Circular Letter No. CC/2025/00000003: Understandings and Best Practices on Account and Payment Card Contract Termination, Account Change Service, and Joint Account Treatment After Holder Death

Circular Letter No. CC/2025/00000003
Sent to:
Credit Institutions, Financial Societies, Payment Institutions, and Electronic Money Institutions.
Mod. 99999975/T – 01/14
Subject: Understandings and best practices to be observed in the termination of deposit and payment account and card contracts, the provision of the account change service, and the treatment of joint accounts after the death of one of their holders

1. In the exercise of its supervisory powers over the conduct of credit institutions, financial societies, payment institutions, and electronic money institutions ("institutions"), the Banco de Portugal has received a high number of complaints related to the termination of current deposit account, payment account, and payment card contracts and to restrictions imposed on the movement of joint accounts after the notification of the death of one of their holders. These circumstances reflect the existence of distinct practices and interpretative doubts regarding the applicable legal framework, in particular the Legal Regime for Payment Services and Electronic Money ("RJSPME"), approved by Decree-Law No. 91/2018 of November 12, hindering its adequate compliance and jeopardizing the rights conferred on banking customers.

2. Additionally, the Banco de Portugal has noted the very low uptake by banking customers of the account change service, provided for in Decree-Law No. 107/2017 of August 30. This circumstance is not unrelated to the fact that the service is poorly known by the institution staff involved in customer service, as the Banco de Portugal noted following a series of mystery customer inspection actions, as well as the low prominence given to this service on the institutions' websites. This circumstance compromises the objectives sought by the European legislator of promoting banking customer mobility and competition in retail banking markets.

3. In this context, the Banco de Portugal prioritized the supervision of the applicable regulatory framework in this area, having carried out a cross-sectional review and evaluation of market practices.

4. This Circular Letter aims to disseminate to the market the Banco de Portugal's understanding of various aspects of the applicable regulatory framework regarding the termination of deposit and payment account and card contracts, the account change service, and the procedures following the knowledge of the death of one of the holders of joint accounts, promoting the harmonization of procedures followed by institutions in this area and the adequate compliance with the regulatory framework. Additionally, this Circular Letter disseminates to the market a set of best practices that the Banco de Portugal considers should be adopted by institutions, with a view to strengthening the protection conferred on banking customers.

5. This Circular Letter does not dispense with the compliance, by institutions, of legal and regulatory requirements not covered by the understandings and best practices now issued.

Annex to Circular Letter of the Banco de Portugal No. CC/2025/00000003
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Mod. 99999924/T – 01/14

6. The understandings, insofar as they reflect the interpretation of the current regulatory framework, must be incorporated into the procedures and practices of institutions promptly. For the implementation of the best practices, institutions have a deadline until January 1, 2026.

7. The assessment of overall compliance with the understandings and best practices transmitted through this Circular Letter will be considered in the supervisory processes carried out by the Banco de Portugal.

8. Without prejudice to the preceding points, institutions must submit a final implementation report to the Banco de Portugal by January 15, 2026. This report must be accompanied by an assessment by the head of the compliance function regarding the adequacy of the measures adopted, as well as the Excel file which will be sent opportunistically through the BPnet correspondence service.

Thus, in the exercise of the competence attributed to it by Article 17 of its Organic Law, approved by Law No. 5/98 of January 31, the Banco de Portugal recommends to institutions the adoption of the understandings and best practices presented in the annex.

Annex to Circular Letter of the Banco de Portugal No. CC/2025/00000003
………………………………………………………………………………………………………………………………………………………………………………………………..
Mod. 99999975/T – 01/14

Annex to Circular Letter No. CC/2025/00000003
Understandings and best practices to be observed in the termination of deposit and payment account and card contracts, the provision of the account change service, and the treatment of joint accounts after the death of one of their holders

