Banking Board of Ecuador

RESOLUTION No. JB-2015-3493

THE BANKING BOARD

CONSIDERING:

THAT the second paragraph of the Third Transitional Provision of the Organic Monetary and Financial Code determines that the Banking Board will continue to act until it resolves all claims, appeals, and other administrative procedures it was handling on the date of entry into force of that Code, within a period of one hundred and eighty (180) days, extendable at the discretion of the Monetary and Financial Policy and Regulation Board;

THAT through Resolution No. 054-2015-F, published in the Official Register Supplement No. 467 of March 26, 2015, the Monetary and Financial Policy and Regulation Board extended by one hundred and eighty (180) additional days the deadline for the Banking Board to continue acting and resolve all claims, appeals, and other administrative procedures within its competence;

THAT through the "Free complaint form by users of entities controlled by the Superintendence of Banks and Insurance" dated November 21, 2013, Mr. Gonzalo Gabriel González Bastidas filed a complaint against Banco de Guayaquil S.A., as he was a subject of an express seizure on November 19, 2013, at 18:15, and was forced to hand over his debit card with the PIN; and, from his checking account No. 11053637, US$ 700.00 were stolen, despite the maximum withdrawal amount being US$ 300.00;

THAT through Office No. IRG-DAYEU-V-R-2014-106 of February 18, 2014, the Regional Intendancy of Guayaquil informed Mr. Víctor Hugo Alcívar, Executive Vice President of Banco de Guayaquil S.A., that the complaint filed by Mr. Gonzalo Gabriel González Bastidas was partially accepted; and, consequently, the banking entity was ordered to restore US$ 390.00;

THAT through communication received at the Superintendence of Banks on March 6, 2014, Banco de Guayaquil S.A. filed a motion for reconsideration against the content of Office No. IRG-DAYEU-V-R-2014-106 of February 18, 2014, which was rejected with Office No. IRG-DAYEU-V-R-2014-960 of September 4, 2014;

THAT through communication received on September 16, 2014, at the Superintendence of Banks, Mr. Víctor Hugo Alcívar Álava, Executive Vice President – General Manager of Banco de Guayaquil S.A., filed a review appeal against the content of Office No. IRG-DAYEU-V-R-2014-960 of September 4, 2014;

THAT through Office No. JB-2014-2665 of September 30, 2014, Mr. Pablo Cobo Luna, Secretary of the Banking Board, informed Mr. Víctor Hugo Alcívar Álava, Executive Vice President – General Manager of Banco de Guayaquil S.A., that the filed review appeal was accepted for processing, and extended the term to resolve it by sixty (60) additional days; and, through Office No. JB-2014-2666, of the same date, informed Mr. Gonzalo Gabriel González Bastidas of the filed review appeal;

THAT according to Article 213 of the Constitution of the Republic, the Superintendence of Banks is the technical body for surveillance, auditing, intervention, and control of financial activities and services provided by public and private entities that are part of the national financial system, with the purpose that these

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activities and services are subject to the legal framework and attend to the general interest. In harmony with that fundamental norm, Article 1 of the General Law of Financial System Institutions established that the Superintendence of Banks is the entity in charge of the supervision and control of the financial system. Furthermore, financial activities are a service of public order and have the fundamental purpose of preserving public deposits;

THAT Article 180, letter b), of the General Law of Financial Institutions, in force at the time the complaint was filed, obliged the control body to ensure the stability, solidity, and correct functioning of institutions subject to its control; and, in general, that they comply with the regulations governing their operation, attributions exercised in the administrative sphere as provided in Article 140 of the General Law of Financial System Institutions;

THAT Article 52, and numeral 25 of Article 66 of the Constitution of the Republic of Ecuador, provide as follows:

"Art. 52.- Persons have the right to dispose of goods and services of optimal quality and to choose them freely, as well as to receive precise and non-misleading information about their content and characteristics.

