Regulatory Alerts2019-09-11
Added
Instruction No. 16/2019
The Bank of Portugal establishes the maximum effective annual percentage rates (APR) and maximum nominal annual rates (ANR) applicable to consumer credit contracts concluded in the fourth quarter of 2019. These limits are derived from the average market rates of the previous quarter plus a statutory margin, as mandated by Decree-Law No. 133/2009. The regulation specifies distinct maximum rates for categories such as personal credit, auto leasing, and credit cards, and explicitly prohibits referring to these ceilings as "legal rates." The instruction enters into force on October 1, 2019.
Instruction No. 16/2019 BO No. 8/2019 Supplement • 2019/09/11 .................................................................................................................................................................................................. Topics Supervision :: Behavioral Supervision Mod. 99999940/T – 01/14 Index Text of the Instruction Text of the Instruction Subject: Disclosure of maximum rates applicable to consumer credit contracts in the 4th quarter of 2019
Decree-Law No. 133/2009, of June 2, which transposed into the domestic legal order Directive No. 2008/48/EC, of April 23, on consumer credit contracts, established the regime of maximum rates applicable to these contracts.
According to Article 28 of Decree-Law No. 133/2009, in the current wording, the maximum rates for each type of credit are determined based on the Average Effective Annual Percentage Rates (APR) practiced in the market by credit institutions in the previous quarter, plus one quarter. Additionally, the maximum rate of any type of credit may not exceed the average APR of the entire consumer credit market, plus 50%. Applying the criterion defined by law, the Bank of Portugal quarterly discloses the maximum rates for the different types of credit, for application to contracts to be concluded in the following quarter.
The rates defined in this Instruction constitute maximum limits on the charges that can be contracted in each type of credit contract, and under no circumstances may they be referred to as "legal rates." The freedom to contract financing conditions remains, with the sole exception of compliance with these limits.
Thus, in the exercise of the competence attributed to it by Article 17 of its Organic Law and by Article 28 of Decree-Law No. 133/2009, of June 2, the Bank of Portugal determines the following:
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Consumer credit contracts, concluded under Decree-Law No. 133/2009, of June 2, shall observe the maximum rate regime defined in Article 28.
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In the 4th quarter of 2019, the maximum rates set out in the tables below apply to each type of credit contract:
4th quarter of 2019
| Credit Type | Maximum APR |
|---|---|
| Personal Credit | 6.5% |
| Purpose: Education, Health, Renewable Energies and Financial Leasing of Equipment | |
| Other Personal Credits (no specific financing, home, consolidated and other purposes) | 13.4% |
| Auto Credit | |
| Financial Leasing or ALD: New | 4.5% |
| Financial Leasing or ALD: Used | 5.9% |
| With retention of ownership and others: New | 9.5% |
| With retention of ownership and others: Used | 12.3% |
| Credit Cards, Credit Lines, Bank Current Accounts and Overdraft Facilities | 15.7% |
4th quarter of 2019
| Credit Type | Maximum ANR |
|---|---|
| Credit Overdrafts | 15.7% |
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The types of credit contracts in the tables above correspond to the credit categories defined in Instruction No. 14/2013, except for credit overdrafts, which are defined in Decree-Law No. 133/2009.
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This Instruction enters into force on October 1, 2019.