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Press release of the Banco de Portugal on the Banking Conduct Supervision Activities – 1st half of 2020

Banco de Portugal publishes today the Banking Conduct Supervision Activities. This publication summarises the activities undertaken by the Banco de Portugal to monitor retail banking markets in the first half of 2020. This period was marked by the COVID-19 pandemic, therefore this publication highlights the role played by banking conduct supervision in the initiatives undertaken to mitigate its impact on bank customers.

The Banco de Portugal regulated the customer information and assistance obligations credit institutions should observe in the application of credit moratoria. In order to assess compliance with such obligations, the Bank assessed lending institutions with credit agreements that could be covered by the moratoria. Following this supervision, the Bank issued specific orders to 97 institutions, requiring greater transparency and completeness of information on their websites. In this period of time, the Bank also analysed 1,022 complaints from bank customers on the application of credit moratoria.

The Banco de Portugal requested that supervised institutions regularly report on the application of public and private credit moratoria to credit agreements. According to the preliminary data available, between 27 March and 31 August 2020, bank customers applied for credit moratoria involving 787,807 credit agreements. By the end of August, credit institutions had approved applications regarding 726,996 agreements (92%), 43% of which related to credit agreements for the purchase of permanent residence and other mortgage credit, 29% to corporate credit agreements and 28% to consumer credit agreements.

The Banco de Portugal published information on the extraordinary rights of bank customers regarding the repayment of credit agreements under moratoria. The Bank published information on eligibility requirements and characteristics of credit moratoria on a specific webpage on the Bank Customer Website and answered information requests from bank customers.

The Banco de Portugal accompanied the international agenda dedicated to reflecting on the measures taken to mitigate the impact of the pandemic on bank customers, at the level of the European Banking Authority (EBA), the International Financial Consumer Protection Organisation (FinCoNet), the G20-OECD Task Force on Financial Consumer Protection, and the Organisation for Economic Co-operation and Development (OECD).

In the first half of 2020 the Banco de Portugal continued to carry out its regular banking conduct supervision activities, among which the supervision of how institutions market basic bank accounts remained a priority. Throughout the year, 15,529 basic bank accounts were opened, 78.5% of which by switching from an existing current account held with the institution, and 1,666 basic bank accounts were closed, 85.2% of which on the customer’s initiative. On 30 June, there were 117,491 basic bank accounts, an increase of 13.4% from the end of 2019 and 49.2% from the end of the same period a year earlier.

As usual at the beginning of the year, the Banco de Portugal assessed the institutions marketing basic bank accounts for compliance with the obligation to include information in the first statement sent every year to current account holders on the possibility of converting the existing current account into a basic bank account. The Banco de Portugal also checked for compliance with the obligation to send the current account statement and to meet the information requirements laid down in the applicable regulations.

The Banco de Portugal again assessed all institutions offering current accounts for compliance with the duty to send the statement of fees. The statement of fees is standardised at European level and describes all the fees charged in the previous year for services linked to payment accounts. The Bank also assessed how the institutions that made the statement of fees available to their customers via digital channels adopted the best practices the Bank had disseminated at the end of 2019.

The actions of institutions offering home loans and mortgage credit and consumer credit were also a priority of banking conduct supervision. The Banco de Portugal analysed the information provided to costumers on home loans and mortgage credit cost measures (total amount payable by the consumer and APRC), particularly where these are marketed in connection with other products and services.

In a context of widespread use of digital channels, the Banco de Portugal prepared and launched a public consultation on a set of recommendations for marketing banking products and services through digital channels, set out in Circular Letter No CC/2020/00000044, disclosed in July 2020. The Bank also assessed the institutions’ marketing practices in these channels as well as the information they provide on their websites on personal loans and car loans.

The Banco de Portugal analysed 4,201 institutional advertising materials and advertising materials for banking products and services, an increase from the previous year, due to the strong growth of marketing campaigns on digital channels during the COVID-19 pandemic. Of the advertising materials analysed following their public disclosure, 3% were non-compliant.

In the first half of 2020 the Banco de Portugal received 10,184 complaints from bank customers concerning supervised institutions. On average, 1,697 complaints were received per month, a 12.5% increase from the 2019 monthly average. Excluding complaints linked to the COVID-19 pandemic, the number of complaints received would have grown by 2.6%. The COVID-19 pandemic context led bank customers to use digital channels more to submit complaints. The e-platform ‘Livro de Reclamações’ (LRE) and the Bank Customer Website (PCB) together recorded 71% of the complaints received by the Banco de Portugal in the second quarter of 2020.

The Banco de Portugal received 277 applications for authorisation to pursue the activity of credit intermediary and decided on 331 applications, of which 215 were approved. On 30 June 2020, 4,880 credit intermediaries were registered with the Banco de Portugal. In the first half of 2020 the Banco de Portugal received 2,036 requests to change the registration of credit intermediaries and decided on 2,046. During this period, supervisory activities focused on the analysis of advertisements and on the assessment of complaints submitted by bank customers.

Within its banking conduct supervisory powers, the Banco de Portugal issued 1,310 specific orders and recommendations addressed to 141 institutions and initiated 40 administrative proceedings against 16 institutions. 10 specific orders were issued and 12 administrative offence proceedings were initiated against 10 and 11 credit intermediaries respectively.