Circular 22/2010 — Prohibitions and Limits on the Charging of Commissions

Monday, July 26, 2010 OFFICIAL GAZETTE (First Section) 76

CIRCULAR 22/2010 General Provisions Establishing Prohibitions and Limits on the Charging of Commissions.

At the margin, a logo that says: Bank of Mexico.

CIRCULAR 22/2010

TO CREDIT INSTITUTIONS, LIMITED OBJECT FINANCIAL SOCIETIES AND MULTIPLE OBJECT FINANCIAL SOCIETIES REGULATED:

SUBJECT: ESTABLISHMENT OF PROHIBITIONS AND LIMITS ON THE CHARGING OF COMMISSIONS

The Bank of Mexico considering that:

I. In recent years, the Honorable Congress of the Union has approved various initiatives for reform to financial laws, to increase transparency and promote competition, as well as to foster the inclusion of the lower-income population into the financial system and protect users of financial services.

One of the concerns of legislators has been the cost of commissions that clients pay for using financial services, so in these reforms, the Bank of Mexico's authority to regulate commissions, their registration, and transparency in their charging was strengthened.

For this reason and in view of the aforementioned concern, the Bank of Mexico issued in July 2009 Circular 17/2009, in which the charging of commissions that deviate from sound financial practices is limited.

II. On May 25, 2010, the Decree was published in the Official Gazette of the Federation by which, among others, the Law for Transparency and Orderly Management of Financial Services is reformed.

Through such reform, fundamental principles that financial entities must follow for the charging of commissions are incorporated, and it is established that the Bank of Mexico must regulate them based on such principles.

Among the aforementioned principles, the following stand out for their importance:

a) That the information received by the public regarding commissions be clear and transparent, expressed in simple and understandable language, and that such information be contained in standard form contracts and available in branches through signs, lists, and brochures;

b) That commissions be applied exclusively for services and operations effectively performed;

c) That any practice in the matter of commissions that inhibits or hinders free competition to the benefit of consumers be eliminated, and

d) That the regulation on commissions always seek the fair balance between the protection of users' rights and the preservation of competitive profit margins, so as not to inhibit the supply of financial services, since there is no more burdensome service for the public than that which ceases to be provided.

III. In addition to the aforementioned principles, the Bank of Mexico considers it appropriate to promote the observance of the following criteria:

a) That commissions not be charged for specific services that should be included in the financial product or basic package offered to the client, and

Monday, July 26, 2010 OFFICIAL GAZETTE (First Section) 77

b) That commissions charged for non-compliance with agreed conditions bear a reasonable proportion to the amount defaulted.

IV. Based on these principles, the Bank of Mexico has identified new inadequate practices in the charging of commissions in active, passive, and service operations, which are the subject of this regulation, therefore:

a) For the benefit of the majority of consumers, who primarily use basic financial services, the charging of commissions for cash withdrawals, balance inquiries, account deposits, and loan payments is prohibited, both at the teller windows of their branches and at automated teller machines operated by the credit institution holding the account;

b) In order that the commission for not paying a loan on time is not excessive, it is provided that only the amount resulting from the lesser of: the amount of the default and the amount that the financial entity registers with the Bank of Mexico may be charged.

The limitation established in the preceding paragraph applies in similar terms to the commission for attempted overdraft by issuing a check without funds and to the commission for not maintaining the required minimum balance in a deposit account;

c) To avoid double charging for the same event, the charging of commissions is prohibited for:

i) late payment of loans when late interest is charged in the same period, and

ii) not using the credit card during a calendar year, if during the same period a commission for annuality or some other equivalent concept is charged;

d) With the purpose of facilitating the cancellation of the registration of mortgages on real estate in the Public Registry, the charging of commissions for carrying out the corresponding procedures is prohibited;

e) In order that in fund transfer and direct debit operations only one commission is charged, it is established that only the originating credit institution of the operation may charge it;

f) In the case of returns of fund transfers and direct debits, it is provided that the commission may not exceed the amount, if any, that was charged to the client for its issuance, and

g) For transparency purposes and with the objective that clients know in advance the commissions they will have to pay for the use of automated teller machines, it is established that operators must display on the screens a clear legend regarding the total cost of the operation. The foregoing, in order that clients are able to not carry out the operation, at no cost.

