Notice No. 3/GBM/2018, April 18 – Regulation on the Advertising of Financial Products and Services

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BOLETIM DA REPÚBLICA PUBLICAÇÃO OFICIAL DA REPÚBLICA DE MOÇAMBIQUE SUMÁRIO A V I S O The matter to be published in the «Boletim da República» must be submitted as a duly authenticated copy, one for each subject matter, containing the following endorsement, signed and authenticated: For publication in the «Boletim da República». IMPRENSA NACIONAL DE MOÇAMBIQUE, E. P. Bank of Mozambique: Notice No. 3/GBM/2018: Approves the Regulation on the Advertising of Financial Products and Services. Wednesday, 18 April 2018 I SERIES — Number 77

BANK OF MOZAMBIQUE Notice No. 3/GBM/2018 of 18 April The dissemination by credit institutions and financial companies of information on financial products and services, in the course of their activities, must respect principles of transparency and accuracy that allow for an adequate assessment of the respective costs, remuneration, and risks. With customers duly informed, they can adequately compare the available market alternatives and formulate consistent judgments regarding the commitments they undertake, yielding advantages for themselves, for credit institutions and financial companies individually, and for the overall efficiency of the financial system. This presupposes the establishment of minimum information requirements that credit institutions, financial companies, and other institutions subject to the supervision of the Bank of Mozambique must satisfy when advertising financial products and services marketed to the public. Therefore, exercising the competence conferred by paragraph d) of paragraph 2 of Article 37 of Law No. 1/92, of 3 January – Organic Law of the Bank of Mozambique, the Bank of Mozambique determines:

1. The Regulation on the Advertising of Financial Products and Services attached hereto is approved, forming an integral part of this Notice.
2. This Notice enters into force 90 days after its publication. The doubts arising from the interpretation and application of this Notice must be submitted to the Behavioral Supervision Department of the Bank of Mozambique. Maputo, 22 March 2018. – The Governor, Rogério Lucas Zandamela.

Regulation on the Advertising of Financial Products and Services

CAPÍTULO I Disposições gerais (General Provisions)

ARTIGO 1 (Objecto) (Subject Matter) The present Regulation establishes the rules and principles governing the advertising of financial products and services marketed by credit institutions, financial companies, and other entities under the supervision of the Bank of Mozambique.

ARTIGO 2 (Âmbito de aplicação) (Scope of Application) The present Regulation applies to credit institutions, financial companies, and other institutions under the supervision of the Bank of Mozambique, regardless of the medium used for advertising financial products and services.

ARTIGO 3 (Regime geral) (General Regime) The advertising of financial products and services is governed by the principles established in this Regulation, in the Advertising Code approved by Decree No. 38/2016 of 31 August, and other applicable rules.

ARTIGO 4 (Expressões de uso restrito) (Restricted-Use Expressions) In the advertising of financial products and services, the following expressions may only be used in the specified situations: a) The expression «interest-free», «0% interest» or similar, when no interest is chargeable to the customer; b) The expression «no costs», «no charges» or similar, when no interest, commissions, or other charges are chargeable to the customer; c) The expression «no initial deposit» or similar, when no advance payments are due from the customer to acquire the financial product or service; d) The expression «guaranteed acceptance» or similar, when the acquisition of a financial product or service is not subject to any conditions regarding the customer's credit profile; e) The expression «offer», «gift» or similar, when no conditions or circumstances obligate the customer to return or compensate for such «offer» or «gift»; f) The expression «we refund your money» or similar, when full refund of the amounts paid by the customer is provided; g) The expression «we pay» or similar, when the credit institution, financial company, or other entities covered by this Regulation bear the costs in full, or when these are partially borne, provided that their respective share is indicated with equal prominence; h) The expression «new customers» without further indications, when the sole condition for accessing a product or service is not being a customer of the credit institution at the time of acquisition; i) The expressions «the lowest/highest/best in the market» or similar, when followed, with equal prominence, by the specific conditions of the financial product or service supporting the statement.

