SUSEP Circular No. 645/2021: complementary rules on the establishment of the Administrative Sanctioning Process at SUSEP and regulation of serious infractions

On October 18, 2021, SUSEP Circular No. 645/2021 was published, providing for complementary rules on the establishment of the SUSEP´s Administrative Sanctioning Proceedings (PAS), as well as regulation of serious infractions, for the purpose of applying the penalties of suspension of the activity carried out, suspension of the exercise of profession, or disqualification.

Regarding the establishment of the PAS, the Circular states:

  • If evidence of materiality and authorship of an administrative infraction is found to exist, the PAS will be initiated by the responsible body, by means of a summons for the presentation of a defense by the natural and legal persons held responsible for the infractions, and, if applicable, by the person or persons jointly liable;
  • The body responsible for the establishment of the PAS is that which is competent to propose and govern the application of the punitive measures or to carry out supervisory activities;
  • The responsible body is authorized (i) not to initiate the PAS, if it considers the damage to the protected legal interest to be low, and must issue a reasoned decision and issue a notification about not initiating the PAS; or (ii) to initiate the PAS. In both cases, the responsible body can propose or use other supervisory instruments and measures that it deems effective in the specific case;
  • Even in the event of low injury to the protected legal interest, the responsible body may choose to initiate a PAS if it believes that this option is more effective for the public interest or for the protection of the protected legal interest, and may, for this purpose, consider the background of the accused and his/her history in complying with supervisory measures.

In addition, the Circular establishes that the following are protected legal interests, whose compliance with which SUSEP is responsible for supervising:

  1. the stability and soundness of the National Private Insurance System, the National Capitalization System, and the Supplementary Pension Plan system;
  2. the regular operation of the legal entities supervised by SUSEP; and
  3. the adequate relationship between the agents supervised by SUSEP and the clients and users of the products and services that are subject to SUSEP’s supervision.

The Circular also states that the body responsible for instituting the PAS is prohibited from not instituting it when any of the following scenarios is identified:

  1. fraudulent or reckless management;
  2. provision of false information to SUSEP;
  3. fraudulent or misleading supervision;
  4. intentional obstruction or hindering of SUSEP’s ability to exercise administrative policing power;
  5. conduct that may be classified as a crime, pursuant to article 3 of this Circular;
  6. an administrative infraction carried out that has already been subject to an instrument or measure of supervision that SUSEP considered as not being complied with;
  7. offender or responsible party in a conduct adjustment term (TAC) considered to be non-compliant by SUSEP less than five years previously;
  8. conduct considered a violation, in theory, of Laws No. 12,846 of August 1, 2013, No. 9,613 of March 3, 1998, No. 13,260 of March 16, 2016, or No. 13,810 of March 8, 2019;
  9. conduct involving damage to public resources or damage of a public nature; or
  10. intentional damage to the protected legal interest.

Finally, for the purpose of imposing penalties of suspension of activity, suspension of the exercise of profession, or disqualification, serious infractions may be considered to be those that (I) are related to the scenarios provided for in items I to X above; or (II) cause serious injury to the protected legal interest.

SUSEP Circular No. 645/2021 entered into force on November 1, 2021 and its full version can be accessed through this link.

Demarest’s Insurance and Reinsurance team is available to provide any additional clarifications that may be necessary.