of the Compilation of Resolutions of the Superintendency of Banks and the Banking Board, cites the following:

"ARTICLE 15.- Authorized institutions to issue or administer credit, payment, or affinity cards must enter into written contracts with affiliated establishments, in which at least the following clauses shall be stipulated:

(...)

15.2 Obligation of the establishment to issue the charge note and to verify that the signature and rubric provided by the cardholder is the same as that recorded on the back of the card. In case of doubt, the establishment will require the identification document and note the identity card number or passport number on the receipt";

THAT it is also necessary to consider that the financial entity has the obligation to adequately manage its risks, as provided by numeral 2.2 of Article 2, Section I, Chapter I, Title X, Book I of the Compilation of Resolutions of the Superintendency of Banks and the Banking Board:

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

THAT concomitantly, Article 3, of Chapter I, of Title X, of Book I of the Compilation of Resolutions of the Superintendency of Banks and the Banking Board, provides: "Financial system institutions have the responsibility to manage their risks, for which effect they must have formal comprehensive risk management processes that allow identifying.

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measure, control/mitigate, and monitor the risk exposures they are assuming...";

THAT the first and second paragraphs of Article 5, of Chapter IV "Procedure for the Attention of Claims against Financial System Institutions", of Title XX, of Book I, of the Compilation of Resolutions of the Superintendency of Banks and the Banking Board, provides:

"ARTICLE 5.- If the result of the analysis performed by the Superintendency determines the need for the controlled institution to introduce corrective measures that regularize the situation that motivated the claim, the Superintendent of Banks and Insurance or the official who holds the delegation of said authority, will issue the corresponding disposition.

If the situation that motivated the claim referred to in the previous paragraph originated in an incorrect procedure of the controlled institution, which caused harm to the claimant, the Superintendency 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 Financial System Institutions, granting the legal representative of the entity a period that may not exceed fifteen (15) days from notification to send, under legal warnings, the proof of compliance with the issued order.";

THAT in the face of the theft of the lady's credit card, the non-observance by the affiliated commercial establishments of the regulations created to prevent criminal acts that cause economic harm to users of the financial system is evident;

THAT the financial entity has the obligation to ensure that affiliated establishments comply with all policies and procedures provided for commercial transactions, in accordance with the agreements signed between the parties, so that the rights of the Bank's clients are not affected;

THAT the bank in the present case shows weaknesses in its risk control policy regarding the use of the credit card to make purchases through commercial establishments affiliated to the point of recognizing a partial return of values; likewise, Banco de la Producción S.A. Produbanco has limited itself to transferring all responsibility for the events that occurred to its client, without taking into consideration principles of justice, equity, and sound practices, contemplated in Article 2, Section I, Chapter IV "Procedure for the Attention of claims against financial system institutions", Title XIV, Book I of the Compilation of Resolutions of the Superintendency of Banks and the Banking Board;

THAT Article 5, of Chapter IV "Procedure for the Attention of Claims against Financial System Institutions", of Title XX, of Book I, of the Compilation of Resolutions of the Superintendency of Banks and the Banking Board, which finds its foundation in Article 180 of the General Law of Financial System Institutions, grants the control body the power to order the restitution of values to a financial entity, in the context of

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a claim, therefore the assertion of the appellant to the effect that the Superintendency of Banks lacks competence to rule as it has done has no legal basis;

THAT in the present case it is observed that the National Directorate of User Attention and Education and the Subdirectorship of User Attention, in letters Nos. DNAE-SAU-2014-04711 and DNAE-SAU-2014-02567, cited, among others, Articles 13, numeral 13.9, and 15, numeral 15.2, of Chapter V, of Title I, of Book I, of the Compilation of Resolutions of the Superintendency of Banks and the Banking Board, and explained how these norms are subsumed to the facts in question; therefore, the appealed administrative act meets the requirement of motivation;

THAT the National Legal Intendency, through memorandum INJ-DNJ-SAL-2015-0099 of February 3, 2015, recommended to the Banking Board to reject the claim contained in the appeal for review filed; and,

IN exercise of its legal attributes,

RESOLVES:

SINGLE ARTICLE.- REJECT the petition contained in the appeal for review filed; and, consequently, PARTIALLY CONFIRM letter No. DNE-SAU-2014-04711, dated July 28, 2014, with which letter No. DNAE-SAU-2014-02567, dated April 24, 2014, was ratified, with the caveat that Banco de la Producción S.A. PRODUBANCO is ordered to pay USD $1,360.13 in favor of Ms. Ibeth Amparito Hinojosa Terán since that is the value effectively claimed by the user.

NOTIFY.- Given in the Superintendency of Banks, in Quito, Metropolitan District, on June 10, two thousand fifteen.

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

*I CERTIFY.- Quito, Metropolitan District, on June 10, two thousand fifteen.

Lcdo. Pablo Cobo Luna
SECRETARY OF THE BANKING BOARD