Instruction No. 1/2023

Instruction No. 1/2023
BO No. 1/2023 Supplement • 2023/01/30
..................................................................................................................................................................................................
Topics
Supervision :: Prudential Standards
Mod. 99999940/T – 01/14
Index
Text of the Instruction
Text of the Instruction
Subject: Regulatory framework applicable to Payment Institutions and Electronic Money Institutions

Decree-Law No. 317/2009, of October 30, which approved the legal regime regarding access to the activity of payment institutions and the provision of payment services, transposed into the internal legal order Directive No. 2007/64/EC of the European Parliament and of the Council, of November 13, regarding payment services in the internal market. During the validity of that legal regime, it was necessary to define the regulatory framework applicable to payment institutions, a need that was the genesis of Bank of Portugal Notice No. 10/2009 and Bank of Portugal Instruction No. 27/2009.

With the publication of Decree-Law No. 91/2018, of November 12, Directive (EU) 2015/2366 of the European Parliament and of the Council, of November 25, 2015, regarding payment services in the internal market (Second Payment Services Directive), was transposed into the internal legal order, consequently revoking the aforementioned legal regime regarding access to the activity of payment institutions and the provision of payment services. In this context, the Legal Regime of Payment Services and Electronic Money, currently in force (“RJSPME”), was approved, annexed to Decree-Law No. 91/2018, of November 12.

Given the above, and taking into account the time elapsed since the establishment of the current normative framework regarding the activity of payment institutions and electronic money institutions, the relevant regulatory developments that have occurred in the meantime, as well as the legislative trend of unitary treatment regarding the legal regime of payment institutions and electronic money institutions, Bank of Portugal Notice No. 2/2021 was recently published, which proceeded to review and clarify the body of Bank of Portugal Notices applicable to payment institutions and electronic money institutions, hereinafter designated as “Institutions”, with which Bank of Portugal Notices No. 10/2009 and No. 4/2014 were also revoked.

Thus, this Instruction aims to continue the effort to update and clarify the regulatory framework governing the activity of these Institutions, revoking Bank of Portugal Instructions No. 27/2009 and No. 14/2014.

Instruction No. 1/2023 BO No. 1/2023 Supplement • 2023/01/30 Topics Supervision :: Prudential Standards
..................................................................................................................................................................................................
Mod. 99999940/T – 01/14

Considering the reference contained in point x) of Article 2 of the RJSPME to Regulation (EU) 575/2013 of the European Parliament and of the Council, of June 26, 2013, this Instruction also aims to clarify the prudential regime applicable to Institutions. Thus, it is established that the Institutions’ own funds instruments are governed by the provisions contained in the aforementioned Regulation, notably regarding eligibility criteria, thereby expressly and consequently referring to Bank of Portugal Instruction No. 11/2014, with the purpose of subjecting the consideration of financial instruments as own funds of Institutions to the prior authorization of the Bank of Portugal.

Given the possibility of Institutions granting credit, even if always according to the conditions and limits set out in point c) of paragraph 2 of Article 13, point b) of paragraph 2 of Article 14, and in Article 15 of the RJSPME, and considering the possibility that they may subsequently assign credits within the scope of credit securitization operations, the provisions of Bank of Portugal Instruction No. 7/2008, which establishes the information and communication duties of institutions that assign securities or other assets within the scope of securitization operations, must be applied to them. As a result of the aforementioned possibility of granting credit, and in order to ensure adequate valuation of the credit portfolio, this Instruction also safeguards the application to Institutions of Bank of Portugal Instruction No. 5/2013, which establishes reporting procedures regarding the process of quantifying the impairment of the credit portfolio.

Similar to what was already established in Bank of Portugal Instructions No. 27/2009 and No. 14/2014, when Institutions grant credit to consumers, under the terms and for the purposes of Decree-Law No. 133/2009, of June 2, especially the provisions of paragraph 10 of its Article 6, the provisions of Bank of Portugal Instructions No. 12/2013, No. 13/2013, and No. 14/2013 continue to apply to them.

Given the applicability of Bank of Portugal Notice No. 3/2020 to Institutions, effected through the reference contained in Bank of Portugal Notice No. 2/2021, it is necessary to specify the reporting duties regarding conduct and organizational culture and internal governance and control systems, which are expressly defined for other institutions by Bank of Portugal Instruction No. 18/2020. Thus, and similar to the strategy already adopted in Bank of Portugal Notice No. 2/2021, it is opted to, through a selective reference, establish the applicability of certain provisions of Bank of Portugal Instruction No. 18/2020 to Institutions, thereby ensuring logical coherence of the regime between this Instruction and Bank of Portugal Notice No. 2/2021.

