Banking Board of Ecuador

RESOLUTION No. JB-2015-3504

THE BANKING BOARD

CONSIDERING:

THAT through Resolution No. JB-2015-3369 of April 22, 2015, the Banking Board resolved: "REJECT the claim contained in the reconsideration appeal filed by Mr. Antonio Acosta Espinosa, Deputy President of Banco Pichincha C.A.; and, consequently CONFIRM the administrative act contained in letter No. DNAE-SAU-2014-03589 of June 9, 2014, through which the User Attention Directorate rejected the reconsideration appeal filed by the bank, regarding letter No. DNAE-SAU-2014-01961 of March 28, 2014, with which it was resolved that the referred banking entity "(...) proceed with the refund of values charged in excess for collection management and interest to the claimant, amounting to the sum of US$ 36.82 (USD 35.60 and 1.22 corresponding to collection expenses and late interest, respectively)." (sic)", fundamentally based on the following considerations:

"(...)

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

THAT Mr. Marco Germánico Pila Lema, through communication received by this control body on December 27, 2013, filed a complaint against Banco Pichincha C.A., CREDIFE stating:

"(...) TYPE OF EXAGGERATIONS IN THE CHARGE ADDITIONAL TO THE QUOTA FIXED FOR THE MONTHLY PAYMENT OF CREDITS ISSUED BY CREDIFE (...)" (sic)

(...), NOT SO OF THE THIRD ENTITY... FROM WHICH I COMPLAIN ABOUT THE HIGH VALUES THEY CHARGE IN RELATION TO THE VALUE OF THE QUOTA WHICH REPRESENTS ABOVE 6%. (...)", (sic);

THAT having accepted the complaint for processing, the User Attention Directorate through letters No. DNAE-SAU-2014-0392 of January 22, 2014, requested explanations and defenses from the financial entity that might assist it regarding the complaint presented;

THAT Banco Pichincha C.A. through letters Nos. AUD-C-R-0006-2014 and BP-ACEC-2014-0155 of February 12 and 13, 2014, respectively, submitted the requested information;

THAT through letter No. DNAE-SAU-2014-01961 of March 28, 2014, the National Director of User Attention and Education issued the administrative resolution, which favorably attended the complaint presented by Mr. Marco Germánico Pila Lema, in the following sense:

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Banking Board of Ecuador

Resolution No. JB-2015-3504

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"(...)

1. The calculation of the late day that Banco Pichincha C.A. carries out for the calculation of the amount of late interest and collection management differs from the calculation carried out between the debit date constant in the payment calendar and the dates of the payments made by Mr. Marco Germánico Pila Lema.

2. The values corresponding to collection management are being carried out for the partial recovery of the owed quota and not for the total recovery of the overdue quota.

That Banco Pichincha C.A.(...) proceed with the refund of values charged in excess for collection management and interest to the claimant, amounting to the sum of US$36.82 (USD 35.60 and 1.22 corresponding to collection expenses and late interest, respectively)." (sic);

THAT with communication received by the control body on April 11, 2014, Banco Pichincha C.A. filed a reconsideration appeal against the administrative act contained in letter No. DNAE-SAU-2014-01961 of March 28, 2014; and, through letter No. DNAE-SAU-2014-03589 of June 9, 2014, the Deputy Director of User Attention, E, rejected the reconsideration appeal filed, and ratified the administrative act;

THAT through a document entered in the Superintendence of Banks and Insurance on June 23, 2014, Mr. Antonio Acosta Espinosa, Deputy President of Banco Pichincha C.A., with the professional sponsorship of lawyer María José Araujo Álvarez, filed a reconsideration appeal before the Banking Board against letter No. DNAE-SAU-2014-03589 of June 9, 2014, arguing the following:

• The argument of the control body mentioning that "the invoices issued by the company 'Pichincha Sistemas ACOVI S.A., which are not evidence,' lacks logical and legal support, since the invoices issued in the name of Mr. Pila Lema constitute unequivocally a means of proof of the collection management carried out by the Institution, which were sent at the time through letter No. BP-ACEC-2014-0155, for which effect he cites article 12, section III, Transitional Provisions, Chapter I, Title XVI, Book I of the Codification of Resolutions of the Superintendence of Banks and Insurance and the Banking Board; which must be taken into account as a fact not considered at the time of issuing the impugned letter.

• That the User Attention Directorate in the impugned letter should not mention that the bank "(...) is applying the partial payments made with late days, a value that should have been charged in the total recovery of the quota according to the values established in the Bank Debtors Fee Table, and not to partial payments as the entity is currently doing.", since "As has been mentioned, the values generated by collection expenses fall within ranges of late days, which evidences that payments must be partialized due to the delinquency incurred by the client, so it is inappropriate that the refund of values was ordered." (sic).

