Notice No. 1/2002

Notices of the Bank of Portugal
Notice No. 1/2002
With the publication of Notice No. 3/2000, of August 11, and the clarification of the main rights and responsibilities of participants in the direct debit system (DDS) - creditors, debtors, and credit institutions - the Bank of Portugal sought to ensure, alongside the transparency of the collection process, a high level of confidence in the system. Indeed, it was a new collection system that required a specific legal and operational framework, stemming from the fact that the debtor, at the time of authorizing a direct debit, might not know the amount and date of its execution, as the collection process is initiated by the creditor. About a year and a half after the publication date of that notice and the operation of the DDS, the reliability provided by the system and the experience acquired since then now allow for new horizons for its use. It was decided to redefine the DDS, allowing the introduction of direct debit authorizations to also be carried out by creditors, as custodians of such authorizations, bringing a significant number of new users to the system. This notice, while maintaining the essential content of Notice No. 3/2000, establishes the obligation for creditors to inform their debtors of the identifying elements of the direct debit authorizations they introduce into the system and to cancel them if the contract that originated them ceases or is revoked. It also regulates the provision of processed authorizations to credit institutions. As for debtors, it guarantees not only the verification, through their bank, of the regularity of authorizations held by creditors but also the crediting of the full amounts collected under authorizations that prove to be non-existent or irregular. Finally, the modifications now introduced into the system allow it to be brought even closer to the operating principles of comparable systems established in most European Union countries, a factor that was also taken into consideration. Thus, the Bank of Portugal, in the exercise of the powers conferred upon it by Article 14 of its Organic Law, establishes the following:
Article 1
Definitions
For the purposes of this notice, the following definitions apply:
a) "Direct Debit System" (DDS) - a set of rules and operational infrastructures that allow payments by direct debit, arising from a contractual relationship and involving a creditor, a debtor, and their respective credit institutions; b) "Direct Debit" - a debit to a bank account, based on a direct debit authorization and a collection instruction transmitted by the creditor or their representative processed through the DDS; Wording introduced by Notice No. 10/2005, published in the Official Gazette, Series I-B, No. 120, of 24-06-2005. c) "Creditor" - an entity authorized by the debtor to make collections through the DDS; d) "Debtor" - an entity that authorizes collections to be made from them through the DDS; e) "Direct Debit Authorization" - the express consent of the debtor transmitted to a credit institution by which they allow the creditor or their representative to make direct debits, of a fixed, variable, or up to a certain predefined amount and/or date, to the deposit account opened in their name at that credit institution; Wording introduced by Notice No. 10/2005, published in the Official Gazette, Series I-B, No. 120, of 24-06-2005. f) "Multibanco System" - a set of infrastructures that enables the execution of operations, composed of application systems, telecommunications, and data processing centers, as well as other means under the responsibility of SIBS - Sociedade Interbancária de Serviços or third parties, normally identified as "ATM - automated teller machines", "Multibanco terminals", and "automatic payment terminals".
Article 2
Creditors
1 - Creditors who intend to make their collections through the DDS, having obtained the debtors' agreement, are obliged to inform them of the rights and obligations provided for in this notice.
2 - In cases where collections are already made by direct debit, creditors are obliged to notify debtors, at least 15 days in advance of the date from which they will be collected through the DDS, of the rights and obligations regulated in this notice. 3 - Creditors are obliged to inform debtors of the identifying elements of direct debit authorizations, namely the numbers assigned to the authorization and to the creditor's identification. 4 - Creditors must not submit for collection any amounts arising from the conclusion, waiver, or execution of a contract legally subject to a cooling-off period before the expiry of that period, unless the debtors have expressly waived it; however, they may introduce into the system the elements that will subsequently allow that collection. 5 - In cases where the said authorizations have been introduced into the system by them, creditors are obliged to cancel authorizations related to contracts:
a) Whose execution has ceased in any way; b) Revoked by debtors during the cooling-off period.
6 - Creditors must provide their credit institutions with the direct debit authorizations they have processed, in accordance with the provisions of paragraphs 3, 4, and 5 of Article 4.
Article 3
Debtors
1 - Debtors are free to accept or refuse that collections be made through the DDS, and may, at any time, cancel the granted direct debit authorization, either with their depositary credit institutions or through the Multibanco System. 2 - Debtors may cancel, with their credit institutions and within five business days following its execution, any debit made through the DDS. Term derogated by paragraph 1 of Article 2 of Notice No. 10/2005, of 8.6, in Official Gazette, Series I B, No. 120, of 24.06.2005. 3 - Debtors have the right to agree with creditors on the advance notice with which they are informed of the debit amounts and the dates from which they will be collected, so that accounts can be duly provisioned. 4 - Direct debit authorizations that have been subsequently modified by the debtor through the definition of term or amount limits are not considered processed by the creditor, nor are those whose existence and regularity have already been proven under paragraph 3 of Article 4. 5 - The mere cancellation by the debtor of a direct debit authorization processed by the creditor does not alter the nature of this authorization.
Article 4
Credit Institutions
1 - Credit institutions must clearly and unequivocally identify in debtors' account statements the debits made through the DDS and the respective creditors, as well as any other movements occurring in their accounts due to the use of such a system. 2 - Credit institutions are not obliged to accept or maintain direct debit authorizations from their debtor clients and are not responsible for the non-fulfillment of obligations arising from contractual relationships established between creditors and debtors. 3 - Credit institutions are obliged, at the request of debtors, to verify the existence and regularity of direct debit authorizations, and, in cases where these authorizations have been processed by creditors, to credit unduly debited amounts when their non-existence or irregularity is proven. 4 - Credit institutions must obtain from their creditor clients and deliver to the credit institutions of those clients' debtors, upon request and within four business days, the direct debit authorizations processed by them. 5 - Credit institutions may require the display of direct debit authorizations processed by their creditor clients, for the purpose of verifying their existence or regularity. 6 - The Bank of Portugal is responsible for regulating the conditions for credit institutions' adherence to the DDS and for setting the conditions they must observe within that system.
Article 5
Entry into Force
This notice enters into force on the day of its publication.
Article 6
Revocatory Provision
Notice No. 3/2000 is revoked.
Lisbon, February 27, 2002. - The Governor, Vítor Constâncio.
Includes the Rectification published in the Official Gazette, Series I B, No. 86, of 12-04-2002.