quarta, 16 junho 2021

What is credit intermediation and what cautions should you adopt in your business in Portugal?

VolverThe Commercial and Corporate Law Department of Belzuz Abogados S.L.P. – Sucursal em Portugal reflects on the legal framework of credit intermediation.

As is well known, financial activity in general and the granting of credit in particular is largely regulated and subject to strict supervision. But we have witnessed a tendency of the European legislator, accompanied by the Portuguese legislator, to cover not only classic activities, such as the credit agreement between a banking entity and a bank customer, as well as other ancillary activities. The aim has been to defend the proper functioning and health of markets and to protect consumers.

Whereas in the past it was possible for a company that promoted the sale of goods (real estate companies or retail companies, for instance) to more or less freely provide services to its customers so that these could obtain credit to purchase the goods from the interested company, with the publication of the legal regime that establishes the requirements for accessing and exercising the activity of credit intermediary and the provision of consulting services (the “RJIC”), approved by Decree-Law No. 81-C/2017, of 7 July and partially transposing Directive 2014/17/EU, the activity became subject to a strict regulatory framework.

The situation is not new, but some recent developments by the supervisor of credit intermediaries' activity, including the recent RJIC’s Impact Assessment Report for the years 2018 to 2020 published by Banco de Portugal (“BdP”) on 18 March 2021 (the “BdP Report”), have revealed a very active stance of the BdP (and even, we venture to say, against the law) of encompassing commercial practices in the concept of credit intermediation activity, therefore subject to authorization and supervision of the BdP.

In more detail:

What is credit intermediation?

RJIC defines as a credit intermediary the person/entity who does not grant credit and is not merely introducing, either directly or indirectly, a consumer to a creditor or credit intermediary, and who, in the course of the respective professional activity, provides intermediation services credit on a remunerated basis.

In turn, credit intermediation services are: (i) presentation or proposal of credit agreements to consumers; (ii) assistance to consumers, by undertaking preparatory work or other pre-contractual administration in respect of credit agreements; and (iii) concluding credit agreements with consumers on behalf of creditors. Credit intermediaries may also provide consultancy services on granting credit that is not mediated by them.

What other practices does BdP deem to be subject to RJIC?

According to the BdP Report, “the “referencing” activity (…) presented as (…) a repeated practice of introducing consumers to a credit intermediary or a credit institution (…) would correspond to the exercise of the credit intermediary’s activity by an entity not qualified for that purpose”. In practical terms, what the BdP is saying is that a company that, as an example, with a view to facilitating its own sales, regularly references its customers (consumers) to intermediaries or credit institutions, so that they can finance themselves, would be required to obtain an authorisation for credit intermediation. We are not, at all, in agreement with this position of the BdP, which we do not see to have any literal support in the law. However, as BdP is the supervisory entity, there is the possibility of applying sanctions (including fines that, depending on the circumstances, may range from €750 to €250,000).

What business practices might pose a risk?

If the company in question has a remunerated agreement with an credit intermediary or a credit institution to refer clients, there may be a greater risk that the activity will be considered subject to RJIC. When in doubt, as with any question, legal advice should be sought out for the specific situation.

Having said the above, and as a general comment (which does not constitute legal advice), we take the view that the situation in which the consumer is not simply referred and in which the company is involved in arranging forms and pre-treating and organising a customer profile for the intermediary or credit institution with which the company relates, notably supporting the consumer in filling out forms, represents a greater risk.

The Commercial and Corporate Law Department of Belzuz Abogados S.L.P. – Sucursal em Portugal has professionals qualified to provide legal advice regarding the clarification of any issue relating to credit intermediation, assisting on requests for authorisation to carry out the activity and advising on contractual structures that protect traders from the risk of sanctions by Banco de Portugal.

Departamento Direito Comercial e Societário | (Portugal)

 

Belzuz Advogados SLP

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