All questions
Overview
The Portuguese monetary system is absolutely built-in with the worldwide and European monetary markets. The Bank of Portugal (BdP) joined the European System of Central Banks (ESCB) on 1 June 1998. As a end result, the definition and implementation of the nation’s financial and alternate price coverage, the administration of official forex reserves, the effectivity of the fee techniques and the issuing of banknotes at the moment are managed by the ESCB.
Thus, the Portuguese regulatory system governing credit score establishments and monetary firms is, in broad phrases, an identical to the authorized framework in power in different EU Member States. Furthermore, not solely has the direct affect of EU legislation supplied the Portuguese banking trade with a excessive degree of safety relating to client finance, however current nationwide authorities insurance policies have additionally contributed to this excessive degree of safety. This has been achieved by means of the reinforcement of the info disclosure duties of credit score establishments and monetary firms, and the imposition of most rates of interest in sure varieties of financing agreements.
Further to the Economic and Financial Assistance Programme, the Portuguese banking trade has undergone important changes which have led to an asset contraction in addition to to a change in its funding construction, giving desire to customers’ deposits fairly than wholesale funding by means of securities. The banking trade in Portugal now includes round 150 credit score establishments, of which the 4 largest teams of banks are (by whole worth of belongings and from the largest to the smallest): Caixa Geral de Depósitos (a state-owned financial institution), Banco Comercial Português, Banco Santander Totta (who acquired Banco Popular Portugal following the decision measure utilized over Banco Popular España) and Novo Banco (a bridge financial institution following the decision measure utilized by the BdP over Banco Espírito Santo).
As for its key monetary indicators, by the finish of the first semester of 2021, they confirmed that the banking trade had a complete asset worth of €435.7 billion,2 whereas on the different hand, the worth of credit score granted to clients amounted to a complete of €243.99 billion3 and the worth of deposits amounted to a complete of €295.40 billion.4
Legislative and regulatory framework
i Legislation
The Portuguese authorized framework governing client fee, deposit and lending providers is strongly influenced by EU authorized devices. As for nationwide legislation, at the prime of the hierarchy the Constitution of the Portuguese Republic accommodates ideas relating to the nationwide monetary system as a complete, in addition to different provisions governing the regulatory function of the BdP. Following it’s the Basic Law of the BdP, enacted by Law No. 5/98 of 31 January, as amended. This legislation establishes the primary construction of the BdP and related points of banking supervision. Both the Portuguese Commercial and Civil Codes have to be thought of when referring to the related authorized framework governing client finance.
The Portuguese regulatory framework governing the exercise of credit score establishments and monetary firms (authorisation, registration, and many others.) is about out in the Credit Institutions and Financial Companies General Framework, enacted by Decree-Law No. 298/92 of 31 December, as amended (RGICSF). This legislation additionally governs, amongst others, the supervisory exercise of the banking regulator, the BdP, and the Resolution Fund. In flip, fee establishments are topic to the Legal Framework of Payment Institutions and Payment Services, enacted by Decree-Law No. 91/2018 of 12 November.
In specific, Directive 2008/48/EC of the European Parliament and of the Council of 23 April 2008 on credit score agreements for customers was applied into Portuguese legislation by Decree-Law No. 133/2009 of two June, as amended. This regime has been in power since 1 July 2009. Notwithstanding, the earlier regime enacted by Decree-Law No. 359/91 of 21 September remains to be relevant to credit score agreements executed earlier than 1 July 2009.
Among a number of others, the following legal guidelines (as amended) should even be considered: Decree-Laws Nos. 381/77 of 9 September, and 454/91 of 28 December, relating to payments by way of financial institution cheques and different debt securities; Decree-Laws Nos. 220/94 of 23 August, and 74-A/2017 of 23 June, as amended, relating to lending agreements (the relevant info disclosure duties, rates of interest, and many others.); Decree-Law No. 349/98 of 11 November, relating to housing credit score; and Decree-Law No. 446/85 of 25 October, as amended (Decree-Law 446/85),5 which establishes the Portuguese unfair contract phrases regime relevant to contractual phrases that haven’t been individually negotiated (LCCG).
