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Banco de Portugal warning on alleged entities claiming to be financial institutions

1. It has come to Banco de Portugal’s attention that a number of alleged entities have claimed to be financial institutions, granting credit at below market-value interest rates and, as a rule, without requiring any collateral.

Following a first stage when these alleged entities request the information supposedly necessary for the conclusion of the credit agreement and provide the draft contract and terms and conditions, they ask their potential clients for certain amounts of cash (seemingly to cover administrative costs, expenses associated with loan plan analysis, payment of insurance, fees and expenses associated with the loan, etc.). However, the agreed loan is never effectively granted at a later stage.

2. In this regard, Banco de Portugal would like to make the following clarifications and warnings:

a) In Portugal, lending, as envisaged in Article 4 (1) (a) of the Legal Framework of Credit Institutions and Financial Companies, approved by Decree-Law No 298/92 of 31 December 1992, may only be performed by authorised undertakings, as laid down in Article 10 of the Legal Framework;

b) These entities’ special registration with Banco de Portugal is a condition governing the exercise of financial activities in Portugal, namely lending activities, pursuant to Article 65 (1) of the Legal Framework;

c) Before entering into any contract for the supply of financial products or services and/or paying any amounts under such contracts, it is necessary to check carefully if the entities offering those products or services are bona fide, namely by consulting Banco de Portugal’s website, which lists registered institutions that are authorised to carry out financial activities in Portugal.  

Lisbon, 1 October 2013