V. It is necessary to compile and update the regulation issued by this Central Institute in the matter of charging of commissions and basic accounts, in congruence with the legal reforms mentioned, as well as to continue with the process of eliminating inadequate practices in intermediation, all of this in protection of the public's interests, to promote the sound development of the financial system and to foster the proper functioning of payment systems.

Based on articles 28 of the Political Constitution of the United Mexican States, paragraphs sixth and seventh; 24 and 26 of the Bank of Mexico Law; 4, 4 Bis and 22 of the Law for Transparency and Orderly Management of Financial Services; 48 and 48 Bis 2 of the Credit Institutions Law; 8th, paragraphs third and sixth, 10; 14 in relation with 25 fraction II and with 25 Bis 1 fraction V; 17 fraction I, and 20 fraction IV, of the Internal Regulations of the Bank of Mexico, which grant it the authority to issue provisions through the General Directorate of Analysis of the Financial System, the Directorate of Central Banking Provisions, and the Directorate of Operational and Payment Systems, as well as Unique of the Agreement on the Affiliation of the Administrative Units of the Bank of Mexico, fractions I, III and IV, has resolved to issue the following:

GENERAL PROVISIONS ESTABLISHING PROHIBITIONS AND LIMITS ON THE CHARGING OF COMMISSIONS

1. DEFINITIONS

For brevity, singular or plural, the following shall be understood as:

Account Management Fee:
any charge derived from the administration of a deposit account, such as annuality, monthly fee, administration, membership, management, or any other equivalent concept.

Client: the person who enters into any passive, active, or service operation with a Financial Entity.

Loan: the loans or financings that Financial Entities grant to the general public, including credit openings based on which credit cards are issued, when: i) their amount is less than the equivalent in national currency to 900,000 UDIS, or ii) they are loans guaranteed by housing for any amount referred to in the Law on Transparency and Promotion of Competition in Guaranteed Credit, in both cases documented through standard form contracts.

Commission: any charge, other than interest, that regardless of its denomination or modality, a Financial Entity charges directly or indirectly to a Client for the celebration of active, passive, or service operations, documented in standard form contracts, including the use of Disposition Means.

Basic Payroll Account:
the checking or savings deposit related to payroll referred to in article 48 Bis 2 of the Credit Institutions Law, which is transferred electronically.

Basic General Public Account:
the checking deposit referred to in article 48 Bis 2 of the Credit Institutions Law.

Issuer: credit institutions, limited object financial societies, or multiple object financial societies regulated that issue, as applicable, debit, credit, or prepaid bank cards.

Financial Entity: credit institutions, limited object financial societies, and multiple object financial societies regulated.

Disposition Means:
debit cards, credit cards, prepaid bank cards, checks, and fund transfer orders, including the service known as direct debit.

Interbank Operations in Automated Teller Machines:
transactions derived from cash withdrawal and balance inquiry operations, in which the Issuer is not the Automated Teller Machine Operator.

Internal Operations in Automated Teller Machines:
transactions derived from cash withdrawal and balance inquiry operations, in which the Issuer is also the Automated Teller Machine Operator.

Automated Teller Machine Operator:
credit institutions, limited object financial societies, and multiple object financial societies regulated, that provide services through automated teller machines.

UDIS: the unit of account whose value in national currency is published by the Bank of Mexico in the Official Gazette of the Federation, in accordance with articles Third of the "Decree by which the obligations that may be denominated in Investment Units are established and reform and add various provisions of the Federal Tax Code and of the Income Tax Law", published in the Official Gazette of the Federation on April 1, 1995, and 20 Ter of the Federal Tax Code.

