Banking Conduct Supervision Activities – 1st half of 2018

Banco de Portugal conducted 592 inspections. Basic bank accounts and mortgage credit were supervisory priorities.

Banco de Portugal conducted 592 inspections of retail banking markets in the first half of 2018: of which 91 were conducted on branches of 24 institutions, 68 on the central services of 22 institutions and 433 as off-site inspections of 81 institutions.

Both on-site and off-site inspections prioritised the verification of compliance with the rules applicable to basic bank accounts and mortgage credit, altered in 2018.

Inspections conducted at central services monitored compliance with the arrears regime and with the consumer credit regime, due to this market's buoyancy.

Banco de Portugal also required that institutions start providing consumers with information on credit products sold over digital channels (homebanking and apps). In the first half of the year 13 institutions reported to Banco de Portugal information on a total of 50 consumer credit products (including 33 credit cards and 12 personal loans) that use digital channels at least once for completing the sale.

Banco de Portugal monitored 645 price lists, 4838 advertisements and 804,593 new consumer credit agreements.

Credit institutions reported to Banco de Portugal 645 price lists in the first half of 2018, including 390 fees and expenses leaflets and 255 interest rate leaflets; 84 fees and expenses leaflets were corrected following instructions by Banco de Portugal.

Banco de Portugal monitored 4838 advertisements for banking products and services; 2.7% were non-compliant. Advertising for car loans had the highest share of non-compliant materials (18.6% of all advertisements).

Banco de Portugal also monitored the key information documents of 32 structured deposits marketed by institutions in the first half of 2018, as well as the return rates of maturing index-linked deposits and dual deposits.

Compliance with the maximum rate regime was also analysed in 804,593 new consumer credit agreements reported by institutions.

Data on 345 947 new proceedings initiated were analysed within the scope of the general arrears regime.

Banco de Portugal analysed data from 345,947 new proceedings reported by institutions pursuant to the out-of-court arrears settlement procedure (OASP) applicable to consumer credit and mortgage credit. The number of proceedings started increased from the previous half-year, reflecting a higher number of proceedings regarding consumer credit as mortgage credit proceedings declined. Credit cards accounted for more than half the consumer credit agreements that were entered into the OASP (57.3%).

Solutions were reached in 288,604 OASP proceedings on consumer credit, 44.3% of which with settlement of arrears. Under mortgage credit, 44,458 proceedings were closed, 64.7% with settlement of arrears. The renegotiation of credit agreements continued to be the main solution agreed between institutions and customers.

Complaints about deposit accounts decreased, though they increased in regard to consumer and mortgage credit. No infringements were found in 58% of the complaints reviewed; in all other cases the complaint was resolved.

Banco de Portugal received 7545 complaints from bank customers within the scope of its banking supervision duties. It received a monthly average of 1258 complaints, 1.3% below the monthly average recorded in 2017.

In regard to 58% of the complaints reviewed, no signs of infringement were found. Complaints showing signs of infringement were resolved by the credit institutions, either of their own accord or at the request of Banco de Portugal.

Most complaints continued to target deposit accounts (32.2% of complaints), followed by consumer credit (24.9%) and mortgage credit (13.4%). Their prevalence is due to the number of agreements on deposit accounts, consumer credit and mortgage credit between credit institutions and their customers. The monthly average of complaints on deposit accounts received by Banco de Portugal decreased by 4.1% from the 2017 monthly average. Conversely, complaints about consumer credit and mortgage credit increased by 9.1% and 5.6% respectively.

Banco de Portugal brought 33 administrative offence proceedings against 17 institutions for failure to comply with the standards applicable to sales of retail banking products and services.

Within its supervisory activity, Banco de Portugal addressed 341 specific orders and recommendations to 57 institutions to correct irregularities detected or to adopt good practices. The specific orders and recommendations mostly targeted consumer credit (136) and bank deposits (110) as a result of inspections made and priorities chosen for them in the first half of 2018.

Banco de Portugal also filed 33 administrative offence proceedings against 17 institutions under its duties as banking conduct supervision authority; of these, 30 resulted from the analysis of 63 complaints. Administrative offence proceedings mostly targeted bank deposits (13 proceedings) and consumer credit (13 proceedings,) and each proceeding may address more than one subject matter.

Banco de Portugal received 658 applications for access to credit intermediary activity and five applications for certification of training institutions.

In the first half of 2018, Banco de Portugal received 658 applications from institutions that wished to become credit intermediaries, most of which submitted nearer the end of that period. Thus, at the end of June 2018, four had been refused and the remainder were under review.

It also received five applications to certify training institutions and two had been granted by the end of June.

As of 1 January 2018 Banco de Portugal became responsible for granting authorisations and keeping the register of institutions acting as intermediaries or consultants on credit agreements. On that date, it was also empowered to certify institutions that provide courses granting professional certification pursuant to the mortgage credit regime and the credit intermediaries regime.