Notice No. 14/2016, September 5: Information Duties in Credit Contracts

NOTICE NO. 14/2016
SUBJECT: INFORMATION DUTIES IN THE CONTEXT OF CREDIT CONTRACTS

Taking into account the development of the Angolan Financial System and the increase in financial products marketed by Financial Institutions, it is of greater importance to determine the frameworks in which these products are marketed, in order to implement responsible practices at all stages of the credit relationship.

Considering the need to regulate the implementation, presentation, and standardization of the informative technical sheets inherent to credit contracts, at the time of contracting and during their validity period, as well as the other information that must be provided to the client and the duties they must observe.

Given the need to mitigate the non-compliance of credit contracts due to financial difficulties, it is also necessary to promote the adoption of responsible behaviors by Financial Institutions and their clients.

In accordance with the combined provisions of letter f) of paragraph 1 of Article 21.º and letter d) of paragraph 1 of Article 51.º, both of Law No. 16/10, of July 15 – Law of the National Bank of Angola, and Articles 72.º and 73.º of Law No. 12/15, of June 17 – Law of the Bases of Financial Institutions.

I DETERMINE:

Article 1.
(Object)
This Notice establishes the information duties to be observed in the context of the credit granting activity by Financial Institutions, the duties of the client, and the possibility for credit restructuring in case of financial difficulties.

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Article 2.
(Scope)
This Notice applies to Banking and Non-Banking Financial Institutions that develop credit activities, under the supervision of the National Bank of Angola, under the terms and conditions provided for in the Law of the Bases of Financial Institutions, hereinafter abbreviated as Institutions.

Article 3.
(Definitions)
Without prejudice to the definitions established in the Law of the Bases of Financial Institutions, for the purposes of this Notice, the following are understood:

1. Commissions: monetary payments due from clients by Financial Institutions as remuneration for services provided by them, or subcontracted to third parties, within the scope of their activity.

2. Distance Contract: any contract whose formation and conclusion are carried out exclusively through distance communication means, which are integrated into a sales or service provision system organized for this purpose by the provider.

3. Credit Contract: a contract by which a creditor grants or promises to grant a debtor a credit in the form of deferred payment, loan, use of credit cards, or any other similar financing agreement.

4. Financial Leasing Contract: a contract by which one party undertakes, for remuneration, to grant the other the temporary use of a movable or immovable asset, acquired or constructed upon its indication, and which the latter may purchase totally or partially within an agreed period, by paying a determined or determinable price, in accordance with the contract itself.

5. Banking Correspondent: a legal entity that represents and provides services inherent to the activity of the Banking Financial Institution in facilities not belonging to it, under terms previously agreed upon by the parties.

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6. Credit: an act by which a Financial Institution, acting for consideration, places or promises to place funds at the disposal of an individual or legal entity against the promise of its repayment on the due date, or incurs, in its interest, an obligation by signature, such as a guarantee.

7. Housing Credit: a financial product marketed by Institutions, the granting of which must be carried out in accordance with the provisions of Presidential Decree No. 259/11, of September 30, and which covers the granting of credit intended for: acquisition of housing already built or under construction; construction and execution of conservation and improvement works on permanent or secondary own housing; and acquisition of land for the construction of permanent own housing.

8. Consumer Credit: a loan intended to satisfy medium-term credit needs, directed towards the acquisition of durable consumer goods or services.

9. Classic Credit: a contract of fixed duration, with the total credit amount and repayment schedule fixed at the beginning of the contract, which may provide for the availability of credit amounts at different times, but does not allow for the reuse of credit upon its partial or total amortization.

10. Revolving Credit: a contract of indefinite duration in which a maximum credit limit is established, which the client may use over time up to that limit value, with the exception of overdraft facilities, and in which, upon amortization of the amounts owed, the client may reuse the credit.

11. Expenses: costs borne by Institutions, which are due to them by third parties, and chargeable to clients, namely payments to Land Registries, Notarial Offices, or those of a fiscal nature.

12. Loan: a contract by which one party places funds at the disposal of another, for the latter to repay them.

13. Overdraft Facility: the express contract by which the Institution allows a client to dispose of funds exceeding the balance of their current deposit account.

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14. Indexer: index contracted for the monetary update of values.

15. Financial Institutions: Public or Private Law companies that exercise activity as Banking and Non-Banking Financial Institutions, in accordance with the Law of the Bases of Financial Institutions.