Monday, July 26, 2010 OFFICIAL GAZETTE (First Section) 79

2. BASIC ACCOUNTS EXEMPT FROM COMMISSIONS

2.1 BASIC PAYROLL ACCOUNT

2.11. Credit institutions that receive checking bank deposits from natural persons are obligated to offer a Basic Payroll Account exempt from the charging of Commissions, in accordance with what is provided in article 48 Bis 2 of the Credit Institutions Law.

The Basic Payroll Account must include the minimum services listed below:

a) Opening and maintenance of the account;

b) Granting of a debit card to the Client and its replacement in case of wear or renewal;

c) Crediting of resources to the account by any means;

d) Cash withdrawals at the teller windows of their branches and at automated teller machines operated by the credit institution holding the account;

e) Payment of goods and services in affiliated businesses through the debit card;

f) Balance inquiries at the teller windows of their branches and at automated teller machines operated by the credit institution holding the account;

g) Direct debit of service payments to providers that use this payment mechanism, and

h) Closing of the account.

Credit institutions may offer additional services associated with the Basic Payroll Account, exempt from the charging of Commissions.

2.12. Basic Payroll Accounts may be opened in favor of the following natural persons:

a) Those with respect to which their employer has entered into a contract with the depositing credit institution, under which they are able to open this type of account, in order to deposit their salary and other labor-related benefits in them, and

b) Those who hold a job, position, or commission of any nature in the Federal Public Administration, who enter into a contract with a credit institution for the opening of the account, in order to deposit their salary and other labor-related benefits in it.

2.13. The Basic Payroll Account will not require a minimum opening amount nor maintain a minimum monthly average balance.

2.14. In the event that for any circumstance a Basic Payroll Account does not receive deposits for six consecutive months, the credit institution holding it may transform it into a Basic General Public Account.

When the situation indicated in the preceding paragraph occurs, the credit institution holding the Basic Payroll Account must notify the Client of what is stated in said paragraph, through: i) written communication addressed to their home address, which may be included in the respective account statement, or ii) their automated teller machines through a clear and conspicuous message that appears on the screen when the Client uses the automated teller machine.

The foregoing must be done with an advance of at least 30 calendar days prior to the date on which the transformation of the account is intended to take place.

2.2 BASIC GENERAL PUBLIC ACCOUNT

Monday, July 26, 2010 OFFICIAL GAZETTE (First Section) 80

2.21. Credit institutions that receive checking bank deposits from natural persons are obligated to offer a Basic General Public Account exempt from the charging of Commissions, in accordance with what is provided in article 48 Bis 2 of the Credit Institutions Law.

The Basic General Public Account must include the minimum services listed below:

a) Opening and maintenance of the account;

b) Granting of a debit card to the Client and its replacement in case of wear or renewal;

c) Crediting of resources to the account by any means;

d) Cash withdrawals at the teller windows of their branches and at automated teller machines operated by the credit institution holding the account;

e) Payment of goods and services in affiliated businesses through the debit card;

f) Balance inquiries at the teller windows of their branches and at automated teller machines operated by the credit institution holding the account;

g) Direct debit of service payments to providers that use this payment mechanism, and

h) Closing of the account.

Credit institutions may offer additional services associated with the Basic General Public Account, exempt from the charging of Commissions.

2.22. Clients may be natural persons who meet the requirements determined by the credit institutions, which in no case may limit, modify, or in any way render nugatory what is provided in these Provisions.

2.23. The Basic General Public Account will not require a minimum opening amount.

2.24. Credit institutions may freely determine the minimum monthly average balance that must be maintained in the Basic General Public Account. In the event that the aforementioned balance is not maintained for three consecutive months, the credit institution may close the respective account.

When the minimum monthly average balance of the Basic General Public Account has not been maintained in any month, the credit institution must notify the Client that if such situation occurs again during the 60 calendar days immediately following the month in question, it may close said account. Such notification must be made through: i) written communication addressed to their home address, which may be included in the respective account statement, or ii) their automated teller machines through a clear and conspicuous message that appears on the screen when the Client uses the automated teller machine.

