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Information note: 2013 Banking Conduct Supervision Report

Banco de Portugal publishes today the 2013 Banking Conduct Supervision Report. The report describes the amendments to the legal framework applicable to retail banking markets and presents Banco de Portugal’s supervisory activities and financial information and education initiatives carried out in 2013. It also addresses the main issues on the agenda of international banking conduct supervision fora.

1.Amendments to the legal framework applicable to retail banking markets

In 2013 important amendments were introduced to the legal framework applicable to retail banking markets, which widened the rights of bank customers and in particular of overindebted customers. These amendments required a considerable reinforcement of Banco de Portugal’s monitoring of credit institutions.

These amendments included the implementation of the arrears regimes, the revision of the legislation governing arrears interest on banking transactions, the extension of the home loans regime to other credit agreements secured by residential mortgages, amendments to the consumer credit regime and the implementation of the new basic bank accounts’ regime.

Arrears regimes (main indicators)

The report presents the main indicators on implementation of the new arrears regimes, from their entry into force up to the end of 2013. These indicators, computed from information reported by credit institutions and data collected by Banco de Portugal, lead to the conclusion that the arrears regimes changed how credit institutions prevent and manage arrears on credit agreements and that bank customers facing difficulties in paying their credit now have a series of rights granting them greater protection.

The new legal framework comprises a general regime, establishing measures to prevent arrears situations (a Pre-arrears Action Plan – PRAP) and the out-of-court settlement of arrears situations (Out-of-court Arrears Settlement Procedure – OASP) on credit agreements, and an extraordinary regime for protecting housing loan borrowers in very difficult situations.

  • Mortgage credit: 182,016 negotiation procedures to settle arrears were initiated, covering 147,808 home loan agreements; 91 per cent of the procedures were concluded by the end of the year. Arrears were settled in 42.1 per cent of the procedures concluded. The share of procedures concluded with the settlement of arrears rose from 34.1 per cent in the first half of the year to 55.4 per cent in the second half.

  • Consumer credit: Credit institutions initiated 657,948 procedures under the Out-of-court Arrears Settlement Procedure (OASP), covering 570,823 consumer credit agreements; 90 per cent of the procedures were concluded by year-end. Arrears were settled in 33.7 per cent of the procedures concluded. The share of procedures ending with the settlement of arrears rose from 29.5 per cent in the first half of 2013 to 40.4 per cent in the second half.

Arrears interest on banking transactions regime

Limits to the fees associated with instalments in arrears were introduced by the new legislation. A ceiling was also imposed on the arrears interest surcharge and the implementation of this surcharge was regulated.

Extension of the home loans regime to other credit agreements secured by residential mortgages

With this change, the rights granted by the home loans regime are extended to the consolidation of home loans with other types of credit secured by mortgages, an option that is frequently used in the restructuring of bank loans in arrears.

Consumer credit regime

A number of amendments were made to this regime, including its extension to previously excluded agreements, such as overdrafts of less than one month; the revision of a few assumptions for calculation of the annual percentage rate of charge (APR); and the change in the methodology for calculating maximum rates. Overrunnings were subject to maximum rates and the charging of fees in these operations was forbidden. The change in the methodology for calculating maximum rates led APR to move closer towards the average market rates applied by credit institutions, with a special impact on the maximum APR on revolving credit.

Basic bank accounts

In 2013 the legal framework of basic bank accounts was revised. Basic bank accounts became accessible to all customers holding only one deposit account and the duties of member credit institutions to make known to the public their decision to provide these accounts as well as their access conditions were reinforced. With these amendments, the number of basic bank accounts opened in 2013 tripled (there were 9,646 basic bank accounts at the end of the year); around 20 per cent of these were opened by converting an existing deposit account.

Payment services

Banco de Portugal communicated to credit institutions that the fees applicable to the acceptance of payment cards should correspond exclusively to the nature of the transaction (debit or credit) and not to the type of card used.

2. Supervisory activities in 2013

Systematic monitoring

Banco de Portugal analysed 6,900 advertising campaigns on banking products and services of 55 credit institutions and required 184 to be changed, 70 per cent of which referring to consumer credit. Banco de Portugal assessed 159 information leaflets on indexed and dual deposits of 11 institutions before they were sold. The number of indexed and dual deposits sold grew by 145 per cent from 2012. Banco de Portugal assessed compliance with maximum rates in all new consumer credit agreements (1,348,469 agreements, 8 per cent more than in 2012). Banco de Portugal monitored 986 fees and expenses leaflets and 547 interest rate leaflets of price lists reported by credit institutions, including the implementation of amendments to the legal framework in force with reflections on products and services fees.


Banco de Portugal conducted 1,403 inspections on credit institutions covering 113 credit institutions; 53 per cent aimed to assess the implementation of amendments to the new legal and regulatory framework.

Inspections focused on:

  • Simple deposits and current accounts: 123 inspections on 54 credit institutions
  • Home loans and other mortgage credit: 284 inspections on 45 credit institutions
  • Consumer credit: 400 inspections on 88 credit institutions
  • Payment services: 197 inspections on 133 credit institutions
  • Price lists: 357 inspections on 94 credit institutions
  • Complaints book: 42 inspections on 19 credit institutions.

Management of complaints

Banco de Portugal received 17,911 complaints from bank customers against credit institutions, i.e. 15 per cent more than in 2012, when it had already recorded a 6 per cent increase, reversing the slowdown observed in the previous two years. The growth observed was chiefly due to complaints on consumer credit and home loans, and based on overindebtedness cases.

Banco de Portugal detected no signs of infraction by institutions subject to complaint in 48 per cent of the cases.

Analysis of draft credit agreements

Banco de Portugal monitored 365 draft credit agreements of 136 credit institutions on personal and car loan products. Based on the draft credit agreements with household customers that credit institutions are obliged to report, Banco de Portugal made an assessment on whether these agreements complied with the legal and regulatory rules governing the banking activity.

Correction of irregularities and sanctions

Banco de Portugal issued 1,030 recommendations and specific orders requiring correction of detected irregularities; 500 resulted from assessing the implementation of amendments to the legal and regulatory framework introduced in 2013.

Within the scope of banking conduct supervision, Banco de Portugal initiated 56 administrative proceedings (34 proceedings in 2012) against 23 institutions. In this period, Banco de Portugal concluded 33 administrative proceedings, 19 regarding proceedings carried forward from previous years and 14 initiated in 2013.

3. Financial information and education

The importance Banco de Portugal attaches to financial information and education continued to be reflected in its banking conduct supervision activities in 2013.

In order to disseminate the amendments to the legal and regulatory framework applicable to retail banking markets, Banco de Portugal published specific brochures and leaflets available for download on the Bank Customer Website. Access to the Website increased by 32 per cent from 2012, mostly due to demand for these new contents.

Banco de Portugal participated in information sessions held in various parts of the country to publicise the new regimes and carry out the training of trainers on these issues. A number of training sessions were aimed at staff belonging to the Assistance Network for Indebted Consumers, in liaison with the Directorate-General for Consumers.

Banco de Portugal continued to play an active role in the National Plan for Financial Education, which has been focusing on financial education initiatives in schools. In 2013 the Plan reached an important milestone, with the adoption of the Core Competencies for Financial Education by the Ministry of Education and Science. The Plan’s first international conference, the new edition of the Todos Contam (Everybody Counts) competition and the celebration of Financial Literacy Day in cooperation with the Todos Contam network of schools proved how the Plan prioritises youth financial education and the role of schools in promoting financial education.

Lisbon, 7 April 2014