State Patrimonial Responsibility: Implications of Deficient Supervision by the National Banking and Securities Commission

Executive Summary

• On January 10, 2025, the Twentieth Collegiate Court on Administrative Matters of the First Circuit published the thesis with digital registration 2029799 under the heading “STATE PATRIMONIAL LIABILITY. IT CAN BE GENERATED BY THE DEFICIENT PREVENTION, MONITORING AND SUPERVISION OF THE NATIONAL BANKING AND SECURITIES COMMISSION (CNBV) TO A FINANCIAL ENTITY.”
• This thesis establishes a relevant criterion to determine the State's patrimonial responsibility for omissions or deficiencies in the CNBV's supervisory functions towards financial institutions.

On January 10, 2025, the thesis of the Twentieth Collegiate Court on Administrative Matters of the First Circuit was published in the Judicial Weekly of the Federation; in which the obligation of the National Banking and Securities Commission ("CNBV" or the "Commission") to prevent, supervise and monitor financial institutions in order to ensure their stability and correct operation; in attention to the protection of public order and the social interest is foreseen.

This criterion finds its origin in the claim for compensation for patrimonial liability of the State presented by an individual; in which, it was argued, among others, that the CNBV had incurred in deficient supervision towards a credit institution. In this regard, since the Commission denied said responsibility, the claimant promoted a contentious administrative trial in which the Federal Administrative Court of Justice recognized the validity of the resolution issued by the CNBV by applying the isolated thesis 2a. XVIII/2020 of the Second Chamber of the Supreme Court of Justice of the Nation (“SCJN”). In that isolated thesis 2a. XVIII/2020 (10th), entitled: “NATIONAL BANKING AND SECURITIES COMMISSION (CNBV). THE REFUSAL TO INTERVENE IN POPULAR FINANCIAL SOCIETIES AT RISK DOES NOT CONFIGURE A CAUSE FOR PATRIMONIAL LIABILITY OF THE STATE, NOR DOES IT GENERATE A RIGHT TO COMPENSATION IN FAVOR OF THIRD PARTIES, SINCE IT IS A DISCRETIONARY POWER GRANTED BY LAW”, the Second Chamber of the SCJN provided that:

1. The CNBV has discretionary powers to ensure the proper functioning of financial institutions, since the law grants it a broad scope of application to decide whether to act or refrain, to decide when and how to do so, or even to freely determine the content of its possible action; and
2. In order to determine the State's liability for inactivity, there must be a legal duty to act.

However, and despite the criteria upheld by the Second Chamber of the SCJN, the Twentieth Collegiate Court determined that the CNBV's omissions; specifically those deficiencies in preventing, monitoring and supervising regulated subjects, could generate patrimonial liability of the State. This is because the Commission, as a decentralized body of the Ministry of Finance and Public Credit, regulated by the Law of Credit Institutions, is obliged to act diligently and in a timely manner to protect the assets of users of the financial system.

In addition, this new criterion underlines that the CNBV's discretion should not be interpreted as an absolute power that justifies omissions or arbitrary acts. On the contrary, this power must be exercised under the principles of the legal order, guaranteeing that the Commission's actions do not expose savers to unnecessary or foreseeable risks.

Likewise, it highlights that the irregular administrative activity of decentralized bodies can seriously affect the property rights of citizens, thus creating a legal basis for the generation of patrimonial liability of the State. This principle could be applied by analogy to various entities of the Public Administration that act under discretionary powers.

We consider that the publication of this thesis establishes a relevant precedent in the context of administrative litigation and financial law. In addition, it marks a significant change in the way in which the obligations of regulatory authorities are conceived, promoting greater diligence in their performance. This, by indirectly encouraging regulatory authorities to review and, where appropriate, strengthen their supervision and oversight procedures.