ARTIGO 5 (Definições) (Definitions) For the purposes of this Regulation, the following are understood as: a) Treasury Bills (BT) – securities representing short-term loans of the Republic of Mozambique, denominated in national currency and intended to finance the State's current treasury deficit and interventions by the Bank of Mozambique within monetary policy; b) Permanent Deposit Facility (PDF) – free deposits in national currency made by market operators with temporary liquidity surpluses; c) Permanent Lending Facility (PLF) – liquidity lending by the Bank of Mozambique to market operators with temporary liquidity deficits; d) Index – a rate serving as the basis for calculating the Prime Rate of the financial system applied in credit operations with variable interest rates contracted between credit institutions and financial companies with their customers, determined using the formula in Annex 1 of the Agreement for the Uniformization of the Calculation Base (Index) of the Banking System Interest Rate; e) Early mobilization – total or partial withdrawal of the amount deposited in a term account before its maturity; f) Multiproduct – a product comprising several differentiated products, indexed to a main product from which profits arise; g) Advertising panels (billboards/outdoors) – popular designation for large-sized panels, mainly modular plates, placed in highly visible locations such as alongside highways or on the side walls of buildings in cities; h) Loan grace period – the period between loan disbursement and the start of loan amortization, during which the borrower pays only interest on the lent amount, with capital remaining constant; i) Loan deferral period – a period in which the debtor makes no payments of either interest installments or capital (amortization); j) Advertising – any form of communication made by a public or private entity, within the scope of a commercial, industrial, artisanal, or liberal activity, with the direct or indirect objective of promoting any goods or services for their marketing or sale, as well as the promotion of ideas, principles, initiatives, or institutions; k) Subliminal advertising – advertising that, through any technique, may provoke sensory perceptions in the recipient of which they do not become fully conscious; l) Spread – a margin reflecting market risk added to the Single Index to constitute the Prime Rate of the financial system; m) Effective Annual Rate (TAE) – a rate measuring, in percentage, the interest actually paid in one year on a specific deposit or loan; n) Total Annual Effective Global Cost (TAEG) – the total cost of credit to the consumer, expressed as an annual percentage of the granted loan amount, including collection expenses, repayments, interest payments, and all other mandatory charges borne by the borrower (taxes, fiscal stamps, insurance); o) Gross Nominal Annual Rate (TANB) – the remuneration rate of a deposit before tax deduction. It refers to a one-year period, so to calculate interest receivable, this rate must be multiplied by the number of interest days divided by 360 days. It is the rate that remunerates a specific investment and is frequently used in term deposits; p) Average Gross Nominal Annual Rate – the average of different TANBs applicable over the life of a deposit, weighted by their respective validity periods; q) Variable interest rates – interest rates applied to the outstanding capital that vary according to an index during the loan contract term until maturity; r) Fixed interest rates – fixed interest rates that guarantee, from the outset, that throughout the contract term until maturity there will be no change to the agreed interest rate, regardless of market fluctuations.

CAPÍTULO II Princípios gerais (General Principles)

ARTIGO 6 (Licitude) (Lawfulness) The form, subject matter, and purpose of financial product and service advertising must respect constitutional and legally established rules and norms.

ARTIGO 7 (Identificabilidade) (Identifiability)

1. Financial product and service advertising must be unequivocally identified as such, regardless of the form or medium used.
2. Financial product and service advertising must clearly indicate, in an unequivocal manner, the credit institution or financial company responsible for the advertised products and services.
3. For the purposes of the preceding paragraph, it is sufficient to use a slogan or logo of the credit institution, financial company, or other institution under Bank of Mozambique supervision responsible for the advertised services and products, or an unambiguously associated commercial brand.

ARTIGO 8 (Veracidade) (Truthfulness)

1. Information contained in advertising messages regarding financial products and services must respect the truth, not distorting facts nor misleading recipients.
2. Disseminating non-updated and/or incomplete information regarding market conditions impacting product or service characteristics, including charges such as interest rates, prices, or commissions, constitutes a violation of the preceding paragraph.

ARTIGO 9 (Respeito pelos Direitos do Consumidor) (Respect for Consumer Rights) Financial product and service advertising must respect rights legally, contractually, or judicially conferred upon consumers.

