Resolution JB-2015-3482 of the Banking Board

Banking Board of Ecuador

RESOLUTION No. JB-2015-3482

THE BANKING BOARD

CONSIDERING:

THAT by Resolution No. JB-2015-3330 of April 1, 2015, the Banking Board resolved: "REJECT the claim contained in the review appeal filed by Mr. Antonio Acosta Espinosa, Vice President of Banco Pichincha C.A.; CONFIRM the administrative act contained in Letter No. IRG-DAyEU-V-R-2014-741 of July 8, 2014, through which the repossession appeal was rejected; and consequently, confirm the administrative act contained in Letter No. IRG-DAyEU-V-R-2014-238 of March 28, 2014, by which Banco Pichincha C.A. was ordered to refund the sum of USD $3,220.00 to the company Corprodusa S.A.", fundamentally for the following considerations:

"(...)

THAT this appeal is resolved in accordance with the First Transitional Provision of the Organic Code of Monetary and Financial Affairs, published in the Official Register, Second Supplement No. 332 of September 12, 2014, whose text states that resolutions contained in the Codification of Resolutions of the Superintendency of Banks and Insurance and the Banking Board, and norms issued by control bodies, will maintain their validity in all that does not oppose what is established in the Organic Code of Monetary and Financial Affairs, 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 claims, appeals, and other administrative procedures it was hearing on the date of its entry into force, within a period of one hundred and eighty days, extendable at the discretion of the Monetary and Financial Policy and Regulation Board, which grants the control body competence to hear and resolve this review appeal;

THAT by communication entered into the Superintendency on November 7, 2013, Mr. Carlos Julio Caicedo Coronel, General Manager of Corprodusa S.A., filed a complaint against Banco Pichincha C.A., stating that in 2010 he requested several loans from Banco Pichincha C.A. In July 2013, due to personal problems, the company he represents fell into default, so he urged the financial entity to refinance the debt. The bank communicated to the complainant that the value of the refinanced initial payment is USD $6,503.73, which included an amount for collection expenses. Therefore, he requests the control body to review the values corresponding to the collection expense; as well as the release of the mortgage on the property whose value exceeds the current debt;

THAT through Letter No. DAyEU-ISFP-REQ-2013-1542 of November 21, 2013, the User Attention and Education Directorate of the Regional Intendancy of Guayaquil requested documentation and defenses from the financial institution regarding the complaint filed. With Letter No. BP-ACEC-2013-0993, entered into the control body on December 13, 2013, Banco Pichincha C.A. submitted the following documentation:

a) Copy of the documents corresponding to Credit Operations Nos. 0118977900, 0134760800, and 0156654600;

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b) Copies of the settlements of Credit Operations Nos. 0118977900, 0134760800, and 0156654600;

c) Copy of the detail of payments made to Credit Operations Nos. 0118977900, 0134760800, and 0156654600;

THAT through Letter No. IRG-DAyEU-V-R-2014-238 of March 28, 2014, the Regional Intendancy of Guayaquil, after analyzing the complaint filed, concluded and resolved as follows:

"(...)

b) From the settlements sent to this control body by Banco Pichincha C.A., it is determined that it includes the item for 'COLLECTION EXPENSE FOR DELINQUENCY', which have not been documentarily supported by the financial institution, in the following values:

# OPERATION (sic)	COLLECTION EXPENSE FOR DELINQUENCY
01189779-00	$ 1,350.00
01347608-00	$ 810.00
01566546-00	$ 1,050.00

(...)

In merit of the above, and in exercise of the powers delegated by the Superintendent of Banks and Insurance (...), this Office resolves:

1. PARTIALLY ACCEPT the complaint filed by Mr. CARLOS JULIO CAICEDO CORONEL, IN CAPACITY OF GENERAL MANAGER OF THE COMPANY CORPRODUSA S.A., with citizen ID No. 120438856-3, against the controlled financial institution BANCO PICHINCHA C.A., regarding the item 'COLLECTION EXPENSE FOR DELINQUENCY' included in Credit Operations Nos. 0118977900, 0134760800, and 0156654600 of the complainant for the value of THREE THOUSAND TWO HUNDRED TWENTY 00/100 DOLLARS OF THE UNITED STATES OF AMERICA (US$3,220.00), since they are not duly substantiated.

