Press release of Banco de Portugal on the Banking Conduct Supervision Activities – 1st half of 2019

Banco de Portugal publishes today the Banking Conduct Supervision Activities. This publication summarises the activities undertaken by Banco de Portugal to monitor retail banking markets in the first half of 2019. It also focuses on the process of integrating credit intermediaries into the perimeter of banking conduct supervision.

Credit intermediaries: 4,659 authorisation processes decided in the first seven months of the year.

From the date of entry into force of the legal framework for credit intermediaries to the date when the transitional period established by the legislator expired, 31 July 2019, Banco de Portugal received 6,112 applications for authorisation to pursue the activity of credit intermediary and decided on 5,711 applications, of which 77.4% were approved. Due to the high number of applications for authorisation submitted in the last quarter of 2018, Banco de Portugal analysed and decided on a total of 4,659 processes in the first seven months of 2019.

As at 31 July 2019, 4,402 credit intermediaries were registered with Banco de Portugal. These intermediaries are mostly legal persons (85.9%) having as main activities motor vehicle sales (51.6%), real estate intermediation (20.7%) and retail trade (14.0%), and which operate in consumer credit (77.9%).

Information on fees: Banco de Portugal received 788 amended fees and expenses leaflets and released the fees charged for the most representative services on the Fees Comparator of the Bank Customer Website.

In the first half of 2019, 788 fees and expenses leaflets, submitted by 154 entities, were reported to Banco de Portugal.

The Fees Comparator, provided by Banco de Portugal on the Bank Customer Website, provides information on 93 fees charged for services provided by approximately 200 institutions, allowing bank customers to choose the institution and the channel for a specific service.

Basic bank accounts: at the end of the first half of 2019, there were 33.1% more accounts than at the end of 2018 and 55.6% more than at the end of the first half of 2018.

In the first half of 2019, 20,922 basic bank accounts were opened, 80.6% of which by switching from an existing current account held with the institution, and 1,362 BBAs were closed, 82.3% of which on the customer’s initiative.

At the end of the first half of 2019, there were 78,733 basic bank accounts, an increase of 33.1% from the end of 2018 and 55.6% from the end of the first half of 2018.

Monitoring: basic bank accounts remained a Banco de Portugal priority.

In the first half of 2019, Banco de Portugal conducted off-site inspections on 107 institutions and mystery shopper inspections in 25 branches of 14 institutions to assess compliance with the duties of information they must adhere to when providing basic bank accounts. These were complemented by inspections on central services to assess their organisation and internal procedures for providing these services.

Banco de Portugal also carried out inspections on the central services of three institutions to assess the practices adopted when marketing and selling home loans and other mortgage credit. It also checked whether 119 institutions had provided the statement of fees on current accounts and payment services, which is standardised at European level and mandatory since January 2019.

Banco de Portugal assessed compliance with cap rates with regard to 743,287 consumer credit agreements concluded in the first half of 2019, a 3.3% decrease compared with the first half of 2018. It found signs of non-compliance in ten agreements from four institutions.

The Bank monitored 4,108 advertising materials released by 48 institutions. 96.6% of the advertising materials analysed following their public disclosure were compliant. The 136 materials with irregularities were corrected by order of Banco de Portugal.

Banco de Portugal also monitored the key information documents of 45 structured deposits offered (13 more than in the same period of 2018) and checked the rates of return on 98 matured structured deposits (21 more than in the first half of 2018).

Complaints: 8,022 complaints received, increasing in deposit accounts and consumer credit but decreasing in home loans and mortgage credit.

In the first half of 2019, Banco de Portugal received 8,022 complaints on matters within its competence, a monthly average of 1,337 complaints, 5.2% more than in 2018.

The most sought-after products have the highest number of complaints: deposit accounts, consumer credit, and home loans and mortgage credit led to 31.7%, 26.8% and 12.2% respectively of the complaints submitted by bank customers.

In deposit accounts, the number of complaints increased from 13 to 14 for every 100 thousand agreements and in consumer credit, the number of complaints rose from 16 to 18 for every 100 thousand agreements. In contrast, in home loans and mortgage credit, the number of complaints declined from 47 to 46 for every 100 thousand agreements.

No signs of breaches were detected in around 62% of the complaints closed in the first half of 2019 (56% in 2018); in the other 38%, the situation was resolved by the credit institution on its own initiative, or by order of Banco de Portugal.

Correction of irregularities and sanctions: 296 specific orders and recommendations and three administrative offence proceedings.

Following the oversight activities carried out, Banco de Portugal issued 256 specific orders and 40 recommendations in the first half of 2019, requiring 42 institutions to either correct irregularities or adopt best practice respectively. The issues covered the most by these specific orders and recommendations were consumer credit (24.3%), home loans and mortgage credit (19.6%) and basic bank accounts (18.2%).

During the same period, Banco de Portugal initiated three administrative offence proceedings against three institutions within the scope of its banking conduct supervision.

Certification of training entities: three applications for certification were approved.

In the first half of 2019, Banco de Portugal received three new applications for certification from training entities, within the scope of the legal frameworks for credit intermediaries and mortgage credit: two were approved and one was refused. An application submitted at the end of 2018 was also approved.

From the beginning of 2018 to the end of the first half of 2019, 27,477 persons had been trained in selling mortgage credit, 705 in selling consumer credit and 1,821 in credit intermediation.