In the event that the notification is made through automated teller machines, the credit institution must keep a record that it showed the Client the respective information. In this case, the referred period shall be calculated from when the Client has used the automated teller machine and the credit institution has shown the notification.

When the credit institution closes the account, it must return to the Client the resources that remain deposited in it, either by delivering cash at the teller windows of their branches or by making a check payable to them available, as established in the respective contract.

2.3 COMMON PROVISIONS

2.31. Credit institutions must inform through their electronic page on the worldwide network (Internet) the following:

I. Regarding Basic Payroll Accounts.

a) The minimum services referred to in section 2.11.;

b) The additional services that, if any, they offer in said accounts, and

c) The circumstance under which the transformation of the account may be carried out, provided for in section 2.14.

II. Regarding Basic General Public Accounts.

a) The minimum services referred to in section 2.21.;

b) The additional services that, if any, they offer in said accounts;

c) The minimum monthly average balance, and

d) The procedure to carry out the closing of the account for not maintaining the minimum monthly average balance for three consecutive months, provided for in section 2.24.

2.32. Credit institutions may freely determine the commercial name of the products they offer under section 2 of these Provisions, provided that it is accompanied by the legend "Basic Payroll Product" or "Basic General Product", as applicable. The foregoing, with the purpose of allowing clients to identify and compare this type of product.

2.33. Credit institutions must assign a standardized banking key (CLABE) to each Basic Payroll Account and to each Basic General Public Account.

2.34. Credit institutions must offer the accounts referred to in sections 2.1 and 2.2, at least in the branches and during the hours in which they offer checking bank accounts to the general public.

Each credit institution may limit the possibility of opening more than one of the aforementioned accounts for the same person.

2.35. Credit institutions are prohibited from denying the opening of the Basic Payroll Account and the Basic General Public Account, to natural persons who meet the requirements provided in the applicable provisions and in their internal policies applicable in general to the rest of their passive operations.

3. LIMITATIONS AND PROHIBITIONS ON THE CHARGING OF COMMISSIONS IN DEPOSIT ACCOUNTS AND OTHER PASSIVE OPERATIONS

Credit institutions may not charge Commissions:

a) Simultaneously, within the same period covered by the account statement, for Account Management Fee and for not maintaining a minimum average balance.

The foregoing, regarding deposit accounts.

In the event that a Commission is charged for not maintaining a minimum monthly average balance, such Commission may not exceed the amount resulting from the lesser of: i) the difference between the required minimum monthly average balance and the observed average balance, and ii) the amount that the credit institution determines and registers with the Bank of Mexico, in accordance with the procedure provided for in Article 6 of the Law for Transparency and Orderly Management of Financial Services;

b) Whose amount is determined using one of several options or calculation formulas in relation to deposit accounts, unless the Commission charged is the lowest;

c) When they establish as a requirement that a deposit account be opened to carry out charges related to the payment of a Loan they have granted, for the following concepts: opening, Account Management Fee, and not maintaining a minimum average balance;