2. ORDER the controlled financial institution BANCO PICHINCHA C.A. to refund the sum of THREE THOUSAND TWO HUNDRED TWENTY 00/100 DOLLARS OF THE UNITED STATES OF AMERICA (US$3,220.00) charged, under the concept 'Legal, Management', in the settlements of Credit Operations Nos. 0118977900, 0134760800, and 0156654600 of the company CORPRODUSA S.A., whose legal representative is Mr. Carlos Julio Caicedo Coronel, (...);"

THAT by writing entered into the control body on April 11, 2014, the lawyer María Elena Franco San Lucas, Judicial Attorney of Banco Pichincha C.A., filed a repossession appeal against the administrative act contained in Letter No. IRG-DAyEU-V-R-2014-238 of March 28, 2014. With Letter No. IRG-DAyEU-V-R-2014-741 of July 8, 2014, the Regional Intendancy of Guayaquil rejected the appeal filed, concluding that no new information was provided that would change the circumstances under which the appealed administrative act was issued;

THAT by writing entered into the Superintendency on July 22, 2014, Mr. Antonio Acosta Espinosa, Vice President of Banco Pichincha C.A., with the professional sponsorship of Dr. Pablo Cadena Merlo and lawyer María José Araujo Álvarez, under the provisions of Article 137 of the General Law of Financial System Institutions

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of the Financial System and Article 6 of Chapter II "Norms for the application of repossession and review appeals in matters related to the financial system and the social security system; and, of appeal in private insurance matters, regarding administrative acts of the Superintendency of Banks and Insurance", Title XVI "Of sanctions and of appeals in the administrative sphere"; of Book I "General norms for the application of the General Law of Financial System Institutions" of the Codification of Resolutions of the Superintendency of Banks and the Banking Board, filed a review appeal against the content of Letter No. IRG-DAyEU-V-R-2014-741 of July 8, 2014;

THAT the arguments raised by Mr. Antonio Acosta Espinosa, Vice President of Banco Pichincha C.A., are limited to stating the following:

• That currently there are collection processes pending in the Judicial Function, therefore, the Superintendency of Banks does not have competence to pronounce and resolve the present complaint, in application of the principle of independence enshrined in the Constitution of the Republic;

• That the values challenged and which the control body ordered to be restituted are duly founded in the Loan Contracts Nos. 1189779-00 and 1347608-00; according to which, Banco Pichincha C.A. has the possibility to charge delinquency expenses and judicial and extrajudicial management derived from the default in the payment of a dividend or fraction, which, upon being accepted by the client, constitutes a payment obligation;

• That the control body has not determined that Banco Pichincha C.A. must introduce corrective measures to regularize the situation that motivated the complaint, which evidences that there were no incorrect procedures that caused harm to the company Corprodusa S.A.; therefore, it is not appropriate that a refund of USD $3,220.00 be instructed;

THAT with Letter No. JB-2014-1969 of July 25, 2014, the Secretary of the Banking Board accepted the review appeal for processing and by Letter No. JB-2014-1970 of July 25 of the same month and year, the control body notified the legal representative of the Company Corprodusa S.A. of the appeal filed;

THAT Article 52 and the first paragraph of Article 308 of the Constitution of the Republic establish as a duty of the State, to guarantee the right of citizens to have access to goods and services of optimal quality; to choose them freely, as well as to receive precise and non-misleading information about their content and characteristics, while financial activity is considered a public service oriented to satisfy user needs;

THAT regarding the existence of judicial collection processes for the credits granted to the Company Corprodusa S.A., it must be noted that Article 8 of the Organic Code of the Judicial Function, in concordance with numeral 1 of Article 168 of the Constitution of the Republic, determine the principle of independence with which the Judicial Function is endowed, and at the same time provide that no function, body, or authority of the State may interfere in the exercise of the duties and powers of the Judicial Function;

THAT Article 6, of Chapter IV "Procedures for the attention of complaints against financial system institutions", Title XX "Of the Superintendency 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 Superintendency of Banks and Insurance and the Banking Board, states:

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"ARTICLE 6.- If it is documented that the specific matter motivating the complaint is under the knowledge and resolution of the ordinary justice at the instance of the complainant, user of the financial system, the Superintendency of Banks and Insurance will abstain from continuing to process it, in attention to the principle of independence of the Judicial Function, enshrined in numeral 1 of Article 168 of the Constitution of the Republic, which agrees with Article 8 of the Organic Code of the Judicial Function, a fact that will be communicated to the parties, informing them that, for this reason, the suspension or archiving of the process has been ordered, as appropriate.