Directive 2014/17/EU of the European Parliament and of the Council of 4 February 2014 on credit score agreements for customers regarding residential immovable property was partially applied into Portuguese legislation by Decree-Law No. 81-C/2017 of seven July, as amended, which establishes the necessities for the taking-up and pursuit of the credit score intermediation exercise.
ii Regulation
As for the physique in cost of implementing and implementing the regulation of client finance providers, the BdP, as the Portuguese central financial institution, performs a central function. Notwithstanding this, there are additionally our bodies liable for client safety that have to be taken into consideration, as they not solely help customers in common but additionally in some circumstances supply authorized recommendation to their members, notably the Portuguese Association of Consumer Law and the Consumer’s Directorate-General, from the Ministry of Economics.
The BdP is liable for the prudential and market conduct supervision of credit score establishments, monetary firms and fee establishments with a view to making sure the stability, effectivity and soundness of the monetary system, in addition to the compliance with guidelines of conduct and transparency necessities in direction of financial institution clients, thereby guaranteeing the security of deposits and depositors, and the safety of client pursuits. Likewise, every time credit score establishments or monetary firms pursue monetary intermediation actions, they are going to be topic to the supervision of, and laws issued by, the Portuguese Securities Market and Exchange Commission. In flip, every time these entities additionally pursue insurance coverage intermediation actions (e.g., banks), they are going to be topic to the supervisory powers and the laws issued by the Portuguese Insurance and Pensions Supervisory Authority. Among others, a major variety of these laws are focused at client safety and safeguarding the buyer’s rights.
Among the completely different points of its actions, of the utmost significance are the BdP’s powers to challenge notices, directions and round letters, which set out guidelines and conduct for the banking trade to adjust to relating to the providers to be supplied to the common public. Furthermore, the BdP has the energy to implement Portuguese banking legal guidelines and laws by means of: fines and ancillary penalties; injunctions for the fulfilment of sure duties; seizure of paperwork and valuables; and particular audits by means of on-site inspections.
Each client has the proper to file complaints in opposition to banks or different establishments (e.g., credit score establishments, monetary firms, fee establishments) inside the scope of the advertising of customers’ banking providers (e.g., deposits, dwelling credit score, client finance, bank cards). These entities are required to current their complaints e book when solicited to take action. These complaints might also be filed instantly earlier than the BdP, however the latter solely has energy to confirm whether or not the establishment is complying with its duties or not, and is incapable of demanding the establishment treatment the damages or pay compensation to the client. This degree of authorized safety is barely assured by courts and related judicial entities.
In July 2019, the BdP joined the e-platform ‘Livro de Reclamações‘, in order that financial institution clients can submit complaints by means of this channel as effectively. With this new channel, complaints acquired elevated, and in 2019, the BdP acquired 18,104 financial institution clients’ complaints, 18.7 per cent greater than in the earlier yr.
Moreover, Portugal has applied Directive 2013/11/EU of the European Parliament and of the Council of 21 May, by way of Law No. 144/2015 of 8 September, as amended, relating to the different decision of client disputes.
Payments
i Overview
Payment devices in Portugal are extremely dependable, and the payments market in Portugal is in line with worldwide finest observe.
Prior to the entry into power in Portugal of Directive 2007/64/EC of the European Parliament and of the Council of 13 November 2007 on fee providers in the inner market, which has been repealed and changed by Directive 2015/2366 of the European Parliament and of the Council of 25 November 2015 (the Payment Services Directive), the issuance and administration of debit playing cards was primarily ruled by the BdP Notice No. 11/2001 of 20 November on credit score and debit playing cards and corresponding phrases of use (BdP Notice 11/01), and by the RGICSF. The pursuit of this exercise in the Portuguese territory needed to be carried out by credit score establishments or monetary firms.
Upon the implementation into Portuguese legislation of the Payment Services Directive by the enactment of Decree-Law No. 317/2009 of 30 October, which has been repealed and changed by Decree-Law No. 91/2018 of 12 November (DL 91/2018), the RGICSF has been amended to offer for the institution of the new ‘fee establishments’ (which don’t fall underneath the definition of credit score establishments or monetary firms) which can be entitled to offer fee providers – these embrace the issuance of debit playing cards.
