Depositors’ Union to the Banking Supervision Committee: Do Your Homework!

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22/03/2021

The Depositors’ Union launched a campaign entitled “The campaign against the Banking Control Commission”.

to shed light on the work of this committee. A committee entrusted by law No 67/28 with the authority to monitor and verify the proper application of the banking system as specified in the Currency and Credit law. This committee may periodically control all banks and set a protocol for any bank to improve its operations and control its expenses.

The campaign aims to make known to depositors this supervisory body so they can file complaints against violations by the banks. Depositors should know that within this commission there is a Consumer Protection Unit and we aim to place every member of this commission before their responsibilities in the manner by which they dealt with the banking crisis and brutal banking violations that encroached on depositors’ rights. To what extent did this commission carry out its duties in the period prior to the crisis to ensure good management of the banking sector and protection of the depositor savings. We intend to prosecute and hold accountable everyone and anyone who failed in their duty and as such contributed to the decline of the financial sector and deprived depositors of their life savings.

The Depositors’ Union has rejected the transgressions that the banks have persisted in committing over the past eighteen months and has sent a complaint to the Banking Control Commission asking it to clarify its stance concerning the banks’ performance and the steps taken by it to control violations. This is a prelude to the Union taking all legal measures to prosecute any negligence, Attached are two text messages.

The Message of the letter sent by the Depositors’ Union to the BCCL.

To the Members of the Banking Commission of Lebanon,

We address to you this letter which we consider as a complaint before the competent authority that has the authority to monitor and deter the abuses committed by banks in Lebanon. According to Article 8 of Law No. 28/67 issued on 5/9/1967, the BCCL is the Committee assigned by the State to supervise banks and protect consumers. The Committee is not subject in the exercise of its powers to the authority of the Central Bank, and it was entrusted, according to Article 9 of Law 28/67 and articles 149 and 150 of the Code of Credit and Money the authority to audit and periodically monitor all banks.

As a result of the banks’ violation of all applicable banking laws and regulations without any supervision, the following are some of the violations that you have overlooked:

First:

Since October 2019, banks have been withholding depositors’ money in foreign currency, and they have also been limiting the withdrawal of funds in Lebanese pounds, both in contravention of the Lebanese constitution, especially paragraph (f) of its introduction and the banking laws in force.  Furthermore, banks are closing the accounts of depositors who object to the transgressions of the banks or who demand their rights, and this is being done without prior notice or justification whereby the banks deposit a banker’s check for the value of the deposit at a notary public, in violation of Article 203 of the Code of Money and Credit and Article 8 of the Banking Secrecy Law, dated  3/9/1956 and Articles 124, 701, and 702 of the Code of Obligations and Contracts (in terms of its abuse and its contravention of the provisions of returning deposits).  This check has no actual value in light of the circumstances that the banks are going through as well as their reluctance to open new accounts except under almost impossible conditions.

Second:

Banks have intentionally, in bad faith, and fraudulently sold preferred shares to persons with no experience in the field of investment after they have been marketed as a safe and sound deposit, in contradiction to Article 2 of Law 308 of 3/4/2001, which regulates dealing in these shares.

Third:

Banks have opened Credit Linked Deposits accounts for inexperienced depositors without their knowledge and in unintelligible ways through which they were able to transfer the risks and losses of Treasury Bonds and Eurobonds from the decision-making and experienced bank to uninformed and inexperienced depositors.

Fourth:

Recently, some banks have sent notices to depositors urging them to withdraw a percentage of their deposit and lose the remaining part after closing the account, transfer their deposits into treasury bonds, or freeze their deposits for a long or indefinite period of time. The magnitude of the complaints received on the hotline of the Depositors Union indicates that the above procedure is not an exception, but rather a policy adopted by banks with the intention of intimidation to impose an illegal and indirect haircut on depositors.

Fifth:

Banks are refusing to deposit checks from thousands of depositors, contrary to Account Opening Contracts, and if they do accept to deposit the check in the account, they are freezing it for several months on end, bypassing Memorandum No. 14/220 issued by your Commission. In light of this blatant transgression, we call on you to oblige banks to respect the decisions and circulars issued by the Banque du Liban and to apply the Code of Money and Credit and all other laws in force.

Sixth:

Contrary to the regulations and basic circular of Banque du Liban No. 150 dated 4/9/2020 and the Memorandum of the Banking Control Commission No. 13/2020, banks are deliberately procrastinating for weeks to deliver “Fresh Money” to their clients from abroad, under the pretext of false pretenses.  Banks are also imposing high commission rates that are illogical and unjustified when its only role is limited to receiving these funds from abroad. This requires your direct intervention to force banks to stop these practices and to stop the systematic theft of people’s money.

Seventh:

Banks are deducting new commissions from depositors’ accounts without any right or pretext.  Contrary to the Account Opening Contracts, banks raised the value of their commissions on all types of accounts and in all currencies, imposing a fait accompli on the depositor under the pretext of being subject to the internal regulations of these banks.  They are also refusing to hand over any contract or document required by the client to verify the validity of their claims.  Banks also reduced the interest given to depositors to a percentage lower than 0.5% and obliged depositors to withdraw their money in Lebanese pounds at an illegal exchange rate according to the text of Articles 2 and 229 of the Code of Money and Credit, and with specific ceilings which led to a heavy loss in the value of these funds.

Eighth:

The Committee has a fundamental role in monitoring the implementation of Law No. 193/2020 issued on October 16, 2020, related to the “Student Dollar” and the circulars regulating it. Banks are still refraining from making transfers to Lebanese students abroad, in violation of the aforementioned law.

Ninth:

Banks are refusing to accept the repayment of loans in Lebanese pounds, in contravention of the provisions of Articles 7 and 192 of the Code of Money and Credit, Article 301 of the Code of Obligations and Contracts, and Article 319 of the Penal Code related to the crime of undermining confidence in the national currency.

Tenth:

Article 9 of the Law Regulating the Money Exchange Profession entrusts the supervision of money exchange institutions to the Banking Control Commission. The records, entries, and accounting of exchange institutions are not subject to both the provisions of the Banking Secrecy Law issued on September 3, 1956 and the provisions of Article 151 of the Code of Money and Credit. And in light of the uncontrollable chaos in the exchange market and the oppression of money changers, the Committee neither had an opinion or direction to give, nor did it exercise its role in controlling or scrutinizing the actions of these people and their transgressions.

This is just the tip of the iceberg of flagrant violations committed by banks in terms of violating agreements, the constitution, laws, decrees, account opening contracts, and customs, especially commercial ones. And after many complaints were received on the Committee’s hotline, which turned out to be out of service, it made it even more difficult to communicate with you in order to pass along these violations. The hotline must be put in service again, so the Committee receives complaints from depositors, pursues the matters, and takes the necessary remedial steps.

Out of our conviction in a state of law, we send you this letter so that you exercise your duties and responsibilities, investigate and address all forms of violations, malpractices, and abuses committed by banks that are negatively affecting depositors and their hopes of restoring their rights. We are expecting a quick response and decisive actions from your side.

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DO YOU NEED LEGAL ASSISTANCE AGAINST THE BANK