16. Distance Communication Means: any communication means that can be used without the physical and simultaneous presence of the Institution and the client.

17. Total Credit Amount: the total amount or maximum usage limit of the credit.

18. Total Amount Charged to the Client: the sum of the total credit amount and the total cost of the credit to the client, which corresponds to the sum of the interest value and the value of charges included in the calculation of the Effective Annual Percentage Rate of Charge (APRC).

19. Installment: the amount to be paid with a certain periodicity to fulfill the financial obligations assumed by the client in a credit contract.

20. Credit Restructuring: extension, renewal, refinancing, renegotiation of credits, or any procedure that alters partially or entirely any conditions originally agreed upon in the contract.

21. Durable Medium: any instrument that allows clients to store information personally addressed to them, so that they can easily access it in the future, for a period of time appropriate to the purposes for which it is intended, and as well as reproduce this information in an integral and unaltered manner.

22. Effective Annual Rate (EAR): the rate that measures all costs associated with a specific loan, including interest and other charges associated with it, excluding taxes.

23. Effective Annual Percentage Rate of Charge (APRC): the total effective cost of the credit, including interest, commissions, taxes, fees, insurance, as well as other charges charged to the client directly linked to the use of the credit.

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24. Nominal Annual Rate (NAR): the interest rate expressed as a fixed or variable percentage applied on an annual basis to the amount of credit used.

25. Revised Effective Interest Rate (REIR): the rate that measures all costs associated with a specific loan, including not only interest with possible reductions in spread in exchange for the optional acquisition of other financial products or services, as well as any costs associated with these financial products and services, excluding taxes.

26. Fixed Nominal Rate: interest rate expressed as a fixed percentage, agreed between the creditor and the client for the entire duration of the credit contract, or the different fixed interest rates agreed for the respective partial periods, if these are not all determined in the credit contract, considering that each fixed interest rate applies only for the partial period for which such rate was defined.

Article 4.
(Objectives)
The definition of information duties, client duties, and conditions for credit restructuring contained in this Notice must pursue certain fundamental objectives, namely:
a) ensure responsible granting and contracting of financial services by Institutions and the client, respectively; b) guarantee that the client receives all necessary pre-contractual information; c) guarantee that the client has access to reliable pre-contractual information, in a timely manner and in a format that allows easy comparison between credit financial products offered by various Institutions; d) ensure that client decisions are made with full knowledge of the facts; e) safeguard the defense and protection of the client against unfair or misleading practices; f) mitigate the risk of subscribing to abusive contractual clauses;

CONTINUATION OF NOTICE NO. 14/2016 Page 6 of 41 g) avoid excessive overload of Institutions in terms of pre-contractual liability; h) encourage responsible practices at all stages of the credit relationship, taking into account market specifics; i) standardize the information provided by Institutions and ensure market stability; j) ensure the possibility of credit restructuring for the client in financial difficulties.

Article 5.
(Pre-contractual Information Duty)

1. Without prejudice to the provisions of Notice No. 2/2014, of March 28, on general information duties in the provision of financial services and products, in fulfilling pre-contractual information duties, the following must be observed:
   a) when presenting a credit product and prior to the signing of the credit contract, the Institution or, if applicable, the banking correspondent, must provide the client with the necessary information to compare different offers, so that they can make an informed and clear decision; b) the information provided by Institutions to clients must be provided through the informative technical sheets contained in Annexes I to III of this Notice, which are an integral part of it; c) regarding the products they offer, Institutions must guarantee the transmission of true and reliable advertising; d) the Institution or the banking correspondent have the duty to inform the client of the existence of the right to freely revoke the contract during the reflection period, in accordance with paragraph 1 of Article 10.º of this Notice; e) whenever the National Bank of Angola deems it necessary, the Institution must provide proof that it has fulfilled its pre-contractual information duties and that it has informed the client of the content of the informative technical sheet;

CONTINUATION OF NOTICE NO. 14/2016 Page 7 of 41 f) for the purpose of the provision in the previous letter, the Institution may request the client to declare, in writing, that they have taken note of the content of the informative technical sheet.

2. For the purpose of the provisions in letters a) and b) of the previous paragraph, the informative technical sheet must be delivered at the time of the credit product simulation and simultaneously with the communication of credit approval, in which case it must incorporate the conditions of the credit contract.

3. In the case where a distance communication means is being used, the information referred to in the previous paragraph must be provided clearly and understandably, through a means suitable to the distance communication technique used.

