Order ECE/482/2019, of April 26, modifying the Order EHA/1718/2010 on banking advertising and the Order EHA/2899/2011 on transparency and client protection

OFFICIAL STATE BULLETIN
No. 102 Monday, April 29, 2019 Sec. I. Page 43131
I. GENERAL PROVISIONS
MINISTRY OF ECONOMY AND ENTERPRISE
6301 Order ECE/482/2019, of April 26, modifying Order EHA/1718/2010, of June 11, on the regulation and control of advertising of banking services and products, and Order EHA/2899/2011, of October 28, on transparency and client protection in banking services.

I
Directive 2014/17/EU of the European Parliament and of the Council of 4 February 2014 on credit agreements for consumers relating to residential immovable property and amending Directives 2008/48/EC and 2013/36/EU and Regulation (EU) No 1093/2010 establishes a specific regime for the protection of consumer persons who have the status of borrowers, guarantors, or holders of guarantees in loans or credits secured by a mortgage on residential immovable property, or whose purpose is the acquisition of residential immovable property.

Law 5/2019, of March 15, regulating real estate credit contracts, which partially transposes said Directive, strengthens the protection of the borrower in all phases of the relationship between lender and borrower: advertising, marketing, and pre-contractual information, validity of the contract, and, if applicable, mortgage enforcement.

Some of these elements are: the obligation to use a representative example in advertising and general pre-contractual information, the requirement of minimum knowledge and competence standards for staff of lenders and real estate intermediaries, the delivery of a sheet with standardized warnings to the borrower during the pre-contractual phase, and the information that the borrower of a loan in foreign currency must receive during the validity of the contract.

These are, in short, measures whose main objectives are to favor transparency in the contracting of real estate loans and responsible lending.

Law 5/2019, of March 15, regulating real estate credit contracts, also establishes various authorizations for the person holding the Ministry of Economy and Enterprise to develop regulatory aspects of certain matters. Specifically, through this ministerial order, the provisions contained in Articles 6.2, 16.2, 17.4, 20.3, and 23.8 and paragraph 2 of the fifteenth final provision of Law 5/2019, of March 15, are developed for the complete transposition of Directive 2014/17/EU of 4 February 2014. Thus, the approval of this order is necessary to guarantee the effectiveness of the measures introduced in said Law.

In this way, more specifically, this order establishes the criteria for determining the representative example regarding the basic information that must appear in the advertising of real estate loans, the minimum knowledge and competence requirements applicable to staff employed by the lender, credit intermediary, or designated representative, and the timeframes and terms in which information must be provided to the borrower in the case of a loan granted in foreign currency.

Likewise, although it is not a matter of transposing Directive 2014/17/EU of 4 February 2014, the specific content of the standardized warnings sheet is developed, in development of the authorization contained in letter a) of paragraph 2 of the fifteenth final provision.

II
This ministerial order is structured into two articles, a transitional provision, an additional provision, a repealing provision, and three final provisions. cve: BOE-A-2019-6301 Verifiable at http://www.boe.es

OFFICIAL STATE BULLETIN
No. 102 Monday, April 29, 2019 Sec. I. Page 43132
Article 1 modifies Order EHA/1718/2010, of June 11, on the regulation and control of advertising of banking services and products with a double objective. On one hand, it extends the advertising rules of banking activity to lenders and real estate credit intermediaries, with the aim of ensuring that analogous norms are applied to the performance of the same activity, regardless of who performs it. On the other hand, it establishes the conditions that the representative example appearing in advertising carried out by lenders or credit intermediaries must meet regarding the basic information that must appear in it.

For its part, Article 2 modifies Order EHA/2899/2011, of October 28, on transparency and client protection in banking services. The object and scope of application of said norm are modified, expanding the same, and adapting it to what is collected in Law 5/2019, of March 15.

The modification made in the order addresses some issues established in Law 5/2019, of March 15, which need to be developed, such as the adaptation of the pre-contractual information sheet (FIPRE) and the regulation of the content of the standardized warnings sheet (FiAE), the index applicable for calculating the market value in compensation for interest rate risk, and the terms in which information must be provided to the borrower in the case of a loan granted in foreign currency.