The law will establish quality control mechanisms and procedures for the defense of consumers; and the sanctions for violation of these rights, the repair and indemnification for deficiencies, damages, or poor quality of goods and services, and for the interruption of public services that were not caused by fortuitous event or force majeure."

"Art. 66.- It is recognized and guaranteed to persons:

(...)

The right to access public and private goods and services of quality, with efficiency, effectiveness, and good treatment, as well as to receive adequate and truthful information about their content and characteristics.

(...)

THAT it is essential to indicate that Article 8, of Chapter III, Title XXV, of Book I of the Codification of Resolutions of the Superintendence of Banks and Insurance and the Banking Board, incorporated the obligation of banking entities to establish in the agreement of the parties the responsibility of the financial institution to implement physical and technological security for transactions, with the following wording:

"ARTICLE 8.- Deposits, fund withdrawals, credits, debits, and any other transaction permitted in monetary deposit accounts, carried out through electronic or electromechanical means, must be supported by a written agreement between the bank and the account holder, in which the following conditions must appear, at least:

(...)

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8.3 Banking entities will be obligated to maintain controls that guarantee the physical and technological security of this type of transaction, taking into account the risks inherent to their operation."

THAT according to the transcribed regulations, banks are obligated to adopt security measures, for which effect they must establish in the contracts they enter into with their checking account holders or savers this obligation;

THAT Article 5 of Chapter IV "Procedure for the attention of complaints against Financial System Institutions", Title XX "Of the Superintendence 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 Superintendence of Banks and Insurance and the Banking Board, provides:

"ARTICLE 5.- If the result of the analysis carried out by the Superintendence 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 disposition.

If the situation that motivated the complaint referred to in the previous paragraph originated in an incorrect procedure of the controlled institution, which caused harm to the complainant, the Superintendence of Banks and Insurance may order the return of the claimed values, in exercise of the functions and attributions 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 legal warnings, the proof of compliance with the issued order."

THAT in application of what is provided in the aforementioned Article 5 of Chapter IV, Title XX, Book I, of the codification of Resolutions of the Superintendence of Banks and Insurance and the Banking Board, it corresponds for the control body to order the return of the claimed value;

THAT it has been verified that the bank's computer system validated the withdrawals performed despite the fact that they exceeded the allowed daily quotas; a situation that determines an unusual behavior within the profile of Mr. Gonzalo Gabriel González Bastidas, of which the client was never alerted with the due opportunity by Banco de Guayaquil S.A.; for the above, the incorrect procedure of the banking entity occurs when not providing the respective security for the disputed transactions carried out through ATMs, since it did not monitor nor implement alerts on the movements that occurred in the account entrusted to its custody, allowing the security controls of the card delivered by the bank to the client to be violated, which caused Mr. Gonzalo Gabriel González Bastidas to suffer economic harm, in addition to the lack of clear, truthful, and timely communication to the user of the new withdrawal amounts at ATMs constitutes another incorrect procedure;

THAT the National Legal Intendancy, through memorandum INJ-DNJ-SAL-2015-0338 of April 22, 2015, recommended to the Banking Board to reject the claim contained in the appeal filed by the Executive Vice President – General Manager of Banco de Guayaquil S.A.; and,

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IN exercise of its legal attributions,

RESOLVES:

ARTICLE ONE.- REJECT the review appeal filed by Mr. Víctor Hugo Alcívar Álava, Executive Vice President – General Manager of Banco de Guayaquil S.A.; and, consequently, CONFIRM the administrative act contained in Office No. IRG-DAYEU-V-R-2014-960 of September 4, 2014, through which the Regional Intendancy of Guayaquil ratified Office No. IRG-DAYEU-V-R-2014-106 of February 18, 2014.

NOTIFY.- Given at the Superintendence of Banks and Insurance, in Quito, Metropolitan District, on the seventeenth of June of two thousand fifteen.

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

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

Signature: Lcdo. Pablo Cobo Luna
SECRETARY OF THE BANKING BOARD