The provisions of the preceding paragraph are excepted for complaints relating to cases that, in parallel, are under the knowledge of the ordinary justice in criminal matters, in which case the Superintendency of Banks and Insurance will hear and resolve them, within the scope of its competence.";

THAT from the file, it is evident that there is no documentary proof in it that demonstrates that the present case is under the knowledge of the ordinary justice, in which case, in accordance with the aforementioned article, the Superintendency is competent to hear and resolve this review appeal, since in the present appeal the existence of excessive charges in the item "Judicial Collection" is analyzed, which without a doubt is the competence of this control body, since it would be an incorrect procedure in which the financial institution would have incurred; therefore, the appellant's argument regarding competence is inadmissible;

THAT Article 12 of Chapter I "Of tariffs for financial services"; of Title XIV "Transparency Code and User Rights", Book I "General norms for the application of the General Law of Financial System Institutions" of the Codification of Resolutions of the Superintendency of Banks and Insurance and the Banking Board, in force at the date, establishes that collection expenses will be applied exclusively when collection management has been duly documented. Expenses generated by charging the client based on invoices generated by third parties, without financial institutions being able to surcharge any sum for any concept;

THAT the file evidences that Banco Pichincha C.A. did not provide proof regarding the collection actions and management performed; for this reason, the financial institution failed to comply with the provisions of the current regulations; consequently, it agrees with what was resolved by the Regional Intendancy of Guayaquil, by ordering Banco Pichincha C.A. to refund the sum of USD $3,220.00, since its charge is not duly substantiated;

THAT in accordance with the aforementioned regulations, the control body does not intend to limit the right that financial institutions have to manage the collection of credits through the judicial or extrajudicial route; what corresponds to the Superintendency is to supervise and control that collection operations and management are carried out in compliance with what is established in the Law, regulations, and resolutions issued for this purpose;

THAT Article 1 and letters b) and o) of Article 180 of the General Law of Financial System Institutions contemplate among the functions and powers of this Superintendency, within the scope of its competence, the supervision and control of the financial system, in all of which the protection of public interest is taken into account, as well as requiring that controlled institutions present and adopt the corresponding corrective measures;

THAT Article 5 of Chapter IV "Procedures for the attention of complaints against Financial System Institutions", Title XX "Of the Superintendency of Banks and Insurance", Book I "General norms for the application of the

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of Financial System Institutions" of the Codification of Resolutions of the Superintendency of Banks and Insurance and the Banking Board, establishes:

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

If the situation that motivated the complaint referred to in the preceding paragraph originated in an incorrect procedure of the controlled institution, which caused harm to the complainant, the Superintendency of Banks and Insurance may order the return of the claimed values in exercise of the functions and powers 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 the notification to send, under the warnings of the Law, the proof of compliance with the order issued.

(...).";

THAT from the review and analysis carried out, it is evident that the items attributed to 'COLLECTION EXPENSE FOR DELINQUENCY', included in the settlement for Credit Operations Nos. 0118977900, 0134760800, and 0156654600, for the concept of expenses and extrajudicial collection management, are not duly substantiated in accordance with current legal regulations; which evidences that there was an incorrect procedure on the part of Banco Pichincha C.A. in the collection of the stated expenses; therefore, the controlled institution incurred in what is established in Article 5 of Chapter IV, Title XX, Book I of the Codification of Resolutions of the Superintendency of Banks and Insurance and the Banking Board;"

THAT through communication received by the Superintendency of Banks on May 8, 2015, Dr. Jaime Flor Rubianes, Legal Representative of Banco Pichincha C.A., with the professional sponsorship of Dr. Pablo Cadena Merlo and lawyer María José Araujo Álvarez, filed a repossession appeal against the administrative act contained in Resolution No. JB-2015-3341 of April 8, 2015;

THAT the Banking Board, in the session held on June 10, 2015, in accordance with the second paragraph of Article 3, Chapter II, Title XVI, Book I of the Codification of Resolutions of the Superintendency 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 established in the first paragraph thereof, 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 powers,

RESOLVES:

SINGLE ARTICLE.- REJECT the repossession appeal filed by Mr. Antonio Acosta Espinosa, Vice President of Banco Pichincha C.A. against the administrative act contained in Resolution No. JB-2015-3341 of April 8, 2015; and, consequently, CONFIRM said resolution.

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

(Signature) Econ. Rodrigo Landeta Parra GENERAL INTENDANT, S PRESIDENT OF THE BANKING BOARD, E

I CERTIFY.- Quito, Metropolitan District, on the tenth day of June of two thousand fifteen.

(Signature) Lcdo. Pablo Cebo Luna SECRETARY OF THE BANKING BOARD