Likewise, a new Section 6th is introduced. This section, formed by Articles 32 to 32 quinquies, aims to establish the minimum knowledge and competence requirements applicable to staff employed by the lender, credit intermediary, or designated representative, as well as to intermediaries who are natural persons and, in the case of legal persons, their administrators. The knowledge to be possessed, the types of training, and the details on how it should be delivered are established, as well as the internal policies and procedures of entities in this area. In this regard, the implementation in Spain of the knowledge and competence requirements established by Directive 2014/65/EU of the European Parliament and of the Council of 15 May 2014 on markets in financial instruments and amending Directive 2002/92/EC and Directive 2011/61/EU has been taken into account, considering the lower complexity that real estate loans represent compared to advice on investment products.

The possibility of linking real estate loans to the opening or maintenance of payment or savings accounts is also regulated, through the creation of a new Section 7th.

Along with the aforementioned modifications, which refer in all cases to the necessary adaptations of the ministerial order to Directive 2014/17/EU of 4 February 2014, and to Law 5/2019, of March 15, this order introduces a new Chapter II bis, dedicated to reverse mortgages. The reverse mortgage currently has a specific protection regime collected in Order EHA/2899/2011, of October 28, which includes its own pre-contractual information sheet (FIPRE) and its own personalized information sheet (FIPER), given its singular characteristics compared to mortgage loans, as it combines a loan element with another of annuity based on actuarial calculation. However, part of its regime was based on references to provisions of the Order regulating mortgage loans, which have now lost validity with the approval of Law 5/2019, of March 15, which does not apply to reverse mortgages. Thus, the necessary modifications are made in order to eliminate any hint of legal uncertainty regarding the maintenance of the current protection regime for this product.

On the other hand, Article 16 is left without content, which is caused by the attribution to the National Securities Market Commission of the competencies to supervise the marketing of structured deposits by Royal Decree-Law 14/2018, of September 28, modifying the consolidated text of the Securities Market Law, approved by Royal Legislative Decree 4/2015, of October 23.

For its part, Articles 23 and 25 are also left without content, insofar as they are regulated directly in Law 5/2019, of March 15, adapted to the requirements of Directive 2014/17/EU of 4 February 2014.

The single additional provision establishes the obligation of the Bank of Spain to carry out a report in which it evaluates the sufficiency and proportionality of the minimum teaching hours required for initial and continuing training to meet the knowledge and competence requirements established in this order, in order to propose, if appropriate, to the Ministry of Economy and Enterprise a modification of it. The single transitional provision fixes a temporal period during which personnel who have not acquired the training regulated in this order may nevertheless provide the corresponding services under supervision, with different levels and scope. The single repealing provision establishes the repeal of norms of equal or lower rank that oppose this ministerial order. The first final provision establishes the competent title, collecting the exclusive state competence over commercial legislation, the bases of the organization of credit, banking, and insurance, and the bases and coordination of the general planning of economic activity. The second final provision collects the declaration of incorporation of European Union Law. Finally, the third final provision establishes the entry into force of the order.

III
This norm adapts to the principles of necessity, efficacy, proportionality, legal certainty, transparency, and efficiency, to which the exercise of regulatory power must be subject, in accordance with what is provided in Article 129 of Law 39/2015, of October 1, on the Common Administrative Procedure of Public Administrations.

In application of the principles of necessity and efficacy, the norm pursues a general interest by adapting the regulatory norm to Law 5/2019, of March 15, as well as to European Union legislation.

Likewise, this norm provides coherence to our legal system and is the most appropriate instrument for it, since its approval is mandatory by mandate of said Law and as a consequence of the necessary transposition of Directive 2014/17/EU of 4 February 2014. It therefore complies with the principles of proportionality and legal certainty.

In application of the principle of transparency, in the elaboration procedure of this ministerial order, what is provided in Law 50/1997, of November 27, of the Government, and in Law 39/2015, of October 1, on the Common Administrative Procedure of Public Administrations, has been taken into account. It has been submitted to the consultation and public hearing procedures provided for in Articles 133.1 and 133.2 of the latter Law, thus enabling the active participation of potential addressees.

