The Banco de Portugal publishes today the Banking Conduct Supervision Report, which summarises the activities undertaken by the Bank to monitor retail banking markets in 2022.

The Banco de Portugal accompanied the entry into force of the extraordinary rules adopted by the legislator to protect borrowers of home loan agreements from the effects of rising inflation and the impact of the increase in interest rates. These measures included strengthening, at the end of 2022, the rules obliging institutions to monitor the performance of home loan agreements, requiring careful action on the part of institutions under the Pre-Arrears Action Plan (PRAP). In 2022, proceedings initiated by institutions under the Out-of-court Arrears Settlements Procedure (OASP) increased in home loans and consumer credit, in the latter case to levels higher than those observed in the pre-pandemic period.

When monitoring the implementation of the extraordinary regime, the Banco de Portugal assessed compliance by 98 institutions with the temporary prohibition of paying the early repayment fee in credit agreements for the purchase of permanent owner-occupied dwellings with a variable interest rate. As a result of the requirement to correct the irregularities detected in 94 institutions, proceedings were amended and approximately €502 thousand were returned to customers.

The Bank also monitored the 95 institutions that offer retirement, education and retirement/education savings plans for compliance with the duty to disclose information on the possibility of penalty-free redemption. Following these actions, the Bank required 86 institutions to correct the irregularities detected.

The Banco de Portugal prioritised verifying compliance with the legal provisions that introduced limits to fees on home loan and consumer credit agreements as of 1 January 2021. Inspections in this respect covered 132 institutions regarding consumer credit and 100 institutions regarding home loans and mortgage credit, with 122 and 97 institutions, respectively, being found non-compliant.

As regards the offering of home loans and mortgage credit, the Banco de Portugal also inspected the information provided at the branches of 81 institutions and on the websites of five institutions and monitored the information on the current account linked to a credit agreement provided on the websites of 11 institutions. In consumer credit, the Bank also assessed the information provided on personal and car loans on the websites of 97 institutions, the offering of credit products through digital channels by five institutions and the draft credit agreements for car loans reported by 77 institutions. It also monitored three institutions for charging arrears interest and other costs in situations of default on credit cards and credit lines as well as three institutions for charging interest on overdraft facilities and overrunning.

The Banco de Portugal monitored the information provided on basic bank accounts at 234 branches of 37 credit institutions. It also monitored 234 branches of 37 credit institutions and four branches of three payment institutions for the provision of the price list and the complaints book. Irregularities were identified in 13, 23 and 21 institutions respectively

The Banco de Portugal monitored 19,225 advertising materials released by 57 institutions. It detected irregularities in 1.8% of the advertising materials analysed following their public disclosure.

On average, the Bank received 1,815 complaints per month, 12.7% more than in 2021. This mainly reflected an increase in complaints about (i) the information reported by the institutions to the Banco de Portugal on customers’ credit liabilities, (ii) alleged fraud in digital payments and (iii) difficulties opening current accounts faced by foreign citizens. The Bank identified irregularities in 2.2% of the closed complaints. The institutions solved the matter subject to complaint, despite the fact that there were no signs of breaches, in 37.4% of the closed complaints.

As a result of the supervisory measures taken, 110 institutions repaid more than €3 million to customers, €2.8 million of which for unduly charged fees and interest involving 111,872 agreements. As part of its banking conduct supervisory functions, the Banco de Portugal issued 2,829 specific orders and recommendations addressed to 143 financial institutions and initiated 117 administrative offence proceedings against 32 financial institutions. Almost all proceedings originated from bank customer complaints. In 2022, 432 administrative offence proceedings were concluded, leading to the imposition of fines totalling €1.8 million.

At the end of 2022, 5,636 credit intermediaries were registered, up by 2.9% from the previous year. When supervising this activity and among other measures, the Bank assessed compliance with the duty to disclose information by 243 credit intermediaries and the provision of the complaints book by 215 credit intermediaries. It also monitored advertising for credit products on the websites of nine credit intermediaries and analysed 80 bank customer complaints against these entities. As a result of these actions, the Bank issued 88 specific orders to 77 credit intermediaries and initiated 266 administrative offence proceedings against 257 credit intermediaries.

Promoting the population’s financial literacy remained a strategic priority. The Banco de Portugal launched the second phase of the #TopTip digital financial education campaign and organised 717 financial education activities involving more than 23,000 participants from across the country. The Bank coordinated the implementation of the National Plan for Financial Education with the other financial supervisors. As part of the partnerships established with the High Commission for Migration and the Ministry of Labour, Solidarity and Social Security, the Bank carried out initiatives to disseminate basic bank accounts. With the support of the Directorate-General for Consumers, it organised information sessions on arrears management for entities that are part of the Bank Customer Support Network and Regional Consumer Information Centres across the country.