4. Institutions must make the informative technical sheets available on their website when they advertise credit products through this distance communication means.

5. In the contracting of financial products, Institutions must ensure that the client:
   a) provides true information about their economic situation so that the Institution is in a position to correctly assess the risk of the operation and their payment capacity; b) analyzes the impact of the product they intend to contract, calculating, for this purpose, the monthly installment as a percentage of their monthly income; c) evaluates the conditions of the financial product and the clauses contained in the contract; d) communicates to the Institution changes of address and other relevant circumstances; e) has a copy of the credit contract in their possession; f) takes note that the funds made available by the Institution must be applied for the purpose agreed upon in the contract.

Article 6.
(Solvency Assessment)

1. Without prejudice to the provisions of Notice No. 11/2014, of December 17, on specific requirements for credit operations, the following must be observed:
   a) before the signing of the credit contract, the Institution has the duty to assess the client's solvency by verifying the information provided by them and consulting the Credit Risk Information Center (CIRC), in accordance with Notice No. 02/2010, of November 18. b) the Institution may, complementarily to the assessment provided in the previous letter, consult other databases considered useful for assessing the solvency of its clients. c) if the credit application is rejected based on the consultations referred to in the previous letters, the Institution must inform the client of this fact, as well as of the elements contained in the consulted databases.

Article 7.
(Informative Technical Sheet)

1. The informative technical sheet must be prepared according to the models defined in Annexes I to III of this Notice, depending on whether it is general credit, financial leasing (leasing), housing credit, or other mortgage credits.

2. The information contained in the informative technical sheet must contain the following elements:
   a) identification of the Institution responsible for the marketing of the credit, with the indication of its name, address, and contacts, as well as the banking correspondent, if applicable; b) date of preparation of the informative technical sheet; c) main characteristics of the product, such as the indication of the type of credit in which it falls, the total credit amount, usage conditions, contract duration, repayment conditions, associated guarantees, and identification of the financed asset or service, in the case of a linked contract;

CONTINUATION OF NOTICE NO. 14/2016 Page 8 of 41 d) indication of all informational elements that allow the client to assess the total cost they will bear; e) other legal aspects, such as the fixing of the validity period of the conditions expressed in the informative technical sheet and the description of other client rights, namely the right to obtain a copy of the contract and the right of revocation; f) financial plan of the contract, whenever the contract to be signed involves a defined temporal repayment schedule.

2. Institutions must respect the informative technical sheet models referred to in the previous paragraph, without being able to add or remove any field, even if some of the fields are not applicable to the contract in question.

3. The filling notes for the informative technical sheets are contained in Annex V of this Notice, which is an integral part of it.

Article 8.
(Effective Annual Percentage Rate of Charge - APRC)

1. The APRC makes equivalent, on an annual basis, the present values of the set of obligations assumed, considering the credits used, repayments, and charges, present or future, that have been agreed upon between the creditor and the client.

2. The APRC is calculated by determining the total cost of the credit to the client according to the mathematical formula contained in Annex IV of this Notice, which is an integral part of it.

Article 9.
(Duty of Assistance to the Client)

1. Without prejudice to the provisions of Article 73.º of the Law of the Bases of Financial Institutions, the Institution, or if applicable, the banking correspondent, must clarify the client in an adequate manner, in order to place them in a position to evaluate whether the proposed credit suits their needs and financial situation, with the Institution or banking correspondent being responsible for providing the pre-contractual information provided for in this Notice,

CONTINUATION OF NOTICE NO. 14/2016 Page 9 of 41 explicitly stating the essential characteristics of the proposed products, as well as describing the specific effects for the client.

2. The duty of assistance to the client provided for in the previous paragraph is applicable not only prior to the signing of the contract but also throughout its validity.

Article 10.
(Right of Free Revocation in Consumer Credit Contracts)

1. The client has a period of 15 (fifteen) calendar days to exercise the right of revocation of the consumer credit contract, without the need to indicate any reason.

2. The period for exercising the right of revocation begins to run:
   a) from the date of signing the credit contract; or b) from the date of receipt by the client of the copy of the contract, if this date is later than the one referred to in the previous letter.

3. For the revocation of the contract to take effect, the client must send the declaration within the period referred to in paragraph 1 of this Article, on paper or on another durable medium.