Finally, the principle of efficiency is accredited, because the regulatory initiative does not impose unnecessary or accessory administrative burdens. Likewise, the mandate to develop Law 5/2019, of March 15, and to transpose Directive 2014/17/EU of 4 February 2014, is carried out with the greatest possible urgency, which only contributes to its greater efficiency.

This ministerial order is issued by virtue of the authorization for regulatory development established by Law 5/2019, of March 15, in its Articles 6.2, 16.2, 17.4, 20.3, and 23.8 and in paragraph 2 of the fifteenth final provision.

By virtue thereof, in accordance with the Council of State, I order:

First Article. Modification of Order EHA/1718/2010, of June 11, on the regulation and control of advertising of banking services and products.

One. Article 3 is given a new wording, with the following literal text:

"Article 3. Scope of application.
The activity directed at clients or potential clients in Spanish territory by:
a) Any credit institution, financial credit entity, payment entity or electronic money entity, Spanish, foreign, or domiciled in another Member State of the European Union, which operates, if applicable, through a branch, agent, intermediary, or under the regime of free provision of services in relation to banking products and services, including payment services, other than financial instruments and investment services contemplated in Order EHA/1717/2010, of June 11, on the regulation and control of advertising of investment services and products, and b) Any real estate lender, real estate credit intermediary, or designated representative defined in Articles 4.2) and 4.5) of Law 5/2019, of March 15, regulating real estate credit contracts, Spanish or foreign, which operates through a branch, agent, or under the regime of free provision of services."

Two. A letter d) is added to Article 4.5, with the following literal text:

"d) The representative example referred to in Article 6.2 of Law 5/2019, of March 15, shall be determined in accordance with the following criteria:

1. The initial loan capital used for the preparation of the example shall be a minimum of 100,000 euros or, from that amount, a multiple of 50,000 euros, with a maximum of 300,000 euros.
2. The amortization term used for the preparation of the example shall be a minimum of 10 years or, from that term, a multiple of 5 years, with a maximum of 30 years.
3. When the advertisement mentions a promotional rate or special usage conditions derived from the normal operation of the loan in question, applicable temporarily, the representative example must illustrate the normal execution conditions of the loan contract.
4. The representative example shall indicate that it has such status."

Second Article. Modification of Order EHA/2899/2011, of October 28, on transparency and client protection in banking services.

One. Article 1 is modified, which shall have the following literal text:

"Article 1. Object.
This ministerial order aims to guarantee an adequate level of protection for clients of banking products and services of credit entities, through the implementation of conduct norms and transparency measures in the provision of banking financial services."

Two. Article 2 is modified, which shall have the following literal text:

"Article 2. Scope of application.

1. This order shall apply to banking services directed or provided to clients, or potential clients, in Spanish territory by financial credit entities and credit entities, Spanish, foreign, or domiciled in another Member State of the European Union, which operate, if applicable, through branches, agents, intermediaries, or under the regime of free provision of services in relation to banking products and services.
   For these purposes, clients and potential clients shall be understood to be natural persons. Likewise, when throughout the articles of the Order reference is made to entities or credit entities, all those mentioned in the previous paragraph shall be understood to be included.
   The provisions provided for in Sections 1st to 7th of Chapter II of Title III shall be applicable to real estate lenders, real estate credit intermediaries, and their designated representatives, as defined in Article 4 of Law 5/2019, of March 15, regulating real estate credit contracts.
   Likewise, for the purposes of this order, banking services shall be understood to be those comprising cash services, the collection of refundable funds, especially deposits, the granting of credit and loans, payment services, and other activities included in the annex of Law 10/2014, of June 26, on the organization, supervision, and solvency of credit entities, paragraphs 7 to 13."

Three. Article 16 is left without content.

Four. The heading of Chapter II of Title III is modified, which shall have the following literal text:

"Norms relating to real estate credits and loans regulated by Law 5/2019, of March 15"

Five. Article 19 is modified, which shall have the following literal text:

"Article 19. Scope of application.

1. This chapter shall apply to activities carried out by any lender, credit intermediary, or their representative operating in Spain directed or related to the design, marketing process, granting, management, and compliance of real estate loan contracts regulated in Article 2 of Law 5/2019, of March 15, regulating real estate loan contracts.
2. The Bank of Spain may adapt the information requirements contained in this chapter for their application to other types of loans different from those provided for in paragraph 1 and which fall outside the scope of application of Law 16/2011, of June 24, on consumer credit contracts."

