Introduction
When you deposit or invest your money in a financial institution, it’s generally considered the safest way to store and grow your funds. However, have you ever wondered what would happen to your money if the bank or financial entity where you hold your accounts entered into a process of dissolution, liquidation, or bankruptcy? This article aims to clarify the role of protection funds in safeguarding your money when dealing with financial institutions.
The Recent CAME Case: A Reminder of Financial Protection Importance
Recently, CAME, which operated as Sociedad Financiera Popular (Sofipo), left 1.3 million customers without answers regarding their accounts after reporting financial difficulties. Currently, its status is under review by the relevant authorities.
This situation highlights the importance of protection funds that financial institutions, such as multiple banking (Sofipos), and cooperative savings and loan societies (Socaps) have in place. These funds ensure that depositors receive their obligations when the institution faces dissolution, liquidation, or bankruptcy.
Protection for Multiple Banking (Sofipos)
The Instituto para la Protección al Ahorro Bancario (IPAB) is well-known among savers and is responsible for addressing situations where a licensed banking institution, such as BBVA, Santander, or Banamex, faces dissolution, liquidation, or bankruptcy.
According to IPAB regulations, the institute will cover up to 400,000 Unidades de Inversión (UDIs), which currently amount to approximately 3,390,000 pesos. The IPAB only covers obligations for checking deposits, salary accounts, savings account deposits, time deposit accounts, and current account deposits associated with debit cards.
Both natural persons and legal entities can claim compensation for financial obligations from the IPAB. However, if a user has multiple accounts, the amounts will be aggregated to reach the equivalent of 400,000 UDIs. To file a claim with the IPAB, you can do so in-person or over the phone by presenting the payment request form, a valid ID, and relevant account statements or contracts. The payment process takes no longer than 90 natural days following the bank’s intervention.
Protection Fund for Sofipos (Prosofipo)
The Prosofipo fund guarantees the recovery of savings for Sofipos users in case of dissolution, liquidation, or bankruptcy. This fund differs significantly from the IPAB.
Prosofipo will only activate once a Sofipo’s dissolution, liquidation, or bankruptcy is legally declared. It guarantees recovery of up to 25,000 UDIs, equivalent to 211,890 pesos. The financial products eligible for recovery through this protection fund are: cash-on-demand deposits, savings accounts, current accounts, and fixed-term deposit accounts.
To claim a payment from Prosofipo, you must complete a request form with personal details, contact information, account numbers, claimed amounts based on the latest account statement, and choose a payment method to recover your money. Keep in mind that you have up to 180 natural days following the Sofipo license revocation announcement to make a claim.
Protection for Cooperative Savings and Loan Societies (Socaps) (Focoop)
The Fondo de Supervisión Auxiliar de Sociedades Cooperativas de Ahorro y Préstamo (Focoop) ensures the safety of Socaps depositors and will cover up to 25,000 UDIs, equivalent to 211,890 pesos.
Focoop returns the money to depositors in deposit accounts, savings accounts, short-term investments with established withdrawal days, and investments that can be withdrawn with prior notice.
According to Focoop regulations, a claim can only be initiated if the entity is an authorized Socap. Socaps operating at a basic level are not covered by this protection fund.
Key Questions and Answers
- What is the IPAB, and what does it protect? The Instituto para la Protección al Ahorro Bancario (IPAB) is responsible for safeguarding depositors’ obligations in licensed banking institutions facing dissolution, liquidation, or bankruptcy. It covers up to 400,000 Unidades de Inversión (UDIs) for various deposit types.
- What is Prosofipo, and how does it differ from the IPAB? Prosofipo is a protection fund for Sofipos users, activated when a Sofipo faces dissolution, liquidation, or bankruptcy. It guarantees recovery of up to 25,000 UDIs for specific financial products.
- What does Focoop protect, and what are its limitations? Focoop ensures the safety of Socaps depositors’ funds, covering up to 25,000 UDIs. It returns money from various deposit accounts but only applies to authorized Socaps, excluding basic-level Socaps.