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Banking Board of Ecuador

Resolution No. JB-2015-3504

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• That he has not incurred in incorrect procedures, and that on his part the control body has not determined any corrective measure, so it is inappropriate to order the reversal of values;

THAT with letter No. JB-2014-1644 of June 27, 2014, the Secretary of the Banking Board accepted the reconsideration appeal for processing; and, with letter No. JB-2014-1645 of the same date, notified the claimant regarding the acceptance of said appeal;

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 the resolutions contained in the Codification of Resolutions of the Superintendence of Banks and Insurance and the Banking Board, and the norms issued by the control bodies, will maintain their validity in everything that does not oppose what is established 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 complaints, appeals, and other administrative procedures it was handling on 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 the Superintendence of Banks and Insurance, as the competent authority, as provided in articles 1 and 180, letter b) of the General Law of Financial System Institutions, in force on the date of the complaint, as well as article 5 of chapter IV regarding the "Procedure for the attention of complaints against Financial System Institutions", title XX, book I of the Codification of Resolutions of the Superintendence of Banks and Insurance and the Banking Board, has the legal and normative faculty to hear financial user complaints, and in case of determining an incorrect procedure by the entities, to dispose of the restitution of values to them, therefore the administrative acts it issues to resolve them, arise from the control and supervision attributes contained in the Constitution and in the law, in whose activity, the protection of public interests must be taken into account;

THAT regarding the argument of the appellant that must be taken into account as a fact not considered at the time of resolution, the 18 invoices sent in copy with letter BP-ACEC-2014-0155 of February 13, 2014, issued by the company Pichincha Sistemas ACOVI C.A. in the name of Mr. Marco Germánico Pila Lema for the concept of "Collection Management Expenses", it must be noted that none of the invoices detail which collection management was carried out by the company, in addition it is observed that the generation of the invoices occurred at high hours of the night or in the early morning hours, automatically at the moment the client incurs in delinquency of the quotas to be paid for the credit;

THAT the first paragraph of the current article 22, before 12, of section III "Of expenses", chapter I, title XIV, book I of the Codification of Resolutions of the Superintendence of Banks and Insurance and the Banking Board, establishes:

"ARTICLE 22.- The expenses charged to the debtor must correspond only to services provided obligatorily by third parties, agreed upon previously, effectively received and duly substantiated." (Underline added);

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Banking Board of Ecuador

Resolution No. JB-2015-3504

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THAT regarding, in relation to the values of collection management and late interest charged to the credit operation granted to the client, charged in excess and detailed in the last column of the table "Summary Detail of Payments of Mr. Pila Lema Marco Germánico", the User Attention and Education Directorate verified that the client made partial payments, and that the bank applied the late interest rate to the total value of the quotas fixed in the months of April, July, August, October, and December 2013;

THAT from the above, it is determined that Banco Pichincha C.A. has incurred in an incorrect procedure, as determined in the technical report sent by the User Attention Directorate, with memorandum No. DNAE-SAU-2014-01384 of December 15, 2014, since the entity presented before the Superintendence of Banks the documentation of the expenses generated by the collection management for Mr. Marco Germánico Pila Lema, without the detail of the actions undertaken for the recovery of the owed values, which, as indicated, were generated automatically without having demonstrated an effective collection management; on the other hand, as indicated, the calculation of late interest and collection expenses was charged on the total value of the quota without considering the payments made by the client; so what is established in the second paragraph of article 5, section I, chapter IV "Procedure for the attention of complaints against Financial System Institutions", title XX "Of the Superintendence of Banks and Insurance", book I "General norms for the application of the General Law of Financial System Institutions" of the Codification of Resolutions of the Superintendence of Banks and Insurance and the Banking Board is configured, for which reason the return of the value claimed by Mr. Marco Germánico Pila Lema is appropriate;

THAT through communication received by the Superintendence of Banks on May 28, 2015, Mr. Antonio Acosta Espinosa, Deputy President of Banco Pichincha C.A., with the professional sponsorship of doctor Pablo Cadena Merlo and lawyer María José Araujo Álvarez, filed a reconsideration appeal against the administrative act contained in resolution No. JB-2015-3369 of April 22, 2015;

THAT the Banking Board, in a session held on June 24, 2015, as established in the second paragraph of article 3, chapter II, title XVI, book I of the Codification of Resolutions of the Superintendence of Banks and Insurance and the Banking Board, heard the appeal referred to in the preceding paragraph and determined that it does not comply with what is provided in the first paragraph ibidem, that is, that there are no new elements of fact or law that motivate the elaboration of corresponding reports, so it decided to deny it outright; and,

IN exercise of its legal attributes,

RESOLVES:

SINGLE ARTICLE.- DENY the reconsideration appeal filed by Mr. Antonio Acosta Espinosa, Deputy President of Banco Pichincha C.A. against the administrative act contained in resolution No. JB-2015-3369 of April 22, 2015; and, consequently, CONFIRM said resolution.

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Banking Board of Ecuador

Resolution No. JB-2015-3504

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COMMUNICATE.- Given in the Superintendence of Banks, in Quito, Metropolitan District, on the twenty-fourth of June of two thousand fifteen.

Econ. Rodrigo Landeta Parra

GENERAL INTENDENT, E

PRESIDENT OF THE BANKING BOARD, E

I CERTIFY.- Quito, Metropolitan District, on the twenty-fourth of June of two thousand fifteen.

Lcdo. Pablo Cobo Luna

SECRETARY OF THE BANKING BOARD