Banking Board Resolution No. JB-2015-3385

Banking Board of Ecuador

RESOLUTION No. JB-2015-3385

THE BANKING BOARD

CONSIDERING:

THAT Mr. José Luis López Flores, through a communication received by this regulatory body on April 30, 2012, filed a complaint against Banco Pichincha C.A., requesting that the Superintendency of Banks analyze the interest generated and other charges up to the current date and grant him a term or monthly value to finish paying said debt, basing his complaint on the following facts: a) That in 2005 a credit was granted to him, which was deposited into Savings Account No. 4181052100; b) That said credit was paid normally until October 2006; c) That in 2009 he approached Banco Pichincha C.A. to refinance the debt for approximately US$ 1,500.00, where they recommended he go to "Pague Ya," where he was informed that he could not refinance and that he had to pay the total value of the debt, which amounted to approximately US$ 2,900.00; and, d) That in the years 2010 and 2011, he approached the entity again to refinance the debt, being informed in the last year that the debt was in legal process and could only be suspended if he paid 50% of the debt, which at that year was US$ 3,219.00;

THAT through letter No. IDG-DAyEU-ISFP-REQ-2012-0213, dated May 8, 2012, the full content of the complaint filed against the aforementioned bank was forwarded, granting a term of ten (10) days for the bank to present pertinent explanations and defenses; in response to said requirement, through letter No. BP-ACEC-2012-0399, dated May 28, 2012, the financial entity presented the explanations and defenses related to the claim presented by Mr. José Luis López Flores, basing its actions primarily on the following:

"(...) We attach the Liquidation of values owed as of May 21, 2012 by Mr. JOSÉ LUIS LÓPEZ FLORES.

The client may present payment proposals or requests directly to the company Pichincha Sistemas Acovi C.A. 'Pague Ya' located in the Torres Pichincha Building on Francisco de Orellana and Justino Cornejo streets";

THAT through letter No. IDG-DAyEU-V-R-2012-020, dated September 12, 2012, the administrative resolution regarding the complaint presented by Mr. JOSÉ LUIS LÓPEZ FLORES was issued, where the Guayaquil Regional Intendancy accepted the claimant's petition, resolving to order BANCO PICHINCHA C.A. to proceed to re-amortize the Mr.'s debt, which as of August 31, 2012, should be US$ 1,741.74;

THAT through letter No. BP-ACEC-2012-1140 dated December 12, 2012, Banco Pichincha C.A. requested this regulatory body to provide copies of the documents that served as the basis for the calculation of the amount of

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USD capital $921.74. with letter No. IDG-DAyEU-IFSP-REQ-2012-1324 of December 21, 2012 the Intendancy of Guayaquil annexed what was requested; THAT through letter No. BP-ACEC-2013-0052 of January 17, 2013, Banco Pichincha C.A., attached the detail of the payments made by the claimant with the specification of the item to which each affected, which were reviewed jointly with the movement of account No. 4181052100 and indicated that the values attached in letter No. IDG-DAyEU-IFSP-REQ-2012-1324 of December 21, 2012, do not reflect in their system;

THAT through letter No. DAyEU-ISFP-REQ-2013-784, of July 8, 2013, the Guayaquil Regional Intendancy, reaffirmed the content of letter No. IDG-DAyEU-V-R-2012-020, of September 12, 2012;

THAT through communication received by this regulatory body on July 24, 2013, BANCO PICHINCHA C.A., filed an appeal for reconsideration against the administrative act contained in letter No. DAyEU-ISFP-REQ-2013-784, of July 8, 2013; and, consequently the content of letter No. IDG-DAyEU-V-R-2012-020, of September 12, 2012;

THAT through letter No. IRG-DAyEU-V-R-2014-273, of April 4, 2014, the Guayaquil Regional Intendancy rejected the appeal for reconsideration filed, and resolved to confirm the content of letter No. DAyEU-ISFP-REQ-2013-784, of July 8, 2013; and, consequently the content of letter. No. IDG-DAyEU-V-R-2012-020, of September 12, 2012;

