The Bank of Portugal will start receiving and analyzing complaints from bank customers about companies that buy bad loans sold by banks, a practice that has been common in recent years, the banking supervisor told Lusa.
Lusa questioned the Bank of Portugal about the new legal regime for credit assignment – the technical name for the operation in which banks sell loan portfolios (generally non-performing loans) to other entities – to clarify exactly what their intervention will be like.
The BdP explained that until now these entities were outside its supervision, but with the entry into force of the new regime, on December 10, it will be responsible for supervising and monitoring the activities carried out by companies that buy credits from banks and by the entities managing these creditsincluding to “consider debtors’ complaints”.
While the new regime is not in force, Banco de Portugal is not responsible for receiving and analyzing complaints from bank customers about companies that buy large credit portfolios from banks, nor about companies that are subcontracted by these buyers to manage credits. Then, the court becomes the only alternative in case of litigation.
At the beginning of September, Lusa published a report on the sale of housing loans carried out by banks in recent years and how it has left customers who were already having difficulty paying for their house unprotected.
Housing credit in the courts
Lusa reported o case of a client who won a case against BPI (which sold her credit to a company based in Luxembourg), but who continues to fight to this day not to lose her house and how, in less than a year, the The Supreme Court of Justice annulled the sale of housing loans carried out by banks in two similar rulings because it saw “fraud of the law” in the operations.
With the entry into force of the regime, the BdP “will have the power to, for example, carry out inspection actions and assess debtors’ complaints”, he told Lusa.
In case of non-compliance with the rules, The BdP may issue determinations and recommendations and even apply sanctions in administrative offense proceedings.
O BdP also has the power to revoke, in certain situations, the authorization granted to credit managers to operate.
Still with the new law, the central bank now regularly receives information about credit contracts sold by banks. You will know the banks that make the sales, the outstanding balances, the number of sales in each period and the type of credit sold (housing or consumer). These credits will also have to be reported to the Credit Responsibility Center.
Until now, Banco de Portugal does not publish data on credit sales made by banks.
Lusa also questioned the BdP about a situation in which a customer with a credit that was sold requests a new credit from another bank. In this case, the bank that will give the new credit is aware of the previous credit and counts it towards that customer’s effort rate or not, asked Lusa.
Banco de Portugal explained that, with the current rules, the sale of the loan to an entity outside its supervision implies that that credit disappears from the customer’s map of credit responsibilities, meaning that the bank is not aware of the existence of that credit and that credit “will not be considered in the assessment of the customer’s creditworthiness” (unless the customer provides this information, for example).
With the new regime, credits sold will be included in the credit responsibility center to which banks have access.