INDEX OF UNDERSTANDINGS AND BEST PRACTICES
I. TERMINATION OF CURRENT DEPOSIT ACCOUNT OR PAYMENT ACCOUNT CONTRACTS .........4
UNDERSTANDING 1: CONDITIONS FOR ACCOUNT CLOSURE.....................................................4
UNDERSTANDING 2: RECORDS AND CONTROLS ASSOCIATED WITH THE ACCOUNT CLOSURE PROCESS .......7
BEST PRACTICE 1: AVAILABILITY OF A FORM FOR SUBMITTING THE ACCOUNT CLOSURE REQUEST
..............................................................................................................................7
UNDERSTANDING 3: TERMINATION OF CONTRACT VIA DIGITAL CHANNELS.....................................................9
UNDERSTANDING 4: PROVISION OF INFORMATION REGARDING THE ACCOUNT CLOSURE PROCESS.....9
UNDERSTANDING 5: COMMUNICATIONS, RECORDS, AND CONTROLS ASSOCIATED WITH ACCOUNT CLOSURE BY
INSTITUTION INITIATIVE, IN CASE OF TERMINATION OR RESCINDING OF CONTRACT ...........................10
BEST PRACTICE 2: CLOSURE OF INACTIVE ACCOUNTS BY INSTITUTION INITIATIVE.........................11
UNDERSTANDING 6: CHARGING FEES ASSOCIATED WITH ACCOUNT CLOSURE ..................... 11
II. ACCOUNT CHANGE SERVICE...............................................................................................12
BEST PRACTICE 3: REQUEST FOR ACCESS TO THE ACCOUNT CHANGE SERVICE VIA DIGITAL CHANNELS .....12
UNDERSTANDING 7: DUTIES OF THE INSTITUTION RECEIVING THE ACCOUNT CHANGE REQUEST ..................13
BEST PRACTICE 4: AUTHORIZATION FORM FOR THE ACCOUNT CHANGE SERVICE...........................14
BEST PRACTICE 5: INFORMATION ON THE ACCOUNT CHANGE SERVICE ON THE WEBSITE.............15
UNDERSTANDING 8: INFORMATION ON THE ACCOUNT CHANGE SERVICE AT COUNTERS AND SERVICE LOCATIONS......................................................................................................................15
III. TREATMENT OF JOINT ACCOUNTS AFTER THE DEATH OF ONE OF THEIR HOLDERS ...........................16
UNDERSTANDING 9: PROCEDURES AFTER NOTIFICATION OF THE DEATH OF A JOINT ACCOUNT HOLDER...16
IV. CESSATION OF PAYMENT CARD USE CONTRACT....................................18
UNDERSTANDING 10: PROCEDURES AND INFORMATION DUTIES IN CONTRACT TERMINATION .............18
UNDERSTANDING 11: TERMINATION OF CONTRACT VIA DIGITAL CHANNELS.................................................19
UNDERSTANDING 12: PROCEDURES IN TERMINATION AND RESCINDING OF CONTRACT BY INSTITUTION
INITIATIVE.........................................................................................................................19
UNDERSTANDING 13: REFUND OF FEES PAID IN ADVANCE .......................................20

Annex to Circular Letter of the Banco de Portugal No. CC/2025/00000003
………………………………………………………………………………………………………………………………………………………………………………………………..
Mod. 99999975/T – 01/14

I. TERMINATION OF CURRENT DEPOSIT ACCOUNT OR PAYMENT ACCOUNT CONTRACT

1. TERMINATION BY CUSTOMER INITIATIVE
   The request to close a current deposit account or a payment account ("account") constitutes the exercise of the right to terminate the framework contract for the provision of payment services underlying it ("contract").

According to Article 94(1) of the Legal Regime for Payment Services and Electronic Money, approved by Decree-Law No. 91/2018 of November 12 ("RJSPME"), "the payment service user may terminate the framework contract at any time, unless the parties have agreed on a notice period, which may not exceed one month".

1.1. Conditions for exercising the right of termination
The freedom to model the terms in which the right of termination must be exercised is accommodated in sub-alignment iii) of alignment f) of Article 91 of the RJSPME, which obliges institutions to inform the payment service user of their right to "terminate and terminate the framework contract and any agreements regarding termination, in accordance with Article 93(4) and Article 94".

However, the conditions imposed for exercising this right must be expressly provided for in the contract or result from compliance with legal requirements. Additionally, the aforementioned conditions cannot generate an excessive burden for the customer wishing to exercise this right. As a reference, and without prejudice to specificities that may justify differential treatment, more demanding conditions than those imposed at the time of account opening should not be imposed at the time of account closure.

Whenever it is possible to overcome the reasons preventing account closure, institutions must make efforts to allow the exercise of the right of termination.

