Notice No. 02/GBM/2018 of March 22 - Code of Conduct for Credit Institutions and Financial Companies

Banco de Moçambique
Governador

AVISO N.º 02/GBM/2018
Maputo, 22 de Março de 2018

SUBJECT: CODE OF CONDUCT FOR CREDIT INSTITUTIONS AND FINANCIAL COMPANIES

With the advent of development and the emergence of new financial products and services in Mozambique, it is urgent to promote the adoption of responsible commercial practices by Credit Institutions and Financial Companies and the taking of informed decisions by clients, decisively contributing to the minimization of the reputation risks of these Credit Institutions and Financial Companies and to the strengthening of client confidence.

Thus, using the powers conferred upon it by paragraph 1 of Article 47 of Law No. 15/99, of November 1 (Law on Credit Institutions and Financial Companies), with the amendments of Law No. 9/2004, of July 21, the Bank of Mozambique determines:

1. Approve the CODE OF CONDUCT FOR CREDIT INSTITUTIONS AND FINANCIAL COMPANIES attached hereto, which forms an integral part of this Notice.

2. This Notice enters into force 30 days after the date of its publication.

Doubts arising in the interpretation and application of this Notice must be submitted to the Behavioral Supervision Department of the Bank of Mozambique.

[Signature]
The Governor
Rogério Lucas Zandamela

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Banco de Moçambique
Governador

CODE OF CONDUCT FOR CREDIT INSTITUTIONS AND FINANCIAL COMPANIES

CHAPTER I

General Provisions

Article 1
(Object)

This Code of Conduct for Credit Institutions and Financial Companies, hereinafter referred to as the Code, aims to establish rules of conduct and seeks to:

a) Define and provide minimum standards of interaction between Credit Institutions and Financial Companies and clients;

b) Establish compatible procedures for conflict resolution.

Article 2
(Purpose)

This Code aims to:

a) Promote the transparency of activities, through the dissemination of relevant and useful information for clients;

b) Promote integrity and confidence in Credit Institutions and Financial Companies.

Article 3
(Scope of Application)

This Code applies to Credit Institutions and Financial Companies and to all microfinance operators referred to in Article 2 of the Microfinance Regulation.

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Banco de Moçambique
Governador

Article 4
(Definitions)

For the purposes of this Code, the following are understood as:

a) Change of circumstances – the abnormal and unpredictable change in the premises that underpinned the decision to contract, which occurs at a moment subsequent to the conclusion of the contract, legitimizing the termination of this or its modification;

b) Abusive clauses – clauses that place the consumer of financial products and services at a disadvantage, notably those set out in paragraph 1 of Article 22 of Law No. 22/2009, of September 28 (Consumer Protection Law), in this Code and other legislation relating to abusive clauses applicable to Credit Institutions and Financial Companies;

c) Client – the person who contacts or who already maintains a relationship with a financial institution to contract the adherence to its products and services;

d) Voluntary code of conduct – the code issued by the associations of Credit Institutions and Financial Companies, whose adherence is voluntary, in opposition to this Code;

e) Collaborators – the members of the administrative or supervisory bodies of credit institutions and financial companies, their workers, agents, commissioners and other persons who provide services to them on a permanent or occasional basis;

f) Force majeure – the natural event or human action whose occurrence would not be reasonably foreseeable and whose effects could not be avoided, related to external facts, independent of human will, which prevent the fulfillment of obligations;

g) Persons with special needs – any person unable to ensure for themselves, totally or partially, the needs of a normal individual or social life, due to a disability, congenital or not, in their physical or mental capacities;

h) Abusive practices – practices that confer manifestly excessive advantages to the supplier of financial products and services, to the detriment of the consumer, notably those contained in Article 29 of Law No. 22/2009, of September 28 (Consumer Protection Law) and in this Code;

i) Electronic payment services – all those provided to the public by Credit Institutions and Financial Companies or by payment service providers, through electronic payment terminals, notably Automated Teller Machines (ATM), Point of Sale (POS) Terminals or other channels, under the terms provided for in Notice No. 2/GBM/2014, of December 31, which approves the Regulation on Procedures for the Provision of Electronic Payment Products and Services;

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Banco de Moçambique
Governador

j) Terms and conditions – the document, with contractual value after signature by the parties, where the general and specific clauses of each service or product provided by the credit institution or financial company are contained.