ARTIGO 10 (Transparência da informação) (Transparency of Information)

1. Financial product and service advertising must not omit or conceal information necessary for the correct assessment of the characteristics that credit institutions, financial companies, or other supervised institutions highlight in the advertised product or service.
2. For the purposes of the preceding paragraph, the following necessary information must be considered: a) Access conditions to financial products and services, the requirement of associated products, minimum loyalty periods, or other criteria whose non-compliance limits such access; b) Restrictions and limitations associated with the advertised product or service.
3. A lack of information transparency in financial product and service advertising is considered to exist when: a) Its nature or purpose is unclear, with the designation «multiproduct» being admissible to identify the nature or purpose of a product or service; b) Promotional conditions omit or conceal their validity period; c) It omits or conceals how the consumer's due payment may be reduced, notably through grace or deferral of capital or extension of the repayment term; d) It uses subliminal images or other concealed means that exploit the possibility of transmitting advertising without recipients perceiving the advertising nature of the message; e) It omits or conceals any relevant circumstance for correctly assessing access conditions to products, services, or additional benefits, notably the following: (i) Interest rates, commissions, or charges associated with these products and services; (ii) Repayment term and the existence of penalties for early mobilization; (iii) Any circumstances obligating the return of these products, services, or additional benefits, or compensation to the credit institution, financial company, or other supervised institution, notably upon early loan repayment or contract termination before a minimum stay period.
4. In advertising products and services combining multiple purposes, institutions must clearly discriminate the components and purposes of each product, including subscription conditions.
5. Without prejudice to potential space and time limitations of the medium used, a lack of transparency in information presentation is considered to exist in any of the following cases when the information appears: a) In characters smaller than the minimum defined in the annex to this Regulation; b) Using non-standard, subjective language that is difficult to understand regarding the fundamental characteristics of the announced products or services; c) Contrary to Article 8 of this Regulation regarding television, radio, internet, or any other medium; d) Without observance of identifiability principles.

ARTIGO 11 (Equilíbrio da informação) (Information Balance) Where applicable, all essential elements for understanding subscription conditions, notably the characteristics, restrictions, or limitations of advertised products and services, must have equal prominence and visual notoriety across different advertising materials.

ARTIGO 12 (Menção obrigatória) (Mandatory Mention) In financial product and service advertising, credit institutions and financial companies must mention the phrase: «For more details, inquire at (name of institution)» or similar, regardless of the medium used.

CAPÍTULO III Dissimulação em meios de difusão (Concealment in Media)

ARTIGO 13 (Regime geral) (General Regime) Without prejudice to compliance with other legal requirements, financial product and service advertising follows the general principles established in this Regulation and additional criteria defined in this chapter for the following media.

ARTIGO 14 (Audiovisual) (Audiovisual) In advertising financial products and services through an audiovisual medium, concealment is considered to occur when information is presented for a period of less than one minute.

ARTIGO 15 (Rádio) (Radio) In advertising financial products and services through radio, concealment is considered to occur when information is presented for a period of less than one minute.

ARTIGO 16 (Internet) (Internet) Advertising financial products and services via the Internet is subject to Article 14 of this Regulation whenever advertising through this medium involves moving images, and to Article 15 when it involves sound.

CAPÍTULO IV Disposições específicas por produto (Specific Provisions by Product)

ARTIGO 17 (Crédito à habitação) (Housing Credit)

1. In advertising financial products and services regarding housing credit, authorized institutions must indicate the corresponding Effective Annual Rate (TAE) with prominence similar to the highlighted characteristics of those products or services.
2. Credit institutions and other authorized entities must also conduct a credit simulation including at least the repayment term and annual nominal interest rate (for fixed rates), or the index and spread (for variable rates), as well as, if applicable, the grace period or capital deferral percentage.
3. Without prejudice to Article 5(i), the index referred to in the preceding paragraph must be calculated at the start of the advertising campaign, indicating the month it refers to.
4. Advertising announcing a housing credit installment must indicate, with similar prominence, the repayment term associated with said installment.

