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Press Release of Banco de Portugal on the 2014 Banking Conduct Supervision Report

Banco de Portugal publishes today its Banking Conduct Supervision Report. The report describes the regulatory and supervisory activities of retail banking markets carried out in 2014.

This year, the Banking Conduct Supervision Report focuses once more on the assessment of arrears regimes, given that two years have elapsed since the entry into force of the general regime.

Supervisory activities in 2014

Stronger monitoring of indexed and dual deposits; less non-compliance in advertising campaigns

The number of indexed and dual deposits in 2014 grew by around 38% from the previous year. Growth in this market required stronger monitoring by Banco de Portugal in the analysis of information leaflets and the return on these deposits.

Banco de Portugal analysed 6,556 advertising campaigns on banking products and services. In the wake of its monitoring, the Bank required 130 advertising campaigns from 30 credit institutions to be changed. The ratio of the number of changed campaigns to the number of monitored campaigns declined, showing less non-compliance by credit institutions of the legal framework in force.

More on-site inspections

In 2014 the number of inspections at the premises of credit institutions rose by 32%. Such considerable growth of on-site inspections was due to the nature of the inspected themes and in particular to the arrears regime, which lead to 56 inspections of institutions’ branches and central services.

Fewer complaints

The number of bank customer complaints on products and services declined by 21%, in a context of more stable rules applicable to retail banking markets.

This trend was observed in most banking products, except for direct debits, coinciding with the completion of migration to the Single Euro Payments Area (SEPA).

The reduction of the number of complaints reflected a decline in complaints about the charging of fees and outstanding values in consumer credit products.

64 administrative proceedings initiated

Within the scope of banking conduct supervision, Banco de Portugal issued 770 recommendations and specific orders requiring 75 institutions to correct irregularities detected.

The Bank initiated 64 administrative proceedings against 25 institutions (56 proceedings in 2013), of which 28 complied with the arrears regimes. The administrative proceedings initiated resulted chiefly from an analysis of bank customer complaints.

In 2014, 27 administrative proceedings were concluded and fines imposed totalled approximately €500,000.


Implementation of arrears regimes

Public consultation showed positive impact of the general regime

At the end of 2014 Banco de Portugal held a new consultation process to assess the implementation of the general arrears regime, given that two years had elapsed since the entry into force of the general regime. Credit institutions were heard, i.e. the entities supporting indebted customers and other interested parties.

In general, credit institutions and consumer protection associations considered that implementation of the general arrears regime had a positive impact on how credit institutions detect and monitor bank customers in risk of arrears under the Pre-arrears Action Plan (PRAP), and seek, in conjunction with customers, to settle arrears in credit agreements, under the Out-of-court Arrears Settlement Procedure (OASP).

Main indicators for 2014

  • 663,000 OASP proceedings initiated regarding approximately 505,000 credit agreements (83% of consumer credit and 17% of home loans), involving a total debt of €5.7 billion and a default ratio of  5.1%;
  • PERSI proceedings concluded with settlement of arrears: 60.2% in home loans; 44.7% in consumer credit;
  • 622 requests for access to the extraordinary regime submitted by bank customers, 66% less than in 2013. 492 requests for access to the extraordinary regime were denied, mostly due to lack of evidence demonstrating access conditions and to non-completion of the access conditions regarding the income of the customers’ household;
  • 133 requests for access to the extraordinary regime were approved, which accounted for €7.7 million in debt and a default ratio of 9.1%;
  • Of the 155 extraordinary regime proceedings concluded, around 63% led to an agreement between the parties.Processos PERSI concluídos com regularização do incumprimento: 60,2% no crédito hipotecário; 44,7% no crédito aos consumidores; 

Financial information and education

In conjunction with the regulation and supervision of retail banking markets, Banco de Portugal considers as a priority area of activity the promotion of the financial information and education of the Portuguese population.

In 2014 the National Plan for Financial Education was launched, aiming to introduce financial education in schools. Teacher training started, as did preparatory work for the production of educational materials. The activities of financial supervisors and the Ministry of Education and Science within the scope of the National Plan for Financial Education was acknowledged by the Child and Youth Finance International, which awarded Portugal with the 2014 Country Award for Europe.

In addition to the activities of the National Plan for Financial Education, Banco de Portugal encouraged the promotion of arrears regimes, legislation governing arrears interest on banking transactions and minimum banking services, through nationwide training courses. In the Bank Customer Website the Bank started to release information that makes it possible for bank customers to compare maintenance fees in minimum banking service accounts and base accounts of credit institutions. It also released monthly data on new consumer credit agreements.

Lisbon, 28 April 2015