However, BdP Notice 11/01 has not been amended or revoked in mild of the new guidelines on the provision of fee providers. Consequently, at current DL 91/2018 offers for guidelines on the issuance of debit playing cards relevant to entities which will present fee providers – credit score establishments, monetary firms and fee establishments – and BdP Notice 11/01 offers for guidelines on the issuance of debit playing cards for credit score establishments and monetary firms.
The massive majority of guidelines supplied for BdP Notice 11/01 are additionally supplied for in DL 91/2018, though there are some variations price highlighting, resembling: (1) whereas in DL 91/2018, when the shopper will not be a client or a microenterprise, events could present that the guidelines on the info necessities set out in the legislation aren’t relevant, the guidelines set out in BdP Notice 11/01 are obligatory; and (2) BdP Notice 11/01 requires the agreements be written in Portuguese and expressly offers that the info on costs and charges of curiosity can’t be inserted in the settlement by reference to an inventory of prices and costs out there in the branches or by one other medium (resembling the web site) and that the issuer is entitled to vary the settlement by giving a 15-day discover interval to the shopper.
Regulation (EU) 2015/751 of the European Parliament and of the Council of 29 April 2015 on interchange charges for card-based fee transactions (IFR) grew to become instantly relevant in its entirety from 9 June 2016, and Directive 2015/2366 of the European Parliament and of the Council of 25 November 2015 on fee providers in the inner market (the PSD2 Directive) was applied in Portugal by way of Decree-Law No. 91/2018 of 12 November
ii Recent developments
Up till now, the BdP has solely issued some pointers on its official web site relating to interchange charges, that are primarily addressed to customers, containing, amongst different issues, a abstract of the major provisions of the Regulation and an evidence of the ideas of ‘manufacturers’ and ‘co-branding’.
In Portugal, for debit-card-based fee transactions, the interchange price can’t be greater than 0.2 per cent of the transaction worth. In credit-card-based fee transactions, this price can’t be greater than 0.3 per cent of the transaction worth.
More broadly, in 2020, the covid-19 pandemic had a major impression on, inter alia, consumption and payments. After six years of development, payments made with cheques, payments of alternate, direct debits, credit score transfers, prompt transfers and playing cards collectively fell by 9.2 per cent in quantity and 4.1 per cent in worth in comparison with 2019. Notwithstanding this, on-line purchases elevated by 32.3 per cent in quantity and 9.6 per cent in worth, and contactless expertise grew by 163 per cent in quantity and 271 per cent in worth.
Deposit accounts and overdrafts
i Overview
In Portugal, solely credit score establishments duly authorised by the BdP are allowed to take deposits and different repayable funds.
As supplied in Decree-Law No. 430/91 of two November, as amended, there are a number of varieties of deposits. If we think about the motion of funds, the commonest are on demand and time period deposits. The first are characterised by the freedom to withdraw the funds at any time, whereas the second are refundable solely after a sure time frame, though credit score establishments could enable for early fund mobilisation topic to a penalty on the accrued curiosity. Conversely, if we think about the banks’ remuneration, we could embrace easy or listed deposits, as the first use mounted charges (or variable charges listed to cash market charges), whereas in listed deposits the remuneration is determined by the evolution of different variable charges.
Under the precept of contractual freedom, every credit score establishment is free to find out the circumstances of a majority of these contracts, that are often set out by way of commonplace adhesion contracts for the opening and managing of financial institution accounts. These contracts could reveal a transparent asymmetry between the rights and obligations of credit score establishments and customers, resulting in an unbalanced authorized relationship. As talked about above, these contracts are topic to the Portuguese unfair contract phrases regime, which has a major function in avoiding unfair and unfavourable circumstances.
Credit establishments should adjust to sure info disclosure duties for customers to have right data of the contracts. The content material of the info supplied therein, relating to easy deposits, is supplied in BdP Notice No. 4/2009 of 20 August, whereas the particulars of the info for listed deposits are set out in BdP Notice No. 5/2009 of 20 August.