Six. Article 21 is given a new wording, with the following literal text:

"Article 21. Pre-contractual information sheet.

1. Lenders, credit intermediaries, and their designated representatives, if applicable, must provide general, clear, and sufficient information about the loans they offer to potential borrowers who request it, with the content provided for in Article 9 of Law 5/2019, of March 15. This information, which shall be free and advisory in nature, shall be provided through the pre-contractual information sheet (FIPRE) appearing in Annex I.
2. The pre-contractual information sheet shall be available to borrowers or potential borrowers, free of charge, in all marketing channels used by lenders, credit intermediaries, or their representatives."

Seven. Article 22 is given a new wording, with the following literal text:

"Article 22. Standardized warnings sheet.
The lender, credit intermediary, or their designated representative, if applicable, must deliver to the borrower or potential borrower, and, if applicable, to any natural person who is a surety or guarantor of the loan, with a minimum advance of ten calendar days prior to the moment of signing the loan contract, the standardized warnings sheet (FiAE) appearing in Annex II."

Eight. Articles 23 and 25 are left without content.

Nine. Article 26.2 is modified, which shall have the following literal text:

"2. In the case of loans granted at variable interest rates, the lender, real estate credit intermediary, or designated representative, if applicable, must deliver to the borrower or potential borrower, and, if applicable, to any natural person who is a surety or guarantor of the loan, with a minimum advance of ten calendar days prior to the moment of signing the contract, the separate document indicated in Article 14.1.c) of Law 5/2019, of March 15, in which special reference will be made to the periodic installments to be paid by the client in different scenarios of interest rate evolution and the possibilities of coverage against such variations, and all this taking into account the use or non-use of official reference indices. For these purposes, at least three amortization installments shall be presented, calculated by employing the maximum, average, and minimum levels that the reference index used in the European Standardized Information Sheet (ESIS) has presented during the last twenty years or the maximum available term if less. If the interest rate initially applicable to the loan corresponded to the maximum or minimum level during the last twenty years, said level shall be taken as reference for the calculation, increased or decreased, as the case may be, by fifty percent."

Ten. Article 28 is modified, which shall have the following literal text:

"Article 28. Indices and reference rates applicable for calculating the market value in compensation for interest rate risk.

1. For the purposes of calculating the market value of mortgage loans and the corresponding compensation for interest rate risk referred to in Article 9.2 of Law 41/2007, of December 7, modifying Law 2/1981, of March 25, on the Regulation of the Mortgage Market and other norms of the mortgage and financial system, on the regulation of reverse mortgages and dependency insurance, and establishing certain tax norms, as well as for the calculation of the financial loss indicated in Article 23.8 of Law 5/2019, of March 15, the following reference indices or interest rates shall be considered: Interest Rate Swap (IRS) rates for terms of 2, 3, 4, 5, 7, 10, 15, 20, and 30 years, which shall be published by the Bank of Spain, to which a differential shall be added. This differential shall be fixed as the difference existing, at the moment of contracting the operation, between the interest rate of the operation and the IRS at the term that most closely approximates, at that moment, until the next interest rate review date or until its maturity date.
2. The reference interest rate from the above that most closely approximates the remaining loan term from early repayment until the next interest rate review date or until its maturity date shall be applied. The differential thus calculated shall be incorporated into the contractual document in all loans subject to Law 5/2019, of March 15, regulating real estate credit contracts.
3. The method of calculation of the aforementioned indices and rates shall be determined by circular of the Bank of Spain."

Eleven. Section 5th of Chapter II of Title III is given a new wording with the following content:

"Section 5th. Loans in foreign currency
Article 31. Information to be sent.

1. Lenders of real estate loans in foreign currency must supply the information referred to in Article 20.3 of Law 5/2019 of March 15, together with the settlement document provided for in Article 7 of Royal Decree 309/2019, of April 26, which partially develops Law 5/2019, of March 15, regulating real estate credit contracts and adopts other measures in financial matters.
   Such information shall be provided at the choice of the borro