Monday, July 26, 2010 OFFICIAL GAZETTE (First Section) 81

Monday, July 26, 2010 OFFICIAL GAZETTE (First Section) 82

d) For overdrafts in bank deposit accounts, except when credit institutions have previously agreed with their Clients the granting of a credit line.
For this purpose, credit institutions must obtain the consent of their Clients, by autograph signature, in a document separate from the deposit contract, in which the limit of the credit line, the applicable interest rate, and, if applicable, the respective Commission are established; e) For attempting to overdraft bank deposit accounts, except when checks without funds are issued, in which case the Commission may not exceed the lesser of the following amounts:
i) the difference between the amount of the check and the available balance in the account, and ii) the amount determined and registered by the credit institution with the Bank of Mexico, in accordance with the procedure provided in Article 6 of the Law for Transparency and Orderly Management of Financial Services; f) For attempting to overdraft the balance of a bank prepaid card; g) For the cancellation of deposit accounts; h) For the cancellation of debit or bank prepaid cards; i) For the cancellation of the electronic banking service; j) For cash withdrawals and balance inquiries at the counters of their branches and at automated teller machines operated by the credit institutions themselves, when the transaction is carried out by their Clients; k) For receiving and crediting funds to their Clients' deposit accounts, through the counters of their branches and the automated teller machines of the credit institutions themselves; l) For not using bank prepaid cards during a period of 365 natural days; m) To Clients who request the credit institution in which their salary, pensions, and other labor-related benefits are deposited to transfer the entire amount of the deposited resources to another credit institution of their choice, in accordance with what is provided in article 18 of the Law for Transparency and Orderly Management of Financial Services, and n) To the depositor of a check for credit to their account whose payment is returned or rejected by the drawee credit institution, in accordance with what is provided in article 4 Bis of the Law for Transparency and Orderly Management of Financial Services.

4. LIMITATIONS AND PROHIBITIONS ON THE CHARGING OF COMMISSIONS IN CREDIT OPERATIONS

Financial Entities may not charge Commissions:
a) Whose amount is determined using one of several options or calculation formulas in relation to Credits, unless the Commission charged is the lowest; b) For the cancellation of one or more credit cards issued under a credit opening contract, nor, if applicable, for the rescission of the corresponding credit opening contract; c) For the receipt of total or partial periodic payment of credits granted by the same Financial Entity, at the counters of their branches, through their automated teller machines, by electronic fund transfers, or by direct debit; d) For late payment of a Credit, non-payment, or any other equivalent concept, when default interest is charged during the same period; e) For the failure to make the periodic payment of a Credit, unless the Commission does not exceed the lesser of the following amounts: i) the amount of said default, and ii) the

Monday, July 26, 2010 OFFICIAL GAZETTE (First Section) 83

amount determined and registered by the credit institution with the Bank of Mexico, in accordance with the procedure provided in Article 6 of the Law for Transparency and Orderly Management of Financial Services; f) For not using the credit card for one calendar year to exercise the credit line, if during the same period a Commission is charged for annuality or any other equivalent concept; g) For the return, for any cause, of checks that they have received as a means of payment of some Credit for which they are creditors; h) For late payment, non-payment, or any other equivalent concept, when due to causes attributable to the Financial Entity, it has not credited the payment of some Credit in terms of what is provided in Circular 22/2008 issued by the Bank of Mexico, which establishes the dates on which payments must be credited depending on the means used to make them; i) For carrying out the necessary procedures for the cancellation of liens related to mortgage Credits due to the total payment of the debt. This is without prejudice to Clients covering the notarial and registry expenses that, if applicable, correspond to them; j) For the receipt of payment of Credits granted by other Financial Entities, in accordance with what is provided in article 4 Bis of the Law for Transparency and Orderly Management of Financial Services; k) For the concept of overdraft or attempted overdraft in credits, loans, or revolving financing associated with a card, as well as in unsecured personal liquidity credits, in accordance with what is provided in article 18 Bis 8 of the Law for Transparency and Orderly Management of Financial Services, and l) Regarding basic credit cards that are issued in accordance with what is provided in article 48 Bis 2 of the Law of Credit Institutions.

5. LIMITATIONS ON THE CHARGING OF COMMISSIONS FOR FUND TRANSFER ORDERS AND DIRECT DEBITS

Regarding this type of operation:
a) In no case shall the amount of Commissions be determined based on the amount of fund transfer orders and direct debits; b) Only the credit institution originating the credit or debit operation, as applicable, may charge a Commission, and

c) In the event of return of fund transfer orders and direct debits, the issuing credit institution may not charge a Commission higher than that charged for originating the operation.
These limitations shall only apply to operations originated and settled within national territory.

6. LIMITATIONS ON THE CHARGING OF COMMISSIONS THROUGH COMMISSION AGENTS

Credit institutions that carry out operations or provide services through commission agents, in no case may determine the amount of the Commissions they charge through them based on the amount of the operation in question, so these must be fixed for each type of operation. This does not prevent credit institutions from establishing limits on the amount of the operations in question.

