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From Commissions to Housing Loans, Changes Are Coming
28 December 2017
Banks will have to give more information about housing loans and will lose their monopoly on payments.
The New Year will bring changes for bank customers. New regulations will come into effect for a range of areas from bank accounts to home loan agreements. The controversial topic of bank commissions will also return to public debate as early as 2018.
The community directive on payment services (PSD 2) will also come into force. This instruction requires banks to provide access to account data to other entities, which may also process payments. It enters into force on January 13, and nothing will be as before. You will no longer have to pay for purchases using online access to the bank account (home banking) or using the ATM, for example.
Technology giants like Google, Amazon and Facebook, among others, will be permitted to access customers’ accounts directly and process payments, with, of course, the consent of the client. In practice, banks will no longer have a monopoly on customer data and payments.
The new rules “reinforce the rights of bank customers and promote the transparency of the information provided in the marketing of these products and services,” the Bank of Portugal explained. But Deco, the Portuguese consumer rights agency, believes that, despite improvements, it’s not enough.
“There is still a lot of work to be done,” Nuno Rico, an economist at Deco Proteste, told DN/Dinheiro Vivo. The fees charged by banks is one of the issues where urgent changes need to be made at a time when bank charges are continually increasing.
“Deco does not oppose commissions as a whole. We dispute the practice of charging commissions on products that are not services. “At the heart of the dispute are account maintenance and service processing fees. “We make our money available to the bank, we are not remunerated, and we are still charged. It’s bizarre, a commission is charged for customers lending their funds to banks, “he said. The costs of bank fees not tied to services can reach 100 euros per year.
Deco’s petition of has more than 14 100 signatures. “We want the government to clarify whether banks can charge those commissions,” said Nuno Rico. “After all, what can count as banking services?”
In any case, in 2018 there will be new rules regarding transparency and the comparison of commissions charged to customers for their current accounts, through Decree-Law no. 107/2017 of August 30. This law also amends the rules applicable to minimum banking services.
“The new regulatory framework further strengthens the transparency of the information provided to the banks’ customers, explicitly setting out the duty of payment service providers to make available, at any time and to any interested party, a document providing information on commissions, as well as a statement of commissions charged to consumers in January of each year,” the Bank of Portugal explained. The Banking Client Portal already has a feature that allows consumers to compare the maintenance fees charged by financial institutions for minimum banking service accounts and basic accounts.
The set of services included in the minimum banking services have also been expanded. The new services include operations in the EU and the possibility to execute twelve interbank transfers each year. And banks will no longer be permitted to condition the opening of a minimum banking services account with minimum deposits or the purchase of additional products or services.
It allows banks to charge commissions on the provision of such services, expenses or other charges which, on a yearly basis and as a whole, corresponding to a maximum of 1% of the value of the index of social support. Today that would be 4.21 euros.
Regarding changes in the rules applicable to residential loan agreements, Decree-Law No. 74-A/2017, of June 23, established rules of conduct and informational duties for the banks. Requirements are laid down for the definition of remuneration policies for bank employees and their knowledge and skills.
Banks are also required to provide general pre-contractual information to their customers, which must include the main features of the loan as well as personalised pre-contractual information. This type of information will have to be provided during loan simulations and at the time that the bank communicates a loan approval.
They will also be obliged to provide a copy of the draft of the loan agreement. The banks will also be bound to the contractual proposal for a minimum period of 30 days; the client, as soon as he receives the offer, has a minimum period of seven days to consider the implications of the contract.
Story: Dinheiro Vivo – Elisabete Tavares
Photo: José Sena Goulão / Lusa
Original Translation: Richard Turner