Bank of Portugal Instruction No. 27/2009 expressly determined the application to payment institutions of Bank of Portugal Instruction No. 30/2001 – which regulates the assignment of Codes of Resident Financial Institution. Now, given that Institutions are qualified as financial institutions, it should be understood that they are already covered within the scope of application of this Instruction, so it was opted not to refer to it in the body of Instructions whose scope of application is now extended to Institutions.

Finally, a reference was included in the Instruction to Bank of Portugal Instruction No. 8/2010, which determines, among other requirements, that institutions subject to it must submit to the Bank of Portugal certain information on credit contracts in order to analyze and evaluate the number of customer complaints, as well as a reference to Bank of Portugal Instruction No. 24/2010, which obliges the sending of copies of the standard templates used for the conclusion of certain credit contracts.

The draft of this Instruction was subject to public consultation in accordance with the law.

In these terms, the Bank of Portugal, in the exercise of the competence conferred upon it by Article 17 of its Organic Law, by Article 120 of the General Regime of Credit Institutions and Financial Companies (“RGICSF”), approved by Decree-Law No. 298/92, of December 31, by point c) of paragraph 1 of Article 7, by point d) of paragraph 1 of Article 15, by paragraph 1 of Article 53, and by paragraph 3 of Article 60, all of the RJSPME, by paragraph 10 of Article 6 of Decree-Law No. 133/2009, of June 2, and considering the provisions of Article 117-A of the RGICSF and point x) of Article 2, in paragraph 6 of Article 50, and in paragraph 6 of Article 56, all of the RJSPME, determines the following, without prejudice to the application of other regulatory norms of the Bank of Portugal:

Article 1.
Object
This Instruction aims to densify the regulatory framework applicable to the activity of payment institutions and electronic money institutions, without prejudice to the provisions of regulatory norms that expressly provide for the application of their regime to these institutions.

Article 2.
General Regime
The following are applicable, with the necessary adaptations, to payment institutions and electronic money institutions:
a) Bank of Portugal Instructions No. 47/97, No. 22/2004, No. 1/2007, No. 7/2008, No. 18/2008, No. 21/2009, No. 8/2010, No. 24/2010, and No. 11/2014. b) Bank of Portugal Instruction No. 18/2020, with the exception of the provisions in Chapters VI and VII.

Article 3.
Granting of Credit
1 – Bank of Portugal Instruction No. 5/2013 is applicable to payment institutions and electronic money institutions that grant credit under the conditions and limits set out in point c) of paragraph 2 of Article 13, point b) of paragraph 2 of Article 14, and in Article 15 of the Legal Regime of Payment Services and Electronic Money, approved annexed to Decree-Law No. 91/2018, of November 12.
2 – The assessment referred to in paragraph 1 of Bank of Portugal Instruction No. 5/2013 must be complete and cover all points of the model annexed to that Instruction, and must be carried out with an annual periodicity, with reference to December 31 of each year.
3 – Bank of Portugal Instructions No. 12/2013, No. 13/2013, and No. 14/2013 are also applicable to payment institutions and electronic money institutions when they grant credit to consumers, under the terms and for the purposes of Decree-Law No. 133/2009, of June 2.

Instruction No. 1/2023 BO No. 1/2023 Supplement • 2023/01/30 Topics Supervision :: Prudential Standards
..................................................................................................................................................................................................
Mod. 99999940/T – 01/14

Article 4.
Temporal Application and Transitional Provision 1 – This Instruction enters into force on the day following its publication.
2 – The first report to the Bank of Portugal of the reports and other documents provided for in Bank of Portugal Instruction No. 18/2020, applicable under point b) of Article 2 of this Instruction, occurs within six months after the date of entry into force of this Instruction, and must be accompanied by a description of the activities specifically developed, in progress, and planned for 2023, intended to ensure full compliance with the applicable provisions of Bank of Portugal Notice No. 3/2020 and Bank of Portugal Instruction No. 18/2020. 3 – Subsequent reports occur by December 31 of each year, as provided for in Bank of Portugal Instruction No. 18/2020.

Article 5.
Repealing Provision
Bank of Portugal Instructions No. 27/2009 and No. 14/2014 are revoked.