In addition, credit score establishments could authorise overdrafts, by means of an settlement with the client or a tacit acceptance from the establishment itself. The first choice known as an overdraft facility and is predicated on a contract between the shopper and the credit score establishment, permitting the shopper to proceed to withdraw cash as much as a sure pre-agreed quantity when the account has no extra funds. The second choice is overrunning, which refers to the scenario the place there isn’t a prior settlement; as a substitute, the credit score establishment tacitly permits customers to utilize funds even when their present steadiness is exceeded.
Under Decree-Law No. 27-C/2000 of 10 March, as amended, all credit score establishments should supply entry to primary banking providers at a lowered price by means of a minimal banking providers account. This service consists of, notably: opening and holding of minimal banking providers accounts; provision of a debit card; entry to the accounts by means of money machines, dwelling banking providers and repair over the counter; and deposit services, withdrawals, fee for providers and items, direct debit and transfers between completely different nationwide banks.
The Portuguese Deposit Guarantee Scheme (DGS) covers each deposit as much as a most of €100,000 per shopper and per financial institution. Further, Directive 2014/49/EU of the European Parliament and of the Council of 16 April states that each DGS should guarantee a capitalisation degree of 0.8 per cent. Recent knowledge reveals that in 2019 the Portuguese DGS had a capitalisation degree of 1.04 per cent, nonetheless effectively above the 0.8 per cent, putting the Portuguese assure fund amongst the most extremely capitalised DGSs inside the EU.
ii Recent developments
Law No. 66/2015 of 6 July, as amended, has introduced some modifications to the deposits’ authorized framework. First, credit score establishments can not supply overdraft services or overrunning underneath the regime of Minimum Banking Services. Second, pursuant to the modification now launched in the RGICSF, credit score establishments should ship an annual invoice-receipt detailing all the charges and bills associated to on-demand deposits from the earlier yr to the account holder.
Law No. 57/2020 of 28 August has amended Law No. 66/2015, introducing a brand new rule relating to the commissions and bills charged by credit score establishments and different now service suppliers. These commissions and bills should correspond to a service truly supplied and have to be affordable and proportionate to the prices incurred, and the charging of any commissions, charges or different costs of a special type shall be prohibited the place no service is definitely supplied.
Revolving credit score
A financial institution card is issued in accordance with an umbrella settlement that should set up the phrases and circumstances of the contractual relationship between the cardholder and the entity that has issued it. Very usually a credit score settlement is executed by means of the use of a bank card that has the provision of a line of credit score underlying it, versus the lending of a certain quantity. As the phrases and circumstances of a bank card are linked to the respective credit score settlement, solely the place a restrict has been set out in the scope of a line of credit score is there the chance of revolving credit score. Lending entities are obliged to offer the buyer with the respective written contracts, that are generally drafted as commonplace contracts (and subsequently topic to the unfair contract phrases regime) and normally offered as the card’s common phrases and circumstances, as the card’s sole objective is to function a way of fee.
As for servicing burdens charged by the bank card issuer, they range amongst the completely different credit score establishments. However, it’s obligatory for all such prices to be clearly indicated in the credit score settlement, which should comprise info on all the relevant curiosity and alternate charges, or, if relevant, the calculation technique and the reference date used in figuring out the relevant curiosity or alternate price.
It can be price mentioning Decree-Law No. 227/2012 of 25 October, which establishes the set of ideas and guidelines that credit score establishments should comply with on the administration and monitoring of the threat of default in client finance. This statute offers that each one credit score establishments should create a plan of motion for the threat of default to stop conditions of default by their clients. More importantly, this statute creates and defines the Out-of-Court Procedure of Default Situations’ Regularisation (PERSI), which consists of a debt restructuring process designed for monetary customers. The PERSI is relevant to the majority of credit score agreements executed with customers and doesn’t rely on any entry circumstances (not even a request from the client). During the debt restructuring negotiations underneath the PERSI, the client has a set of authorized ensures, three of them being the impossibility that credit score establishments could terminate the credit score settlement; take authorized actions to say these credit; and assign these credit to a 3rd occasion.
Decree-Law No. 227/2012 has been not too long ago amended by Decree-Law No. 70-B/2021 of 6 August, offering protecting measures for financial institution clients with credit score agreements falling underneath a moratorium and amending the common default regime. Under this new regime, credit score establishments are obliged to organize and implement an motion plan for default threat, describing in element the procedures and measures adopted for monitoring the execution of credit score agreements and the administration of default threat conditions.
