The report summarises the activities undertaken by the Banco de Portugal to monitor retail banking markets in 2021.

The report begins with a chapter highlighting two relevant topics in 2021: the growing importance of financial training as a priority in terms of public policy and the contribution of banking conduct supervision to mitigating the impact of the COVID-19 pandemic on consumers of banking products and services. This is followed by the usual chapters describing the evolution of the regulatory framework and the supervision of financial institutions and credit intermediaries, with information on the matters supervised and the measures adopted to sanction the breaches identified. It also describes the Banking Conduct Supervision department’s actions to promote financial literacy and training, its participation in international forums and cooperation initiatives.

The Banco de Portugal continued to monitor the implementation of measures adopted to protect bank customers in the context of the COVID-19 pandemic.

The Bank monitored how credit institutions adopted the amendment to the general arrears regime to mitigate the risks associated with the termination of moratoria. Using information reported by the institutions and assessing bank customers’ complaints, the Bank supervised the implementation of the Pre Arrears Action Plan (PRAP) in relation to credit agreements no longer under moratoria. According to the data provided by credit institutions, by the end of December, 68% of PRAPs started had been completed in the absence of default risk.

Bank customers submitted 500 complaints on matters related mainly to credit moratoria (70% fewer than in 2020). Following the analysis of complaints, 17 administrative sanctioning proceedings were initiated against nine institutions, involving 130 complaints. 

Pursuant to the law, the Banco de Portugal assessed compliance with the duty to disclose information on the possibility of redeeming, without penalty, retirement (PPR), education (PPE) and retirement/education (PPR/E) savings plans and issued 286 specific orders and recommendations to correct irregularities and deficiencies found in 97 institutions.

Monitoring amendments to regulations governing bank fees and business practices was a priority. The Banco de Portugal assessed whether the information provided by 86 institutions on their websites complied with the legal provisions preventing institutions from requiring their customers to have a current account linked to a credit agreement with the same institution, with 83 institutions being ordered to correct irregularities. The draft contracts of 86 institutions were also checked for compliance and 83 institutions were ordered to correct irregularities.

For consumer credit, the Bank analysed the draft credit agreements of 97 institutions for compliance with the legal provisions preventing the conclusion or renegotiation of credits being conditional on the purchase or maintenance of other financial products or services, in particular on having a current account with the same institution. Specific orders were issued to 81 institutions to correct the irregularities detected.

Access to basic bank accounts (BBAs) was monitored again. Inspections were conducted to check whether the information disclosed online by the 100 institutions that marketed the basic bank account was compliant and whether customers were informed of the possibility of converting their current account into a basic bank account. The BBA marketing practices were also examined at one institution. These inspections led to 488 specific orders and recommendations being issued to 100 institutions.

The Bank assessed the information provided to customers on current account fees. The Banco de Portugal assessed whether 118 institutions complied with the obligation to send the statement of fees, and assessed the fee information document provided by 111 institutions. It also examined the use of harmonised terminology by 118 institutions and whether 111 institutions provided a glossary on their websites. 111 institutions were assessed to verify whether they provided the standard information sheet. To correct the instances of non-compliance detected in these inspections, the Banco de Portugal issued 559 specific orders and recommendations to 117 institutions.

Amid growing digitalisation in the market, the Bank continued to monitor the marketing of consumer credit through digital channels. 

The information provided on the websites of 100 institutions regarding consumer credit agreements was assessed as well as the practices adopted by 83 institutions when marketing these contracts on digital channels. 

The marketing of consumer credit was also assessed, with a focus on arrears management. The procedures adopted by 84 institutions to address arrears and the application of the arrears regime by 76 institutions. The Bank assessed the practices adopted by 81 institutions for entering into such credit agreements and while the agreements are in effect. 

Following the supervision of the marketing of consumer credit, the Bank issued 4,024 specific orders and recommendations to 105 institutions.

Institutions offering home loans and mortgage credit were also monitored, focusing on arrears management.

The Bank assessed 99 institutions for compliance with the rules applicable when charging interest and other fees in case of default in the payment of home loans and mortgage credit. This led to 160 specific orders being issued to 80 institutions. 

The number of advertising materials monitored grew by 73%. Advertising on digital channels surged, accounting for 18% of all materials released. Of the advertising materials analysed following their public disclosure, 2.6% were non-compliant.

The Bank received 1,610 bank customer complaints per month, on average, 1.7% fewer than in 2020. 61.7% of the closed complaints showed no indication of infringement. In all other cases, the matter subject to complaint was solved by the institution on its own initiative (34.8% of complaints) or following the Banco de Portugal’s intervention (3.5%). Irregularities were found in 572 closed complaints, leading to 117 administrative sanctioning proceedings against 30 institutions and to 37 specific orders addressed to 12 institutions.  

In the context of the supervision of the financial institutions’ conduct in retail banking markets, the Banco de Portugal issued 5,926 specific orders and recommendations addressed to 143 financial institutions and initiated 121 administrative sanctioning proceedings against 31 institutions.

The Banco de Portugal intensified the supervision of credit intermediaries. It verified the compliance of the information in the register of credit intermediaries and analysed advertising by these entities. It also inspected the information and the consumer care service provided online by 94 intermediaries and, regarding eight intermediaries, compliance with information obligations in establishments open to the public and the availability of a complaints book. Bank customers submitted 83 complaints focused on the conduct of credit intermediaries. As a result, 1,575 specific orders were issued to 1,398 credit intermediaries and 62 administrative sanctioning proceedings were initiated against 48 credit intermediaries.

The Bank promoted the safe use of digital channels in the financial training activities carried out.

Alongside the activities of the National Plan for Financial Education, the Banco de Portugal carried out 351 financial training activities throughout the country, supported by its regional network, with a total of 9,612 participants, most often addressing the care needed when accessing banking products and services through digital channels. The dissemination of the basic bank account remained a priority and an awareness campaign was designed to take advantage of the information desks of the Ministry of Labour, Solidarity and Social Security, which involved the training of around 700 staff members of this ministry.

The Banco de Portugal strengthened its representation in the main banking conduct supervision forums.

In 2021, it continued to chair the International Financial Consumer Protection Organisation (FinCoNet) and, in March 2022, became vice-chair of the OECD’s International Network on Financial Education (OECD/INFE).