Banking Board of Ecuador

RESOLUTION No. JB-2015-3369

THE BANKING BOARD

CONSIDERING:

THAT the second paragraph of the Third Transitional Provision of the Organic Code of Monetary and Financial Law determines that the Banking Board will continue to act until it resolves all claims, appeals, and other administrative procedures that it was hearing as of 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 a communication received by this regulatory body on December 27, 2013, filed a claim against Banco Pichincha C.A., CREDIFE, stating:

"(...) TYPE OF EXAGGERATIONS IN THE ADDITIONAL CHARGE TO THE FIXED QUOTA SET 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 claim for processing, the Subdirectorate of User Attention, through letters No. DNAE-SAU-2014-0392 of January 22, 2014, requested explanations and defenses from the financial entity regarding the claim 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 an administrative resolution, which favorably attended to the complaint presented by Mr. Marco Germánico Pila Lema, in the following sense:

"(...)

1. The calculation of the day of default made by Banco Pichincha C.A. for the calculation of the amount of interest for default and collection management differs from the calculation made between the debit date stated in the payment schedule and the dates of the payments made by Mr. Marco Germánico Pila Lema.
2. The values corresponding to collection management are being applied to the partial recovery of the owed quota and not to the total recovery of the overdue quota.
   That Banco Pichincha C.A.(...) proceed to refund values charged in excess for the concept of collection management and interest to the claimant, which amounts to US$36.82 (USD 35.60 and 1.22 corresponding to collection expenses and default interest, respectively)." (sic);

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THAT with a communication received by the regulatory body on April 11, 2014, Banco Pichincha C.A. filed an appeal for reconsideration 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 Subdirector of User Attention, E, rejected the appeal for reconsideration filed, and ratified the administrative act;

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

• The argument of the regulatory body is lacking in logical and legal support when mentioning that "the invoices issued by the company 'Pichincha Sistemas ACOVI S.A., which are not evidence', 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 itself, 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 Compilation of Resolutions of the Superintendency of Banks and Insurance and of the Banking Board; which must be taken into account as a fact not considered at the time of issuing the challenged letter.

• That the Subdirectorate of User Attention should not mention in the challenged letter that the bank "(...) is applying the partial payments made with days of default, 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 days of default, which shows that payments must be partialized due to the default incurred by the client, so it is inappropriate that the refund of values has been ordered." (sic).

• That it has not incurred in incorrect procedures, and that on its part the regulatory 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 appeal for review filed; and, with letter No. JB-2014-1645 of the same date, notified the claimant regarding the acceptance of said appeal;

THAT this challenge is resolved in accordance with the First Transitional Provision of the Organic Code of Monetary and Financial Law, published in the Official Register Second Supplement No. 332 of September 12, 2014, whose text states that the resolutions contained in the Compilation of Resolutions of the Superintendency of Banks and Insurance and of the Banking Board, and the norms issued by the regulatory bodies, will maintain their validity in everything that does not oppose what is established in the Organic Code of Monetary and Financial Law, 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

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Banking Board of Ecuador

Resolution No. JB-2015-3369
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will continue to act until it resolves all claims, appeals, and other administrative procedures that it was hearing as of 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 Superintendency of Banks and Insurance, as the competent authority, as provided by articles 1 and 180, letter b) of the General Law of Institutions of the Financial System, in force at the date of the claim, as well as article 5 of chapter IV regarding the "Procedure for the attention of claims against Institutions of the Financial System", title XX, book I of the Compilation of Resolutions of the Superintendency of Banks and Insurance and of the Banking Board, has the legal and normative faculty to hear the claims of financial users, and in case of determining an incorrect procedure on the part of the entities, to dispose of the restitution of values to them, therefore the administrative acts that it issues for the purpose of resolving them, arise from the attributes of control and supervision contained in the Constitution and in the law, in whose activity, the protection of the interests of the public 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 resolving, 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 pointed out that in none of the invoices is it detailed what 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 hours of the morning, automatically at the moment the client incurs in default of the quotas to be paid for the credit;

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

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

THAT with respect to the collection management values and default 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 Subdirectorate of Attention and User Education verified that the client made partial payments, and that the bank applied the default rate to the total value of the quotas fixed in the months of April, July, August, October and December 2013;

THAT from what is exposed, it is determined that Banco Pichincha C.A. has incurred in an incorrect procedure, as determined in the technical report sent by the Subdirectorate of User Attention, with memorandum No. DNAE-SAU-2014-01384 of December 15, 2014, since the entity presented before the Superintendency of Banks the documentation of the expenses generated by the collection management for Mr. Marcos 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 management of

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collection; on the other hand, as indicated, the calculation of default interest and collection expenses was charged on the total value of the quota without considering the payments made by the client; therefore, what is established in the second paragraph of article 5, section I, chapter IV "Procedure for the attention of claims against Institutions of the Financial System", title XX "Of the Superintendency of Banks and Insurance", book I "General norms for the application of the General Law of Institutions of the Financial System" of the Compilation of Resolutions of the Superintendency of Banks and Insurance and of the Banking Board is configured, for which reason the return of the value claimed by Mr. Marco Germánico Pila Lema is procedent;

THAT the National Legal Intendency, through memorandum INJ-DNJ-SAL-2015-0171 of February 20, 2015, recommended to the Banking Board to reject the claim contained in the appeal filed by the Adjunct President of Banco Pichincha C.A.; and,

In exercise of its legal attributes,

RESOLVES:

SINGLE ARTICLE.- REJECT the claim contained in the appeal for review filed by Mr. Antonio Acosta Espinosa, Adjunct 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 Subdirectorate of User Attention rejected the appeal for reconsideration filed by the bank, against letter No. DNAE-SAU-2014-01961 of March 28, 2014, with which it was resolved that the referred banking entity "(...) proceed to refund values charged in excess for the concept of collection management and interest to the claimant, which amounts to US$ 36.82 (USD 35.60 and 1.22 corresponding to collection expenses and default interest, respectively)." (sic).

NOTIFY.- Given at the Superintendency of Banks and Insurance, in Quito, Metropolitan District, on the twenty-second of April of two thousand fifteen.

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

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

Lcdo. Pablo Cobo Luna
SECRETARY OF THE BANKING BOARD