Article 5
(General Principles)

In their relationship with their clients, Credit Institutions and Financial Companies must observe the following principles:

a) Client assistance – which consists of helping clients choose the services and products that best satisfy their needs and understand the functioning of their accounts;

b) Expediency – which consists of the duty to correct errors, make financial products and services available and handle client complaints quickly;

c) Clarity – which consists of providing information relating to operations and products in understandable language and in providing assistance to clients on aspects that are not within their perception;

d) Competence and credibility – which consists of having the capacity to provide services and of secure and credible payment systems;

e) Integrity – which consists of acting in a firm and fair manner, so as to encourage confidence between Credit Institutions and Financial Companies and clients;

f) Legality – which imposes that it must be ensured that the creation and provision of services and products are in accordance with current legislation;

g) Non-discrimination – which consists of guaranteeing that the provision of products and the provision of financial services are based on principles and commercial criteria that do not allow for differentiated treatment on account of color, race, religion, marital status, sex, place of birth, ethnic or social origin, physical disability, culture, language, level of education, social position, profession or political party preference;

h) Respect for good banking practices – consists of imposing that one proceed in a fair manner in all transactions that Credit Institutions and Financial Companies carry out with their clients and ensure that all operations carried out and products provided are in conformity with the principles and good banking practices.

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Banco de Moçambique
Governador

Article 6
(System for the protection of financial consumers)

Credit Institutions and Financial Companies must inform their clients about the existence of financial consumer protection entities in Mozambique to which they can resort, namely:

a) The complaint handling units of Credit Institutions and Financial Companies;

b) Bank of Mozambique;

c) Arbitration, conciliation and mediation centers for conflicts, under the applicable terms and merely optional in relation to letters a), b) and f);

d) Consumer associations, under the terms of the Consumer Protection Law;

e) The Consumer Institute;

f) The judicial courts.

CHAPTER II

Rules of Conduct

Article 7
(Relationship with the client)

1. In relations with their clients, Credit Institutions and Financial Companies must act with diligence, neutrality, loyalty, discretion and respect for the interests entrusted to them, and must not:

a) Reveal or use information about facts or elements relating to the life of the institution or to the relations of this with its clients whose knowledge comes exclusively from the provision of their services, except in the circumstances provided for in the Law on Credit Institutions and Financial Companies;

b) Obtain information relating to clients by illicit means, as well as collect, use or disclose information from a client about social beliefs, religious, political affiliations, race or ethnic origin.

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Banco de Moçambique
Governador

2. In their relationship with their clients, Credit Institutions and Financial Companies must also:

a) Make available the updated terms and conditions for each banking service or product they intend to offer to their clients or potential clients, under the applicable legislation;

b) Obtain from their clients all relevant and necessary information to assess their capacity to fulfill their obligations relating to the requested financial products and services;

c) Disclose the existence of any fees, commissions and other charges applicable to the pre-contractual phase, and whether the same are refundable in case of rejection of the request or cancellation of the operation;

d) Disclose or inform clients in detail about the rates for the provision of services, notably those relating to check collections, transfers and transactions in general;

e) The compensation time of the transaction, when the same involves compensable documents, under the applicable legislation.

3. Credit Institutions and Financial Companies must ensure that all collaborators with access to personal information about clients, including those who have benefited from the services, maintain absolute secrecy about them, under the applicable legislation.

Article 8
(Relationship between Credit Institutions and Financial Companies)

1. Credit Institutions and Financial Companies must collaborate with each other in the investigation and regularization of controversial banking operations, subject to complaint or request for information from their clients.

2. The collaboration referred to in the previous number consists in the free and timely provision of evidence or other relevant documents that help in clarifying the issues.

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Banco de Moçambique
Governador

Article 9
(Data protection)

1. Credit Institutions and Financial Companies must:

a) Take measures to protect the personal data of their clients against unauthorized access, risks, loss, use, destruction, modification or disclosure;

b) Update, guarantee immediate access and correct errors in client information contained in their database;

c) Inform their clients about internal policies on the use and sharing of client personal information.

Article 10
(Information on payment instruments)

1. Credit Institutions and Financial Companies must inform their clients about the care to be taken and the convenience of keeping payment instruments such as cards, checks and others secure.