7. CHARGING OF COMMISSIONS FOR OPERATIONS AT AUTOMATED TELLER MACHINES

7.1 The charging of Commissions for Interbank Operations at Automated Teller Machines may only be carried out by Automated Teller Machine Operators, so Issuers may not charge any additional Commission. For this purpose, Issuers will charge the respective Commission and transfer it to the Automated Teller Machine Operator in question.
When a Financial Entity, directly or indirectly, constitutes a legal person to provide services through automated teller machines, it must take the necessary actions for such legal person to comply with the obligations applicable to Automated Teller Machine Operators mentioned in these Provisions. The operations that Clients of said Financial Entity carry out at automated teller machines operated by the aforementioned legal person, will be considered as Internal Operations at Automated Teller Machines, for the purposes of these Provisions.

7.2 Automated Teller Machine Operators must display on their screens after a service is selected and before the operation is authorized, one of the following legends, as applicable:
a) If a debit card is used:
"For this operation you will pay a commission of: ____ pesos, VAT included."
Or else,
"No commission will be charged for this operation." b) If a credit card is used:
"For this operation you will pay a commission of: ____ pesos, VAT included."
Or else,
"No commission will be charged for this operation."
Additionally, in the event that the operation consists of a cash withdrawal:
"For use of the credit line you will pay a commission of: ____ pesos, VAT included, to the Issuer of your card."
In all cases, the user must be given the opportunity to cancel the operation before carrying it out and at no cost.
In the case of Internal Operations at Automated Teller Machines, only the legend corresponding to the Commission to be charged, either for the use of the automated teller machine or for the exercise of the credit line, shall be displayed. This, in accordance with articles 4 Bis and 17 of the Law for Transparency and Orderly Management of Financial Services.

TRANSITORY PROVISIONS

FIRST. This Circular shall enter into force on July 27, 2010.
On the aforementioned date, Circular 17/2009 containing the "General Provisions regarding the charging of commissions," published in the Official Gazette of the Federation on July 21, 2009, including its modifications made known through Circular 24/2009 published in the Official Gazette of the Federation on October 12, 2009, Circular 29/2009 published in the Official Gazette of the Federation on December 11, 2009, and Circular 14/2010 published in the Official Gazette of the Federation on April 16, 2010, are repealed. Likewise, on the mentioned date, the "Rules to which credit institutions must adhere regarding basic payroll accounts and for the general public, referred to in article 48 Bis 2 of the Law of Credit Institutions," published in the Official Gazette of the Federation on July 16, 2007, as well as its modifications made known through Resolutions published in the aforementioned Official Gazette of the Federation on November 30, 2007 and September 26, 2008, respectively, are repealed.

SECOND. The provisions in numerals 2.14.; 2.24.; 2.31.; 4 subsection a), and 7.2, shall enter into force on October 26, 2010.

Monday, July 26, 2010 OFFICIAL GAZETTE (First Section) 85

THIRD. The provisions in numeral 3 subsection a) second paragraph; 3 subsection e) with respect to the attempt to overdraft by issuing checks without funds, as well as for direct debit, and 4 subsections d) and e), shall enter into force on January 3, 2011.

Mexico, D.F., July 22, 2010.- BANK OF MEXICO: The Director General of Financial System Analysis, José Gerardo Quijano León.- Signature.- The Director of Central Banking Provisions, Fernando Luis Corvera Caraza.- Signature.- The Director of Operational and Payment Systems, Ricardo Medina Alvarez.- Signature. For any inquiries regarding the content of this Circular, please contact the Department of Authorizations, Consultations and Legal Control, located at Avenida 5 de Mayo number 2, sixth floor, Centro Neighborhood, Mexico City, D.F., C.P. 06059, or at the phones 5237.2308, 5237.2000 ext. 3200 or 5237.2317.