Norm on Reforms to Articles 12, 17, 18, 21, 22, 36, 54 and Annex 3 of the Norm on Transparency in Financial Operations

Resolution No. CD-SIBOIF-814-2-DIC13-2013
Dated December 13, 2013

NORM ON REFORMS TO ARTICLES 12, 17, 18, 21, 22, 36, 54 AND ANNEX 3 OF THE NORM ON TRANSPARENCY IN FINANCIAL OPERATIONS

The Board of Directors of the Superintendence of Banks and Other Financial Institutions.

CONSIDERING

I

That on August 30, 2013, this Board of Directors approved the Norm on Transparency in Financial Operations, contained in Resolution No. CD-SIBOIF-796-1-AGOST30-2013, published in La Gaceta, Official Gazette No. 178 on September 20 of the same year.

II

That it is necessary to reform Articles 12, 17, 18, 21, 22, 36, and 54 of the Norm on Transparency in Financial Operations, for the following purposes: 1) to clarify that in the case of active operations, the base for calculating the effective interest rate shall be 360 days; 2) to specify that the informational summary for active and passive operations is not part of the contract, but must contain the relevant parts of it; 3) to establish new criteria regarding the responsibility of the financial institution and the client in the contracting of individual insurance associated with active operations; and 4) to empower the Superintendent of Banks and Other Financial Institutions to extend, upon reasoned request, the adaptation deadlines indicated in the norm.

III

That it is equally necessary to modify Annex 3 of the aforementioned norm, in order to incorporate into the "Informational Summary for Passive Operations" format contained in said annex, the information required in subsection j) of Article 21 of the norm, regarding the obligation of the financial institution to indicate to the client whether their deposit is or is not covered by the Deposit Guarantee Fund (FOGADE), in accordance with what the Law and regulations on the matter establish.

IV

In accordance with the considerations set forth above, the legal provisions cited, and based on the powers provided for in Article 53 of Law 842, Law for the Protection of the Rights of Consumers and Users (Law 842), published in La Gaceta, Official Gazette No. 129, on July 11, 2013; and Article 3, numeral 13) and

Article 10, numeral 1 of Law 316, Law of the Superintendence of Banks and Other Financial Institutions, and its reforms.

HAS ISSUED

The following,

Resolution No. CD-SIBOIF-814-2-DIC13-2013

NORM ON REFORMS TO ARTICLES 12, 17, 18, 21, 22, 36, 54 AND ANNEX 3 OF THE NORM ON TRANSPARENCY IN FINANCIAL OPERATIONS

FIRST: Articles 12, 17, 18, 21, 22, 36, 54 and Annex 3 of the Norm on Transparency in Financial Operations, contained in Resolution No. CD-SIBOIF-796-1-AGOST30-2013, published in La Gaceta, Official Gazette No. 178 on September 20, 2013, are hereby reformed, which shall read as follows:

"Article 12. Determination of Interest Rates.- The current and delinquent interest rates must be expressed as effective annual rates for active operations granted under the installment system, regardless of whether, additionally, they are expressed in their equivalent for other periods. For these purposes, when it comes to active operations, the base for calculating the effective interest rate shall be that the year has 360 days. In the case of credit cards, what is established in the regulations governing this matter shall be followed. When it comes to passive operations, the base for calculating the effective interest rate shall be that the year has 365 days.

The interest rates that institutions disseminate and apply must comply with the criteria stated above.

Article 17. Information on Active Operations.- For the purpose of concluding contracts for active operations, whether they are granted under the installment system or other distinct modalities, institutions must attach to the contracts the Informational Summary for Active Operations, which will contain the information referred to in Articles 18 and 19 of this norm. The information included in the informational summary must contain the relevant parts of the contract.

In the case of operations other than those indicated in the preceding paragraph, such as credit cards, the informational summary for active operations must contain the concepts that are applicable.

Article 18. Informational Summary for Active Operations and Payment Schedule.- The informational summary for active operations shows the detail of the current and delinquent interest rates, commissions, and expenses that will be borne by the client and summarizes some of the obligations undertaken by the client and/or by the institution that are relevant to both parties. However, its delivery to the client does not exempt the institution from incorporating into the body of the contract the clauses that regulate the rights and obligations of the contracting parties.

The informational summary for active operations must bear the signature of the person authorized by the financial institution.

The informational summary for active operations must be delivered to the client with a copy with an acknowledgment of receipt signed by the client, for their reading. In case there are doubts about the concepts contained in said document, the institution must clarify them. After the document has been read and any doubts have been clarified, the parties will sign it in duplicate, leaving one copy in the possession of the institution as proof of compliance with its delivery to the client.

The informational summary for active operations, along with the signed contract, must be kept in the files that the institution has available for its conservation.