ARTIGO 18 (Crédito ao consumo) (Consumer Credit)

1. In advertising financial products and services regarding consumer credit, authorized institutions must indicate the corresponding Total Annual Effective Global Cost (TAEG), with prominence similar to the highlighted characteristics of those products or services.
2. Credit institutions and other authorized entities must also conduct a credit simulation including at least the loan amount, repayment term, annual nominal interest rate (for fixed rates), or index and spread (for variable rates).
3. Without prejudice to Article 5(i), the index referred to in the preceding paragraph must be calculated at least at the start of the advertising campaign, indicating the month it refers to.
4. Advertising announcing consumer credit with fixed installments must indicate the following elements: a) The repayment term expected at loan inception to be associated with said installment; b) The financing amount corresponding to the announced installment.
5. Advertising announcing consumer credit with differentiated installments during the loan maturity must indicate the following elements: a) The repayment term expected at loan inception to be associated with each announced installment; b) The total loan term.

ARTIGO 19 (Depósitos) (Deposits)

1. Advertising announcing an interest rate associated with a deposit must indicate: a) The Gross Nominal Annual Rate (TANB), for deposits with a single fixed interest rate; b) The average TANB, when more than one fixed interest rate applies over the deposit's life; c) The index and spread(s), for variable interest rates; d) The deposit term, when it is less than one year; e) The eventual existence of penalties for early mobilization of the deposit.
2. The elements referred to in paragraphs a) to e) must be presented with prominence similar to the highlighted characteristics of the financial product or service and with interest rates duly identified as TANB.
3. Advertising regarding deposit remuneration must not use an interest rate that is not guaranteed and applicable to the entirety of the deposit during contract execution, and the use of generic terms indicating dynamism in the interest rate that may mislead consumers, such as “..up to __% interest” or “interest up to __%”, is prohibited.

ARTIGO 20 (Impedimentos) (Impediments) Regarding financial product and service advertising, regardless of the form used, the use of Metical notes and coins is prohibited, notably in the forms: a) Stylized; b) Geometric figures; c) Animal figures; d) Other figures and forms that in any way detract from the dignity due to the Metical as a national symbol.

ARTIGO 21 (Responsabilidade) (Responsibility)

1. Credit institutions, financial companies, or other entities subject to Bank of Mozambique supervision must ensure that advertising of their financial products and services, carried out by advertising agencies as well as other entities exercising advertising activities, complies with this Regulation.
2. Advertising disseminated by banking agents or other entities through which credit institutions, financial companies, or other supervised institutions market their products and services is the responsibility of those credit institutions, financial companies, and other supervised entities.

ARTIGO 22 (Supervisão) (Supervision)

1. Supervision of financial product and service advertising is conducted by the Bank of Mozambique, based on an evaluation model for compliance with principles and rules set forth in prevailing legislation governing advertising.
2. The evaluation referred to in the preceding paragraph may be conducted before or after advertising dissemination across media.

ARTIGO 23 (Raporte de Campanhas de Publicidade) (Reporting of Advertising Campaigns)

1. After launching television, radio, internet, or other media advertising campaigns inside and outside credit institutions, financial companies, or other supervised entities, they must submit to the Bank of Mozambique one copy, in an electronic medium defined by the Bank, of each form used for such advertising, notably posters, leaflets, or equivalents.
2. The reporting referred to in the preceding paragraph must be conducted within 15 days after campaign launch, accompanied by written terms of reference mentioning, among other information, the objective, target audience, campaign duration, and contact details for clarifications.
3. Credit institutions, financial companies, or other supervised entities must submit within 15 days prior to campaign start one copy of materials related to advertising campaigns distributed via written supports made available at counters, by email, or by posters exclusively used inside their respective agencies or establishments.
4. In case of campaign relaunch or updated version, institutions covered by this Regulation must communicate the fact by sending a copy of the updated version, indicating subsequent changes to the Bank of Mozambique, within the timeframes established in paragraphs 2 and 3.
5. The technical sheet of the advertised financial product or service must also be sent, accompanied by other supporting material means, if any.

CAPÍTULO V Regime sancionatório (Sanctioning Regime)

ARTIGO 24 (Regime sancionatório e cautelar) (Sanctioning and Precautionary Regime)

1. Violation of this Regulation is sanctionable under the Law on Credit Institutions and Financial Companies.
2. The Bank of Mozambique may, upon detecting untrue advertising, require the credit institution, financial company, or other covered institutions to: a) Suspend the advertising campaign; b) Modify the campaign to restore, within 5 days, the truthfulness of advertised facts with the same prominence and media used for advertising dissemination; c) [Text cuts off here.]