2. Credit Institutions and Financial Companies must require the client to communicate promptly about the loss, misplacement, theft, robbery or improper and/or fraudulent use of their payment instruments.

3. Credit Institutions and Financial Companies must inform the client in writing about:

a) The consequences resulting from non-compliance with the provisions of paragraph 2 of this article;

b) The instruments by which the client must communicate the misplacement, loss, theft, robbery or improper and/or fraudulent use of said payment instruments.

4. Credit Institutions and Financial Companies must make available in detail all costs and charges to be borne by the client relating to payment services.

Article 11
(Responsible credit)

Credit Institutions and Financial Companies must, before granting credit, take into account the set of factors they consider relevant for the fulfillment of debt service, in the granting of credit, namely:

a) The suitability of the client;

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Banco de Moçambique
Governador

b) The source of income;

c) The borrowing capacity;

d) The purpose of the credit;

e) The guarantee and its adequacy.

Article 12
(Disclosure and information on financial products and services)

1. Credit Institutions and Financial Companies must effectively disclose information about financial products and services, to allow informed decision-making by clients.

2. In the exercise of their activities, Credit Institutions and Financial Companies must:

a) Make a copy of this Code available in the main business areas;

b) Publish this Code on their official Internet sites.

3. Regarding service standards, Credit Institutions and Financial Companies must ensure that the following is disclosed to the public:

a) The average time for processing and evaluating client requests for adherence to financial services, including client credit, constitution of personal and real guarantees and credit cards;

b) The average time for cash service and general client service, including during peak hours;

c) The response time to internal complaints or client inquiries, under the applicable legislation on the matter;

d) Any changes intended for contracts with clients regarding financial services, such as interest rates and credit card commissions, among others.

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Banco de Moçambique
Governador

4. Regarding bank accounts, Credit Institutions and Financial Companies must provide clients or potential clients, through a description, without prejudice to verbal explanation, general information about the financial product or service to be contracted, including:

a) Procedures for opening accounts;

b) The need for the client to inform the bank in case of financial difficulties that prevent the payment of credit installments;

c) The need for a client to read the terms and conditions applicable to the financial services or products they intend to adhere to;

d) The instruments for moving the bank account;

e) The care to be taken with bank accounts;

f) The care to be taken with the payment instruments inherent to the movement of the account.

Article 13
(Contractual terms and conditions)

1. The terms and conditions of all contracts for financial products and services must be previously submitted for review by the Bank of Mozambique.

2. Credit Institutions and Financial Companies must provide their clients with a copy containing all terms and conditions, notably all documents used for the provision of financial services, including contracts that must be:

a) Drafted in Portuguese;

b) Distinct from promotional material;

c) Consistent with this code;

d) In simplified language and font size not less than 12 points; and

e) Provided in the pre-contractual phase, except where it is impractical to do so, it must be provided as soon as possible after the provision of said service.

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Banco de Moçambique
Governador

3. Banks must, in the pre-contractual phase, include in the terms and conditions applicable to banking services:

a) Interest rates and other applicable charges;

b) The means of notification to the client regarding changes to the terms and conditions on interest rates, charges and others;

c) Regarding time deposits:

i) Payment modalities of interest as well as capital; ii) The indication of the account where the capital will be credited; iii) Nature of charges or variation of interest rates resulting from mobilizations; iv) The value of interest to be credited;

d) Regarding credits granted, the repayment modalities, with:

i) The frequency and methods of sending account statements; ii) A declaration of the availability of information on interest rates and charges, upon request by the client; iii) The admissible causes for interruption of payment of installments by the borrower.

4. Credit Institutions and Financial Companies must notify clients affected by the introduction or variation of an interest rate or any other rate, commission or charge paid directly or indirectly by their clients.

5. Changes to the terms and conditions must be communicated previously to clients, in writing or other suitable means, provided that it is capable of demonstrative proof, so as to allow clients to accept them or withdraw from the contract.

Article 14
(Timeliness of granting response)

Credit Institutions and Financial Companies must respond promptly to client requests, regarding the terms and conditions of any products and services offered, according to the nature of the requests involved.