The payment schedule will include the detail of all scheduled payments. For each payment date, the amount of capital, interest, insurance premium, other commissions and expenses, as well as the total payment amount for that date, are incorporated. The structure of the payment schedule must comply with what is established in Annex 2, which forms an integral part of this norm. The payment schedule is only required for active operations under the installment system.

In the case where the obligation is contracted in córdobas with value maintenance, the payment schedule will be delivered in the reference foreign currency.

Article 21. Informational Summary for Passive Operations.- The informational summary for passive operations shows the detail of the interest rate that will be paid to the client, the commissions and expenses that will be borne by the client, and summarizes some of the obligations undertaken by the client and/or by the institution that are relevant to the parties. However, its delivery to the client does not exempt the institution from incorporating into the body of the contract the clauses that regulate the rights and obligations of the contracting parties.

The informational summary for passive operations is an annex and must bear the signature of the authorized person of the institution.

The informational summary for passive operations must be delivered to the client with a copy with an acknowledgment of receipt signed by the client, for their reading. In case there are doubts about the concepts contained in said document, the institution must resolve them. After the document has been read and any doubts have been resolved, the parties will sign it in duplicate, leaving one copy in the possession of the institution as proof of compliance with its delivery to the client. The informational summary for passive operations, along with the signed contract, must be kept in the files that the institution has available for its conservation.

The informational summary for passive operations must contain the following detail:

a) The effective annual compensatory interest rate that will be applied to the deposit. In case it is a variable rate, the criterion and periodicity for its modification must be indicated. b) The total amount of interest to be paid for time deposits, when applicable. c) Currency in which the deposit is made. d) The cutoff dates for the crediting of interest, as well as the mechanism by which payment will be made. e) The maturity date of the time deposit and the possibility of early cancellation, including the penalty/cost, if applicable. f) The amount and detail of any commission or expense passed on to the client, if any. g) The penalties that will be applied for non-compliance with the obligations undertaken, if any have been agreed upon, such as account inactivity or maintenance of account balances below the agreed amounts. h) Applicable taxes, if any. i) Indication of whether the deposit is or is not covered by the Deposit Guarantee Fund (FOGADE), in accordance with what the Law and regulations issued by FOGADE establish. j) Establish whether the contract is or is not with value maintenance regarding a specific currency. In this case, the financial institution in the document delivered to the client must inform them of this circumstance. A final declaration by the client, referring to that the informational summary for passive operations, as well as the contract, were delivered for their reading, that their doubts were clarified, and that they sign with full knowledge of the conditions established in said documents. k) Time deposits. Specify whether the document issued by the institution is or is not a negotiable instrument.

l) Contact for complaints within the same institution and, in case it is not resolved in favor of the client, contact for complaints before the Directorate for Attention to Users of Financial Services of the Superintendence. m) A final declaration by the client referring to that the informational summary for passive operations, as well as the contract, were delivered for their reading, that their doubts were clarified, and that they sign with full knowledge of the conditions established in said documents. n) Other information that is relevant to the parties as considered by the institution or the Superintendent.

The obligation to provide the informational summary for passive operations will be considered fulfilled if the information contained therein is included in deposit certificates, or in any other document by which the deposit is represented, and in which the signature of the client and the responsible person of the institution appear. The informational summary for passive operations must comply with what is established in Annex 3, which forms an integral part of this norm.

Article 22. Responsibility of Institutions in the Contracting of Insurance Associated with Active Operations.- Institutions that offer damage insurance to protect goods received as collateral, as well as any other type of individual or collective insurance associated with the active operations they carry out, must observe the following:

a) When contracting the aforementioned insurance through a collective policy, they must strive to obtain the best policy conditions for their clients. b) In case the client proves that they have contracted on their own an insurance that provides similar or greater coverage than the insurance offered by the institution, and for equal or longer terms, the client may agree with the institution to use it for the granting of credit in substitution of the insurance offered by the institution. In this case, the insurance must be endorsed in favor of the institution up to the amount of the outstanding balance. Likewise, the client must present to the financial institution a copy of the policy, the assignment, and the receipt of payment of the first three premium installments fully paid. Similarly, the client is obligated to present the renewals and a copy of the receipt of cancellation of the first three premium installments for the following year, at the latest within ten (10) days prior to the date of its maturity; otherwise, the institution may contract it with an insurance company of its choice, in the name of its client and at their expense, notify them, and make a copy of the policy available to them. In this last case, if the client presents after the date of the policy's maturity, the financial institution is not obligated to cancel the renewal; however, the client will have the option for the following year to contract the policy within the period stated above.

The client must present to the financial institution, at the latest within ten (10) days prior to the date of the third installment's maturity, the receipt of cancellation of payment of the premium corresponding to the following month, and so on until proving the cancellation of the last installment; otherwise, the financial institution may automatically contract with an insurance company of its choice, in the name of its client and at their expense, a new insurance policy for a term of one year.