THAT through writing entered into this Superintendency on April 16, 2014, Mr. Antonio Acosta Espinosa, Adjunct President of Banco Pichincha C.A., with the professional sponsorship of Dr. Pablo Cadena Merlo, filed before the Banking Board an appeal for review against the administrative act contained in letter No. IRG-DAyEU-V-R-2014-273, of April 4, 2014, arguing:

"(...) In letter No. IRG-DAyEU-V-R-2014-273, the subject of the present challenge, the Control Entity insists on the application of a liquidation with a cut-off date of August 31, 2012, whose origin has not been backed, motivated or explained in any way, and states:

"- Through letters Nos. IDG-DAyEU-ISFP-REQ-2012-1324 of December 21, 2012 and No. IDG-DAyEU-ISFP-REQ-2013-602 of June 06, 2013, it proceeds to inform that said values correspond to the excess of the application of previous payments, as emphasized in the tables attached to the aforementioned letters."

In relation to the above, we must indicate that the table attached to the letters in question contains incorrect calculations, and not supported by documents or proven accounting entries, consequently the value of the capital after the alleged payments varies in relation to the record of the credit value maintained in the Bank; likewise, the consequent liquidation carried out based on said table, will yield values that are not real".

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"(...) The value of the installment to which the Control Organism arrives, has not been technically sustained, and is not in accordance with the conditions of the credit granted at the time to the claimant client. Any re-amortization that is made must be supported by real facts, partial payments, early payments or any other form of early cancellation of values so that it has a legal, financial and logical basis. In the case at hand, we have no support for any of these facts and consequently it is not correct and not real.";

THAT through letter No. JB-2014-972, of April 22, 2014, the Secretary of the Banking Board, accepted for processing the appeal for review filed, and, with letter No. JB-2014-973 of the same date, notified Mr. José Luis López Flores, regarding the acceptance of said appeal;

THAT through letter No. SAL-2014-00070, of May 2, 2014, the Subdirection of Legal Advice of the National Juridical Direction of this Intendancy, requested the technical criterion of the Guayaquil Regional Intendancy, regarding the foundations of the appeal for review filed against the administrative act contained in letter No. IRG-DAyEU-V-R-2014-273, of April 4, 2014;

THAT through letter No. IRG-DAyEU-2014-382, of December 8, 2014, the Guayaquil Regional Intendancy sent the requested report, indicating that the appealed administrative act was based both on the constitutional regulatory framework, as well as the legal framework in force at the date of its issuance, and reaffirmed letter No. IRG-DAyEU-V-R-2014-273, of April 4, 2014, and in its central part stated that:

"(...) regarding the considerations contained in resolution No. IRG-DAyEU-V-R-2014-273, of April 4, 2014, which rejected the appeal challenging the administrative act contained in letter No. IDG-DAyEU-V-R-2012-020 of September 12, 2012 that accepted the complaint filed by Mr. JOSÉ LUIS LÓPEZ FLORES, and taking into consideration the payment table provided by the banking institution, through which the term and the dividend established between the claimant and Banco Pichincha C.A. can be evidenced, this Office varies its criterion only in the total value of the debt with a cut-off date of August 31, 2012, which is determined at the value of $1,916.82"

THAT this challenge is resolved in accordance with the First Transitional Provision of the Organic Code of Money and Finance, 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 the Banking Board, and the norms issued by the control organisms, will maintain their validity in everything that does not oppose what is established in the Organic Code of Money and Finance, 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

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acting until resolving all complaints, appeals and other administrative procedures that it was hearing as of the date of its validity, within a term of one hundred eighty days, extendable at the discretion of the Monetary and Financial Policy and Regulation Board;

THAT the Superintendency of Banks, as the competent organism, in accordance with what is established in articles 1 and 180, letter b) of the General Law of Institutions of the Financial System, as well as what is provided in article 5 of chapter IV relative to the "Procedure for the attention of complaints against Institutions of the Financial System", title XX.- "Of the Superintendency of Banks and Insurance", book 1 "General norms for the application of the General Law of Institutions of the Financial System" of the Codification of Resolutions of the Superintendency of Banks and Banking Board, has the function and attribution to ensure the stability, solidity and correct functioning of institutions subject to its control; to supervise that they comply with the norms that govern them; and, to require that said institutions present and adopt the corresponding corrective measures when necessary; under this context, based on the referred legal and regulatory provisions, it is inferred that this control organism has the legal and normative faculty to hear the complaints of financial users, and in case of determining an incorrect procedure by the entities, to dispose of the restitution of values to them, therefore the administrative acts that it issues to resolve them, arise from the control and supervision attributions, in whose activity, the protection of the public's interests must be taken into account;