4. Once the right of revocation is exercised, the client must pay the creditor the capital and accrued interest from the date of credit usage until the date of capital payment, without undue delay, within a period not exceeding 30 (thirty) days after the dispatch of the communication.

5. For the purposes of the previous paragraph, interest is calculated based on the stipulated nominal rate, with nothing more being due, except for compensation for any non-refundable expenses paid by the Institution, in accordance with paragraph 8 of Article 3.º of this Notice.

6. Contracts of financial leasing (leasing) are excluded from the application of the right of free revocation.

Article 11.
(Information Regarding Contract Terms)
Institutions must notify the National Bank of Angola of the models of credit contracts to be made available to their clients prior to their use, with the supervisory body having the faculty to issue recommendations.

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Article 12.
(Statement and Complementary Information)

1. During the validity of the credit contract, Institutions must include in the statement, with monthly periodicity, the following information regarding each of the credit contracts in force:
   a) identification of the credit; b) identification of the outstanding amount; c) identification of the credit due date; d) detail of the installment due in the month to which the statement refers, with identification of the amortized amount, interest paid, and the interest rate on which interest and taxes were calculated, if applicable; e) indication of the amount to be paid in the next installment and its respective due date; f) indication of which values are due, what they refer to, and the date of default of each of these values, if such occurs.

2. The provision in the previous paragraph is also applicable in cases where the credit contract does not require the existence of a current deposit account.

Article 13.
(Clarity of Information)

1. Information must be provided in a clear and concise manner, observing the principles enunciated in Article 5.º of this Notice.

2. Communications addressed to the client must be made, obligatorily, in the Portuguese language; the use of another language for information exchange requires the express authorization of the client.

Article 14.
(Credit Restructuring)

1. Without prejudice to the provisions of Notice No. 12/2014, of December 17, on the constitution of provisions, whenever non-compliance with obligations arising from credit contracts is verified, Institutions must

CONTINUATION OF NOTICE NO. 14/2016 Page 11 of 41 promote contact with the client to ascertain the reasons for this non-compliance.

2. It is incumbent upon the client to demonstrate evidence of the financial difficulties in which they are found and which motivate the non-compliance of their financial commitments.

3. Institutions must inform clients and the National Bank of Angola which credit contracts are subject to restructuring, promoting their regularization preferably through extrajudicial means, presenting the client with one or more regularization proposals suitable to their financial situation.

4. In the analysis of the client's financial situation, Institutions must take into account their global charges and not only the commitments assumed with the Institution itself.

5. Whenever contractual changes are justified by the client's financial difficulties, Institutions cannot aggravate the charges with the credit, namely, through the increase of charged interest or the collection of commissions or expenses related to the restructuring of the credit.

Article 15.
(Sanctions)
Non-compliance with the imperative norms established in this Notice constitutes a misdemeanor punishable in accordance with the Law of the Bases of Financial Institutions.

Article 16.
(Doubts and Omissions)
Doubts and omissions resulting from the interpretation and application of this Notice are resolved by the National Bank of Angola.

Article 17.
(Transitional Provision)
Institutions must comply with the provisions of this Notice within a period of 60 (sixty) days after the date of entry into force.

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Article 18.
(Entry into Force)
This Notice enters into force on the date of its publication.

PUBLISH-
Luanda, July 18, 2016

THE GOVERNOR
VALTER FILIPE DUARTE DA SILVA

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ANNEX I
Informative Technical Sheet of Financial Product (FTI) General Credit Contract

A. Identification Elements

1. Identification of the Financial Institution
   1.1 Name [Insert name of the Financial Institution]
   1.2 Address [Insert the address of the Financial Institution]
   1.3 Contacts [Insert phone number, email address, among others]

2. Identification of the Banking Correspondent (if applicable)
   2.1 Name [Insert name of the banking correspondent]
   2.2 Address [Insert the address of the banking correspondent]
   2.3 Contacts [Insert phone number, email address, among others]

3. Date of the FTI
   [Indicate the date of preparation of this document]

B. Description of the Main Characteristics of the Product

1. Type of Credit
   1.1 Commercial Name of the Product [Insert the commercial name of the product]
   1.2 Category [Indicate the category of the credit]

2. Total Credit Amount
   [0.00 currency]
   [Indicate the total amount or the maximum usage limit of the credit. In cases where there is financing of charges, in addition to the "Total Credit Amount", the amounts corresponding to "Financed Charges" and the "Amount of

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