In relation to PERSI, this decree-law requires credit score establishments to create, in a sturdy medium, particular person recordsdata for the financial institution clients lined by the procedures foreseen in PERSI, which should comprise all related parts described in Article 19 of Decree-Law No. 70-B/2021 of 6 August.
Finally, a quick reference have to be made to contactless playing cards, which have not too long ago been launched to the Portuguese banking trade. Usually, the issuer entity establishes each the most quantity allowed for single payments in addition to an general most quantity for successive transactions with out the use of the card’s PIN (private identification quantity) code (at the moment,6 financial institution clients could solely make a contactless fee if the worth of the transaction is beneath €50 and the general quantity or variety of successive contactless transactions is a most of €150 or 5 transactions (the entity that points the card can set decrease limits)). The BdP issued a round letter on the topic, thus publishing the good practices relating to the info duties that the issuer entities should present to their clients, together with the obligation for these entities to offer mentioned info by way of a paper doc or different sturdy medium.
Instalment credit score
The client credit score regime applies to contracts for quantities between €200 and €75,000. There are completely different types of client credit score, relying on objective, specifically: private credit score, which can embrace pupil and well being loans; and automotive loans, by means of leasing, with reservation of title, or others. Even although they’re all thought of client credit score, these contracts entail completely different prices, charges and costs.
The housing credit score regime applies to contracts for the objective of the buy, development, upkeep or enhancements of privately owned property or the buy of land for its growth. These contracts could also be secured by a mortgage on the property, which can be strengthened by different means, resembling the life insurance coverage of the debtor and his or her partner or another type of assure which will match the supposed objective.
Credit establishments have the proper to terminate each client and housing credit score contracts. For the objective of client credit score, credit score establishments could terminate the contract if the following two necessities are met: the non-payment of two consecutive instalments that exceed 10 per cent of the whole quantity of credit score; and in the case that the creditor has given further time of a minimal of 15 days for the client to pay the delayed instalments, along with potential compensation due, with a warning relating to the penalties of shedding the proper to pay by instalments or the penalties regarding the termination of the contract.
For the objective of housing credit score contracts, credit score establishments could terminate the contract in the case that the client fails to pay not less than three overdue and unpaid instalments.
For each varieties of credit score contracts, customers have the proper to request a partial or whole early reimbursement, upon offering a previous discover to the financial institution. If the client decides upon a sophisticated reimbursement, it might end result in further prices. For client credit score contracts, credit score establishments aren’t authorised to cost any charges when this issues the early reimbursement of mortgage agreements with a variable rate of interest. However, they’re entitled to take action in the case of the early reimbursement of mortgage agreements with a set rate of interest. Concerning housing credit score contracts, banks could cost further charges for early repayments for mortgage agreements with both mounted or variable rates of interest.
The client, whether or not requesting particulars on client or housing credit score, is entitled to clear, full and up to date info relating to the traits, circumstances and prices of the mortgage. Credit establishments, other than these pre-contractual obligations, should proceed to tell their purchasers, amongst others, on the standing of the mortgage, of modifications to the rate of interest and of any breaches of contractual obligations. BdP Notice No. 10/2014 of three December establishes the info necessities that have to be fulfilled by credit score establishments throughout the time period of the client credit score contract. By the identical token, BdP Notice No. 5/2017 of twenty-two September establishes the info necessities for housing credit score contracts supplied by credit score establishments.
Under Portuguese legislation, lending (secured or in any other case) is taken into account a banking exercise. Accordingly, any short-term client lending exercise that’s carried out, on knowledgeable foundation, by an entity that’s not duly authorised or registered with the BdP, shall be deemed a really critical administrative offence, topic to a tremendous of as much as €5 million, plus ancillary sanctions.
As talked about above, though the banking exercise could solely be carried out by credit score establishments or monetary firms which can be duly authorised, crowdfunding is rising inside the scope of the sharing financial system. Crowdfunding, as a channel of financing, permits matching traders instantly with the contributors and tasks in want of funds, primarily in the early levels, by way of digital platforms.