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Banco de Moçambique
Governador

Article 15
(Abusive clauses)

In the drafting of standard form contracts, Credit Institutions and Financial Companies must not include contractual clauses that, notably:

a) Make impossible, exempt or attenuate the liability of Credit Institutions and Financial Companies for defects of any nature of the financial products and services or imply waiver or disposition of rights;

b) Establish obligations considered unfair and abusive that place the client at an exaggerated disadvantage or are incompatible with good faith and equity;

c) Establish the inversion of the burden of proof to the detriment of the client;

d) Determine the compulsory use of arbitration;

e) Impose a representative to conclude or carry out another legal transaction by the client;

f) Leave to Credit Institutions and Financial Companies the option to conclude or not the contract, obliging the client;

g) Allow Credit Institutions and Financial Companies to terminate the contract unilaterally, without equal right being conferred to the client;

h) Authorize Credit Institutions and Financial Companies to unilaterally modify the content or quality of the contract, after its conclusion.

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Banco de Moçambique
Governador

Article 16
(Abusive practices)

Under this code, the following constitute abusive practices, among others:

a) Conditioning the provision of certain financial products and services to the provision of other products and services;

b) Issuing, sending or delivering to the client, without prior request from the client, any product or providing any service;

c) Taking advantage of the weakness or ignorance of the client, age, health, knowledge or social condition, to impose their financial products and services on them;

d) Raising the prices of financial products and services without just cause; and

e) Failing to stipulate in the contract the deadline for the fulfillment of its obligation and fixing its initial term at its exclusive discretion.

Article 17
(Commissions and charges)

1. Credit Institutions and Financial Companies must make available to clients information on interest rates, commissions and charges applicable to loans and deposits offered by banks, under the applicable legislation.

2. Credit Institutions and Financial Companies must, before the provision of a certain financial product or service, and at any time, at the request of the client, make available, where applicable, information containing, notably the active and passive interest rates and all inherent and applicable charges to the requested service.

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Banco de Moçambique
Governador

Article 18
(Publication of price list)

1. Credit Institutions and Financial Companies must publish on their Internet sites and make available in all main business areas all rates, commissions and other charges, under the applicable legislation.

2. No fees, commissions or charges that have not been previously contracted and disclosed shall be charged to clients.

Article 19
(Training and professional qualification)

Credit Institutions and Financial Companies must ensure that collaborators responsible for advising and selling financial products and services are properly qualified for this purpose.

Article 20
(Priority service)

1. Credit Institutions and Financial Companies must create special conditions for priority service for elderly clients, sick clients, pregnant women, clients with infants and persons with special needs.

2. Credit Institutions and Financial Companies must provide, at their headquarters and in all their branches, the creation of special services for clients with special needs, namely:

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Banco de Moçambique
Governador

a) Establishment of a service channel;

b) Infrastructure that guarantees accessibility for wheelchairs and access to special services for clients with reduced mobility.

Article 21
(Communication of contractual changes)

1. Contractual changes must always be formally and previously communicated to clients, by legally established means, regarding the following situations:

a) Commissions and charges;

b) Interest rates;

c) Application of more than one interest rate;

d) Maturity date of repayments;

e) Restrictions on deposit or cash withdrawal;

f) Any other contractual obligations of Credit Institutions and Financial Companies and the client;

g) Other applicable terms and conditions.

2. For the implementation of any existing contractual change, Credit Institutions and Financial Companies must communicate previously to clients before the production of the intended effects, except in cases of force majeure or changes of circumstances, where communication can be made immediately by the media or other suitable means, at least twice.

CHAPTER III

Conflict Resolution

Article 22
(Internal conflict resolution)

1. Credit Institutions and Financial Companies must have policies and procedures for the internal resolution of conflicts with their clients, under the specific regulation issued by the Bank of Mozambique.

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Banco de Moçambique
Governador

2. Credit Institutions and Financial Companies must also have a specialized complaint handling and information request unit, under the applicable legislation and which must not be integrated into the commercial services structure.

3. Credit Institutions and Financial Companies are obliged to notify the client about the designation and contact of the unit where the complaint process is taking place.

4. Whenever Credit Institutions and Financial Companies are unable to resolve an internal conflict within the maximum legal deadline, they must immediately inform the client about the reasons for the delay and the request for extension made to the Bank of Mozambique.

5. Credit Institutions and Financial Companies must ensure:

a) That the investigation and resolution of complaints received from their clients are carried out within the legally established deadlines, maintaining for this effect a management and control system of them at the level of their respective administrations under the applicable legislation on Internal Control Standards;

b) That the info

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