Understanding 1: Conditions for account closure Institutions must not obstruct the termination of the account opening contract for reasons that the institution itself can overcome or that the holder(s), duly and timely informed, can resolve, adopting the necessary diligence. If the adoption, by institutions, of diligence necessary for account closure depends on the customer's authorization, this authorization can be collected through the account closure form.

1.1. Reasons that do not constitute grounds for refusing account closure:
a) Existence of a credit balance
The institution must request the holder, at the time of the account closure request, to indicate the IBAN of the account to which the credit balance existing at the date of closure should be transferred. Alternatively, it may issue a check or a credit balance letter that allows the holder to withdraw the balance. b) Active debit cards If the holder does not deliver the payment cards in their possession, the institution must proceed with their cancellation, upon collection of their authorization. c) Unused requisitioned checks and active checks If the holder does not deliver the unused check modules in their possession, the institution must proceed with their cancellation, through a means that does not allow their subsequent use, upon collection of the holder's authorization.

The holder must be warned that, in the event they are presented for payment, under the terms and deadlines of the Uniform Law on Checks, checks with an amount greater than €150 drawn on the closed account will be returned for the reason of "account closed" and that this return will trigger the mechanisms regarding the restriction of check use, which, at the limit, may mean that the holder is prevented from using checks, following the inclusion of their name in the list of check users offering risk (LUR). d) Overdraft facilities When there are no utilized amounts, the institution must proceed with the termination of the contract, upon collection of the holder's authorization. e) Insurance contracts covering risk The institution must request the holder to indicate another deposit account to support the risk coverage insurance contracts. If the holder does not indicate another account, the institution must, nevertheless, execute the account closure request.

1.2. Reasons that constitute grounds for refusing account closure and that require the holder(s) to be informed of the necessary diligence to resolve them:
a) Credit contracts associated with the account, including contracts with amounts in default The institution must allow the holder to associate another account (with the same or another institution) for the payment of installments of credit contracts. If the holder does not indicate another account, the institution may condition the account closure to the repayment of the total credit amount.

The holder must be informed of the alternatives available to them to overcome the situation.
If the account or salary domiciliation were marketed in association with the credit contract, as consideration for the improvement of the financial conditions of that product ("optional associated sales"), the holder must be informed of the potential impact that account closure will have on the interest rate and the amount of installments.

Default on credit contracts does not constitute a valid reason for refusing the closure of the associated account, considering the possibility of recourse to the judicial route for the recovery of outstanding amounts. b) Debit balance resulting from credit limit exceedances or utilized amounts of the overdraft facility The institution may condition the account closure to the payment of outstanding amounts, resulting from the use of the credit limit granted under an overdraft facility contract or a credit limit exceedance. c) Time deposits and structured deposits In products that can be mobilized in advance, if the holder does not request it, the institution must proceed with their respective demobilization, upon collection of the holder's authorization. In products that cannot be mobilized in advance, the institution may refuse account closure if the request is made during the period in which the demobilization of the time deposit or structured deposit is not possible, unless the institution consents to its demobilization and the holder accepts the potential loss of interest resulting from early demobilization.

The institution may also transfer the credit balance resulting from the product demobilization, on the scheduled date, to another account indicated by the holder. d) Financial instruments, registered or deposited in the account, or financial insurance The institution may refuse account closure if the holder does not transmit a settlement order, authorize the institution to proceed with their alienation, does not request the transfer of the financial asset portfolio to another account, or if the settlement order cannot be executed at the price or under the conditions indicated during the 30-day period.

The institution must request the holder to indicate another deposit account to support financial insurance. e) Other contracts associated with the account If the account has associated contracts for safe deposit box rental or automatic payment terminal (TPA) use or other contracts intrinsically linked to the account, the institution may condition the account closure to the prior termination of these contracts by the holder, and this option may be included in the account closure form. The institution must ensure that the termination of these contracts is carried out promptly after the request presented by the holder.

1.3. Reasons that prevent account closure:
The current deposit account cannot be closed in situations where there is a legal or judicial impediment or there is a guarantee (e.g., pledge) on the account balance, and the holder must be informed of this impossibility, whenever the disclosure of this information is not prohibited by law.

1.2. Account closure process
Institutions must have adequate procedures and processes for the registration, control, and handling of account termination requests, in order to ensure compliance with the legally established deadline for this purpose.