Law No. 102/2015 of 24 August, as amended, has established the guidelines on crowdfunding. This legislation addresses the fashions of crowdfunding: key options and duties of the house owners of digital platforms; key options and duties of the events; circumstances of entry to the exercise; registration process; phrases of open name to the public to lift funds for a particular challenge; and competence of the Portuguese Securities Market Commission, as the Portuguese authority liable for supervising and monitoring correct choices of managing our bodies of platforms.
Law 102/2015 of 24 August is inspired by European curiosity on this type of financing, although with restricted cross-border exercise for the second.
There is a current regulatory change that may have an effect on banking lending actions. Decree-Law No. 144/2019 of 23 September was not too long ago enacted and it establishes, amongst different modifications, the creation of mortgage funds instead financing instrument, particularly designed to accommodate the difficulties felt by small and medium-sized enterprises in acquiring financing by means of banking loans. The objective of those mortgage funds is to lend on to debtors, to take part in mortgage syndicates or to accumulate loans originated by banks or different entities, by means of credit score assignments. Therefore, mortgage funds characterize a brand new means of boosting the capital markets, in an try to comply with the tendencies noticed in different reference European markets that admit mortgage funds.
Additionally, Decree-Law No. 144/2019 additionally transferred from the BdP to the Portuguese Securities Market Commission supervisory powers over administration firms of collective funding schemes and administration firms of securitisation funds. This statute entered into power on 1 January 2020.
Other areas
In current years, two different points have been broadly mentioned in Portugal, as a lot for his or her relevance inside the banking trade as for the rising public controversy that they’ve triggered.
The first broadly mentioned challenge is expounded to the results of a possible detrimental rate of interest on lending agreements. This was due to European monetary insurance policies, which have led to the lowest rates of interest in years, with direct results on the Euro Interbank Offered Rate (EURIBOR), which in the first semester of 2015 reached detrimental values for the first time (when contemplating the three-month price). In Portugal, EURIBOR is often used as the variable rate of interest in client finance agreements resembling dwelling credit score. The BdP was thus questioned as as to whether these detrimental values ought to function a reduction on the customers’ credit score instalments, or whether or not the variable rate of interest must be deemed as equal to zero every time the related credit score settlement didn’t particularly govern the matter.
The BdP began by issuing Circular Letter No. 26/2015/DSC of 30 March, in which, in common phrases, it said that:
- the rate of interest relevant to a contract ought to end result from the arithmetic common between the mounted and the variable rate of interest; and
- if no particular provision exists regulating the detrimental worth occasion, credit score establishments could hedge this occasion by way of monetary devices.
This implies that the purchasers would profit from the detrimental worth of the EURIBOR. More than one yr later and after a lot controversy, the Governor of the BdP said earlier than the Parliament, and by way of a letter to the Minister of Finance, that credit score establishments shouldn’t bear the threat of detrimental rates of interest alone and that, if the common between the variable rate of interest and the unfold (normally a set price) is detrimental, then it must be deemed equal to zero. Subsequently, Law No. 32/2018, of 18 July, was enacted, establishing that in conditions the place the sum of the index and the unfold outcomes in a detrimental rate of interest, credit score establishments are obliged to replicate that price in full in the quantities payable by clients. Credit establishments could select both of the following:
- to lower the detrimental quantity decided to the excellent principal of the excellent instalment; or
- to create a credit score in favour of the clients, which shall be deducted from the curiosity due as quickly because it turns into optimistic.
If, upon termination of the mortgage settlement, there may be nonetheless a credit score in favour of the buyer, credit score establishments are obliged to pay it.
Second, the Portuguese banking trade has mentioned crowdfunding instead means of financing. See Section VI on the regulated nature of the lending exercise and the current developments in crowdfunding.
Moreover, in 2021 there have been essential legislative modifications that must be highlighted, that are detailed beneath.
Recently the Law No. 32/2021 of 27 May (Law 32/2021) amended the General Contractual Terms/Unfair Contract Terms by imposing new formal necessities that, mainly, materialise a facet of the duties of data and communication imposed to the sort of contract. According to Law 32/2021, common contractual phrases which can be written in a font dimension smaller than 11 or 2.5 millimetres; and with a line spacing of lower than 1.15 millimetres, are completely prohibited.