THAT from the verification of the defenses sent by Banco Pichincha C.A. as well as the claims of the claimant, it is determined that on November 30, 2005, Mr. José Luis López Flores, agreed to a credit operation with the aforementioned entity, for an amount of USD. $3,000.00, for a term of 37 months, with monthly installments of USD. $102.72 with an interest rate of 12.05% and a default rate of 13.255%;

THAT through letter No. IDG-DAyEU-V-R-2012-020 of September 12, 2012 this Control Organism based on the defenses sent by the controlled financial institution, took as reference for the portfolio liquidation the time for the payment of the credit which was the term of 18 months which is observed within the file with the date of concession December 2005 and with the maturity date June 2007, therefore it partially accepted the claimant's petition, resolving to establish the liquidation of said obligation with a cut-off date of August 31, 2012 in the following manner:

LIQUIDATION AS OF AUGUST 31
2012 (at 18 months)
Capital	921.74
Financing Interest	37.58
Default Interest	782.42
Total	1,741.74

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THAT likewise, within said administrative resolution, the claimant's petition was not accepted regarding this Control Organism ordering Banco Pichincha C.A. to refinance his debt, since the acts and contracts that institutions of the financial system celebrate with their clients are based on the principles of autonomy of will and contractual freedom, therefore corresponding to said institutions, to decide whether or not to celebrate a certain contract, a decision that must be subject to technical and objective procedures that allow adequate knowledge of the client and risk measurement; THAT on June 18, 2013, through letter No. BP-ACEC-2013- 0587 the financial entity attached the payment table duly signed by Mr. José Luis López Flores, where the data corresponding to the client's loan are recorded, when the Guayaquil Regional Intendancy had already issued the respective resolution No. IDG-DAyEU-V-R-2012-020;

THAT the financial entity presented the payment table, in which the term and the dividend fixed between Banco Pichincha C.A. and Mr. José Luis López Flores are recorded, that is the cancellation of a monthly dividend of $99.72 for 37 months, therefore based on the new documentation presented, the payment application and the estimation of the debtor balance as of August 31, 2012 were carried out, which gives a total of $1,916.82;

THAT based on the above, it is determined that the Guayaquil Regional Intendancy pronounced itself and determined a liquidation with a cut-off date of August 31, 2012, without specifying the interest rate applied as well as the expenses for the concept of recovery, which makes it impossible to determine the exactness of the obligation; and, not having in the file documentation to support ratifying said figure, the National Juridical Intendancy recommends the following;

THAT the National Juridical Intendancy, through memorandum INJ-DNJ-SAL-2015-0315 of April 15, 2015, recommended to the Banking Board to accept the petition contained in the appeal for review filed; and,

IN exercise of its legal attributions,

RESOLVES:

SINGLE ARTICLE.- ACCEPT the appeal for review filed by Mr. Antonio Acosta Espinosa, Adjunct President of Banco Pichincha C.A.; DECLARE WITHOUT EFFECT letter No. IRG-DAyEU-V-R-2014-273, of April 4, 2014, through which the Guayaquil Regional Intendancy rejected the appeal for reconsideration filed, and resolved to ratify the administrative act contained in letter No. IDG-DAyEU-V-R-2012-020; and, ORDER BANCO PICHINCHA C.A. to notify with the re-amortization of the debt in which the amount of capital determined by the Superintendency of Banks is recorded, identify the payments made, the interest rate, the default rate, and collection expenses if any, to Mr. JOSÉ LUIS LÓPEZ FLORES; and, send to the control organism the proof of compliance with this provision.

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COMMUNICATE.- Given at the Superintendency of Banks, in Quito, Metropolitan District, on the thirtieth of April of two thousand fifteen.

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

I CERTIFY.- Quito, Metropolitan District, on the thirtieth of April of two thousand fifteen.

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