Understanding 2: Records and controls associated with the account closure process Institutions must have adequate registration and internal control systems and procedures to guarantee compliance with the legally provided deadline for the realization of account closure requests. For this purpose, the systems must, in particular, allow:

2.1. Immediate consultation of the holder's integrated account position, allowing the visualization of associated services and products, in order to identify the diligence to be undertaken with a view to account closure.
2.2. The registration of the account closure request on the date of its submission, on durable media.
2.3. That the registration of closure requests is accessible centrally and allows queries, the definition of alerts, and the extraction of information.
2.4. The identification of the phases of the process and any diligence that requires intervention by the holder or the institution.
2.5. The registration and archiving of communications with the holder, on auditable media.

The exercise of the right to terminate the payment services contract cannot be subject to formal conditions not provided for by law. Notwithstanding, it is considered a best practice for institutions to make available a form for holders to submit the termination request.

With a view to speeding up the account closure process, the form should identify any situations that may constitute constraints on the exercise of the right of termination and provide individualized fields indicating the necessary diligence to resolve them. Whenever appropriate, the form should provide information on the consequences of exercising the right to terminate the contract on other products and services associated with the account.

Best Practice 1: Availability of a form for submitting the account closure request In order to facilitate and speed up the process, institutions must make available a form for holders to submit the account closure request and, simultaneously, transmit relevant information to holders in the context of this process.

The form should, in particular, contain information on:

a) The diligence to be adopted regarding any existing payment instruments, namely payment cards (debit and credit), checks (requisitioned, unused, and active), and direct debits; b) The possibility for the holder to indicate the IBAN of another account for the transfer of any credit balance existing on the date of account closure; c) The products and services constituted depending on the account that may be cancelled by the institution, upon the holder's authorization, and their respective effects; d) The possibility to indicate another account for the debit of installments associated with credit contracts concluded with the institution, with indication that this change may have an impact on the applicable interest rate and the amount of the contract installments, as a result of the default on optional associated sales, when applicable. Institutions must also inform the customer of the concrete impact of these changes, in the form or in an autonomous document; e) The possibility to indicate another account to support other contracts, namely insurance, financial instruments, or others; f) Other relevant aspects associated with the account closure process, including:
i) The method of subsequent communication with the holder and the procedures for updating holder data, if the holder closes all accounts but maintains contractual relationships with the institution regarding other banking products and services; ii) The fact that the annual commission statement to be made available in January following the account closure will still contain information on commissions and interest charged up to the date of its respective closure; iii) The return, in the proportion corresponding to the period not yet elapsed, of commissions charged in advance for cards cancelled as a consequence of account closure, when applicable.

1.3. Termination of contract via digital channels
Article 94(1) of the RJSPME does not establish any requirement regarding the channel or the manner in which the right of termination must be exercised, understanding that holders may exercise it through any channel made available by the institution for the provision of services.

In a context of progressive digitalization of financial services, it does not seem legitimate to condition the exercise of the right to terminate the account contract or other payment services to the presentation of the account closure request in person.

Thus, institutions must allow the exercise of the right of termination via digital channels, whenever these channels are made available by them for the opening or movement of that same account.

Understanding 3: Termination of contract via digital channels Institutions that make digital channels available for the opening or movement of the account must have a space or provide a means, easily accessible and permanently, on the commercialization platform, website, or institutional application, that allows holders to submit the termination request, regardless of the channel used for the conclusion of the contract or the number of account holders.

1.4. Communications with banking customers in the context of the account closure process
Institutions must guarantee the transparency of the account closure process, and holders must be informed about the various stages of this process.

Communications must be made on durable and auditable media and must be archived with the respective process in the system.

The conclusion of the closure process must be communicated to holders autonomously or with the sending of the last statement, and this communication must mention the account closure date.

If it is not possible to close the account within the legally provided deadline (due to the verification of legal, judicial, or operational impediments, due to holder inertia in adopting the necessary diligence, or due to other circumstances), institutions communicate to holders, on durable media, the non-closure of the account, indicating the respective reasons.

Understanding 4: Provision of information regarding the account closure process Institutions must make available to holders information regarding the account closure process, on durable media and through regular communication means, in the various phases of the process.

In particular, institutions must:
4.1. Provide a copy of the account closure request to the respective holders, upon its submission.
4