Decree-Law No. 59/2021 of 14 July launched the regime relevant to the availability and dissemination of phone traces for client contact. This new regime applies to ‘suppliers of products or service suppliers’ and ‘entities offering important public providers’. According to this Decree-Law, these entities will need to have a free phone line or, alternatively, a phone line with a geographic or cellular numbering vary (i.e., beginning with two or 9, in accordance with Portuguese phone numbers). However, calls regarding the pre-contractual part and people which can be in themselves efficiency of the contract aren’t included. Another essential innovation is that it requires firms to offer a phone line.
Decree-Law No. 9/2021 of 29 January authorised the Legal Regime of Economic Offences and punishes, as a minor administrative offence, the failure to adjust to the responsibility of data relating to different decision of client disputes, and as a critical administrative offence the unfair industrial practices and the failure to adjust to the responsibility to offer pre-contractual info in distance or off-premises contracts.
Lastly, Law No. 78/2021 of 24 November established the authorized regime on the prevention and combating of non-authorised monetary exercise and safety of customers, by imposing sure further info disclosure necessities to monetary establishments working inside the Portuguese territory.
Unfair practices
Consumer credit score agreements, ruled by Decree-Law No. 133/2009 of two June, usually comprise common contractual clauses and, subsequently, should adjust to particular necessities.
The qualification of a common contractual time period requires, as per Decree-Law 446/85, the lack of potential of one among the events to barter the contractual time period stipulated by the different occasion or that the addressee of this contractual time period will not be in a position to affect its content material.
As these clauses aren’t negotiated in advance, the compliance with the info and communication duties imposed by the LCCG is prime. These duties of data and communication are significantly related in this context, provided that in the sort of contract it is not uncommon for info to be supplied in a smaller font dimension and that in accordance with the unfair industrial practices regime (Decree-Law No. 57/2008 of 26 March), a industrial observe is taken into account unfair if it accommodates false info or if, though factually right, for no matter cause, specifically its common presentation, it deceives or is more likely to deceive the client or leads or is more likely to lead the client to decide that she or he wouldn’t have taken in any other case.
To make clear these duties, the Portuguese courts dominated that it’s not essential to take note of the subjective degree, however an goal parameter that corresponds to a regular of reasonableness and that’s proportionate to the penalties that the events could endure because of the disparity of energy.
The court docket additionally clarified that, in mild of the precept of reasonableness, the info have to be transmitted by environment friendly means and with ample content material, and reaffirms the significance of a ‘broad idea of informing’, which encompasses not solely the responsibility to tell strictu sensu (merely informing the counterparty of the essence of the clause) but additionally the responsibility to advise (offering steering on the finest conduct to undertake) and the responsibility to warn.
As talked about above, Law 32/2021 amended the LCCG by imposing new formal necessities that, mainly, materialise a facet of the duties of data and communication.
Nevertheless, in accordance with a reputed Portuguese authorized scholar, the new format necessities launched by Law 32/2021 to the LCCG aren’t relevant to pre-contractual info, provided that the objective of pre-contractual info is to tell the buyer fairly than to manipulate the relationship between the events.
Notwithstanding, if an entity fails to adjust to these new necessities, and never forgetting that the clause can even be thought of as completely prohibited, this behaviour could also be thought of an unfair industrial observe, certified as a critical offence underneath the Legal Regime of Economic Offences.
Recent instances
i Enforcement actions
In the context of its supervisory powers, the BdP has carried out various inspections that particularly focused compliance with the guidelines governing client finance. Particular consideration was paid to annual proportion charges, info duties and the conduct of enterprise. Pursuant to those inspections, the BdP issued each suggestions and obligatory orders to credit score establishments. In a small variety of instances, it additionally utilized sanctions.
ii Litigation
In 2016, the Portuguese attraction courts rendered two judgments that considerably influenced credit score establishments’ rights in the case of default of the monetary client. These rulings discovered it illegal for a provision in a client finance contract to depart from the authorized regime and permit the creditor to say the excellent compensatory curiosity if the debt is accelerated following an occasion of default. This entails that, if the client fails to pay the instalments in due course, collectors will solely be entitled to the principal quantity, the accrued compensatory curiosity and the default curiosity.