Article 36. Obligation to Provide Periodic Information to Clients.- Institutions have the obligation to provide periodic information to their clients in accordance with the nature of the product or service they contract. The modality to be used to provide periodic information regarding account statements must be agreed upon in the contracts signed by the institution with the client. Additionally, financial institutions may use different communication means that allow the client to be able to take adequate and timely knowledge of the respective information. When the modality for providing this information to the client is agreed upon through electronic means, the institution must ensure that the client has the knowledge and means to receive it.

Institutions have the obligation to inform their clients, adequately, in periodic communications, such as account statements, about the different instances to which they can resort to present complaints and/or reports regarding the operations and services they perform, such as the institution itself and the Directorate for Attention to Users of Financial Services of the Superintendence.

With respect to periodic information concerning credit card operations, it will be governed by what is established for this topic in the regulations governing this matter.

Article 54. Adaptation Deadlines.- Financial institutions will have a period of 8 months, counted from the entry into force of this norm, to comply with the requirements established therein. For these purposes, financial institutions must submit to the Superintendent, at the latest within 60 days after the entry into force of this norm, an adaptation plan to its provisions. Said plan must include a diagnosis of the institution's current situation that reflects its degree of progress in complying with the requirements established in the norm, the actions planned for total adaptation and their schedule; as well as the officials responsible for the compliance of said plan.

The Superintendent may extend, upon duly reasoned request, the deadline indicated above.

The transitional period established in the preceding paragraph will not apply to those provisions referred to the rights and obligations of clients and users, duties of information and transparency, advertising, inquiry and complaint system, among others, which by their nature must be complied with from the entry into force of this norm.

ANNEX 3

INFORMATIONAL SUMMARY FOR PASSIVE OPERATIONS

Financial Institution: Name and branch (including phone and address): Date:
Client's Name and ID number:
Passive Product Denomination (1):
Effective Annual Compensatory Interest Rate (2):
Currency (3): C$, C$ MV; USD
Interest Rate Type (fixed/variable) (4):
Total Interest Amount (5):
Cutoff Dates for Interest Crediting (6):
Maturity Date (if applicable) (7):
Commissions and Expenses (8):
Commission / Expense 1: C$, C$ MV; USD
Commission / Expense 2: C$, C$ MV; USD
Other Commissions / Expenses: C$, C$ MV; USD
Penalties:
Taxes:

Warning (9)
Contact for complaint at the financial institution (10) Name/Responsible Unit:
In Person
(Address):
Postal Email Address:
Email Address:
Internet Page:
Phone:
Contact for complaint before the Superintendence (11) Name/Responsible Unit:
In Person
(Address):
Postal Email Address:
Email Address:
Internet Page:
Phone:
Declaration, Signatures, and Clarifications of the Institution's Representative and the Client

GLOSSARY AND FILLING GUIDE (BACK OF THE INFORMATIONAL SUMMARY) The letters and numbers included in the cells illustrate the type of content expected in each of them:

(1) Name with which the product is marketed. In case of time deposits, specify whether the document issued by the institution is or is not a negotiable instrument.
(2) Interest Rate (express in %): is the annual interest rate that will be applied to the deposit; (3) Currency: specifies the currency of the deposit (Córdobas, Córdobas with value maintenance; or Dollars).
(4) Interest Rate Type: it will be specified whether it is a fixed or variable interest rate. In case it is variable, the reference rate or adjustment factor that is applicable and the periodicity for its modification will be detailed; (5) Total Interest Amount: the total amount of interest to be paid for time deposits;

(6) Cutoff Dates: the cutoff dates for the crediting of interest to be paid, as well as the mechanism by which payment will be made.
(7) Deposit maturity date, if applicable;
(8) Commissions and expenses: the concept and amount of the two most significant commissions and expenses will be included; the rest of the commissions and expenses will be included in a single amount; (9) Warning: it must be indicated whether the deposit is or is not covered by the Deposit Guarantee Fund (FOGADE), in accordance with what the Law and regulations issued by FOGADE establish. (10) Contact for complaint with the financial institution: is the first instance for client complaints. The available complaint alternatives must be included; (11) Contact for complaint with the Superintendence: is the second instance for complaining (after having done so at the financial institution) and refers to the Directorate for Attention to Users of Financial Services of the Superintendence."

SECOND: This norm will enter into force upon its notification, without prejudice to its subsequent publication in the Gaceta, Official Gazette. (f) A. Guevara (f) V. Urcuyo V. (f) Gabriel Pasos Lacayo (f) Fausto Reyes B. (f) illegible (Silvio Moisés Casco Marenco) (f) illegible (Freddy José Blandón Argeñal) (f) U. Cerna B.
Secretary.

URIEL CERNA BARQUERO
Secretary of the Board of Directors SIBOIF