Hello Buyers,
In recent years, the role of credit intermediaries (CIs) has skyrocketed in Portugal, especially in the home and auto loan sectors. Now, the Bank of Portugal (BoP) is stepping in with new legislative proposals aimed at tightening regulations around CIs, promoting more “transparency and clarity” to prevent “bias in credit advice,” according to Francisca Guedes de Oliveira, a BoP board member responsible for Conduct Supervision.
“We’ve already taken steps with CIs by updating the information standards that they provide to clients and submit to us, making it all more standardized and easier to supervise,” Oliveira explains, adding that the primary focus is on CIs in home and auto loans. However, enforcing these standards is a “herculean task,” as she admitted in an interview with Público.
Looking to go further, the BoP is preparing a proposal to amend the 2017 decree that governs CIs. Here’s a sneak peek at some of the anticipated changes, shared by Oliveira in the same interview:
- Enhanced transparency and clarity in client interactions, including a new rule that would require all loan options from lenders (banks) to be presented to clients. Currently, this is not obligatory.
- Referral rules that clearly outline how a CI should guide clients towards a specific product or service. Since CIs earn commissions from financial institutions, the goal here is to ensure transparency, clarity, and consumer interest, with products tailored to fit the client’s profile and needs.
- Minimum training requirements for starting and continuing in the profession, where currently only initial training is mandated.
“It’s easy to understand why we want new rules between CIs and end clients: because CIs are paid by institutions, which can lead to biased advice. That’s the crux of it. Referral practices, not showing all lender options—these are issues that arise because the payment model varies from one institution to another,” Oliveira elaborated in the interview.
This legislative proposal is currently being developed by the BoP, with the intent to enforce it in 2025. In addition to stricter oversight and compliance for CIs, it will also impose tighter advertising standards for all financial institutions, not just CIs.
In: Idealista