Although these choices don’t bind different courts, they however present stable grounds for different courts to rule in the identical means.
Another topic addressed by the attraction courts was the relationship between client finance and different client contracts. The Lisbon Court of Appeal dominated that, the place a client mortgage was granted particularly in reference to an underlying client contract (e.g., the sale and buy of or a service), the termination of the latter entails the termination of the former. In this context, the court docket determined that it was abusive for the creditor to fill in and execute an unfilled promissory notice issued by the client for the functions of securing the client mortgage.
Outlook
After the appreciable lower that befell in 2011–2012, client finance in Portugal has been steadily on the rise since 2013.
In 2019, at the nationwide degree, precedence was given to, amongst others, the monitoring of the macro prudential measure7 adopted in the type of a suggestion by the BdP in 2018, geared toward mitigating the dangers related to new credit score agreements with customers.
In 2020, asset high quality additionally improved considerably, the non-performing loans (NPL) ratio continued to comply with the downward development that started in mid-2016, NPL ratios each gross and internet of impairments continued to say no, albeit at a slower price, reflecting higher difficulties in the sale and restoration of already current NPLs. Compared with 2020,8 in 2021 the whole quantity of loans granted by banks to firms grew 5.1 per cent from September 2020 to €76.3 billion and the quantity of loans to households for home buy grew by 4.3 per cent from September 2020 to €96 billion.
The fast escalation of the public well being disaster brought on by covid-19 has created an unprecedented scenario that poses innumerable authorized challenges, each on a nationwide and worldwide scale. Since 30 January 2020, when the World Health Organisation declared this example to be a public well being emergency on a world scale, the seriousness of the disaster has step by step worsened and there at the moment are quite a few nations, together with Portugal, which have authorised varied varieties of measures resembling mitigating the financial impression of the virus.
Portugal reacted to this example by passing legal guidelines resembling Decree-Law No. 10-J/2020 of 26 March, as amended, which authorised the public moratorium pursuant to which the enforcement of payments associated to loans benefiting from these measures is suspended, together with the enforcement of instalments in arrears at the time the utility of the moratorium was requested, and subsequently default curiosity and different contractual penalties can’t be charged. In the case of client finance, the public moratorium covers, amongst others, credit score for financing training providers (together with educational and vocational coaching).
In line with the European Banking Authority pointers,9 credit score establishments additionally voluntarily supplied personal moratoriums to their purchasers, and these moratoriums lined mortgage agreements that don’t profit from the public moratorium (e.g., automotive loans). These moratoriums are not in power and Law No. 50/2021 of 30 July prolonged the moratorium foreseen in Decree-Law No. 10-J/2020 of 26 March till 31 December 2021.
The impression that the finish of the moratoriums could have on the Portuguese financial system and, in specific, on client loans, can solely be ascertained at a later stage, though a worsening of defaults is anticipated.
Furthermore, owing to the uncertainty surrounding the potential impression of the ongoing pandemic in the monetary sector, the BdP really helpful, in December 2020, that much less important establishments and funding corporations should chorus from making or limiting dividend distributions or repurchases of bizarre shares till 31 September 2021. This suggestion is in line with the strategy set by the European Central Bank for important establishments in the context of the Single Supervisory Mechanism. By the identical token, the BdP’s suggestion that Portuguese credit score establishments shall apply a extra restrictive set of measures in respect of the attribution and fee of variable remuneration has now been prolonged for the identical time frame.
However, on 24 September 2021, the BdP introduced that these suggestions wouldn’t be prolonged past their expiry date (31 September 2021), in line with the strategy adopted by the European Central Bank for important establishments in the context of the Single Supervisory Mechanism and by the European Systemic Risk Board.
Nevertheless, in this assertion the BdP additionally said that, in any case, it’s essential that establishments preserve a prudent strategy to the distribution of dividends and the attribution and fee of variable remuneration, as deriving from the relevant laws and laws and bearing in mind the impacts arising from the pandemic which will nonetheless materialise, specifically these regarding credit score dangers.