Central Bank of S. T. P.

NAP

PERMANENT APPLICATION NORM

CODE	RD 09
Proponent (S)	G.G
ENTRY INTO FORCE	17/09/2012
DATE OF ISSUE	17/09/2012
DOC NO	12/2012
PG.	1/14

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SUBJECT: Protection of Financial Institution Clients

Considering that the protection of the rights and interests of financial sector clients is an indispensable condition for gaining trust and consequently promoting greater financial inclusion in the national economy.

Given the need to create a legal and regulatory framework that governs the actions of financial institutions in their relationship with their clients and ensures the use of internationally accepted best practices in the financial sector;

In accordance with the powers conferred upon it by paragraph d) of Article 8 of the Organic Law of the Central Bank of São Tomé and Príncipe, the Board of Directors determines the following:

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CHAPTER I

General Provisions

Article 1

(Object and Scope)

This regulation aims to establish general rules to be observed by financial institutions authorized to operate in the national financial market, in contracting operations and providing services to clients and the general public.

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CODE	RD 09
Proponent (S)	G.G
ENTRY INTO FORCE	17/09/2012
DATE OF ISSUE	17/09/2012
DOC NO	12/2012
PG.	2/14

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Article 2

(Definitions)

1. For the purposes of this norm, the following definitions apply:

Consumer or client: any natural or legal person who acquires or uses a financial sector service as the final recipient.

Provider: any legal entity, public or private, national or foreign, that carries out the activity of providing services in the financial system.

Service: any activity provided by financial market operators.

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CHAPTER II

Duties of Financial Institutions

Article 3

(General Duties)

1. In contracting operations and providing services to clients and the general public, without prejudice to observing other current legal provisions applicable to the National Financial System, financial system operators must observe the following principles:

a) Act fairly in all transactions carried out with their clients and ensure that all operations and products provided comply with the principles of good customs and good banking practices, even if they have their own terms and conditions;

b) Provide information related to operations and products in clear language and assist clients with aspects that are not within their understanding;

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CODE	RD 09
Proponent (S)	G.G
ENTRY INTO FORCE	17/09/2012
DATE OF ISSUE	17/09/2012
DOC NO	12/2012
PG.	3/14

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c) Help clients choose services that best meet their needs;

d) Help clients understand how their accounts work;

e) Provide secure and credible payment system services.

f) Ensure that their employees, in the exercise of their duties, apply procedures consistent with the commitments established in this norm;

g) Manage client complaints and correct errors quickly, in accordance with applicable norms;

h) Ensure that all services and products comply with current legislation;

i) Act with integrity to encourage client trust;

j) Ensure that the criteria applied in granting credit and other financial products and services are based on commercial principles and that there is no discrimination of any kind.

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Article 4

(Clarity of Language)

1. Financial institution professionals are obliged to use clear, accessible, and coherent language in their relations with clients, especially regarding the rights and obligations arising from the operations carried out, both from a technical and legal point of view.

2. Financial institutions are obliged to issue documents to their clients in Portuguese.

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CODE	RD 09
Proponent (S)	G.G
ENTRY INTO FORCE	17/09/2012
DATE OF ISSUE	17/09/2012
DOC NO	12/2012
PG.	4/14

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Article 5

(Advertising)

1. In promoting services and products, financial institutions must not use misleading or abusive advertising.

2. For the purposes of the preceding paragraph, the following are considered:

a) Misleading advertising - any form of information or communication capable of misleading the client or user regarding the nature, characteristics, risks, rates, commissions, fees, insurance premiums or any other form of remuneration, terms, taxation, and any other data related to contracts, operations, or services offered or provided.

b) Abusive advertising - among others, advertising that contains discrimination of any nature, harms competition, or characterizes imposition or coercion.

3. Financial institutions may submit advertising information to the Central Bank in advance for “NO OBJECTION” purposes.

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Article 6

(Prohibited Operations)

1. Financial institutions are prohibited from:

a) Debit client accounts without their prior authorization;

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CODE	RD 09
Proponent (S)	G.G
ENTRY INTO FORCE	17/09/2012
DATE OF ISSUE	17/09/2012
DOC NO	12/2012
PG.	5/14

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b) apply a readjustment formula or index different from that legally or contractually established;

c) charge fees and commissions, stipulate tariffs or any other form of remuneration for operations or services, in an amount higher than that established in current regulations and legislation;

d) disregard and/or omit deadlines for fulfilling their obligations or leave them to their exclusive discretion;

e) terminate, suspend or cancel a contract, operation or service, or execute a guarantee outside of legally or contractually provided situations;

f) charge a commission or fee for closing a demand deposit account;

g) transfer a portfolio of insurance premiums without the consent of the Central Bank of São Tomé and Príncipe.

2. In the case of an operation or service subject to a tariff or rate index control regime, institutions may not exceed the established limits, and must refund any excess amounts received, updated, in accordance with applicable legal norms, without prejudice to other applicable sanctions.

3. Exceptions to the prohibitions in this article include reversals necessary to correct undue entries resulting from operational errors by the financial institution, which must be communicated to the client within two business days after the said correction.

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CODE	RD 09
Proponent (S)	G.G
ENTRY INTO FORCE	17/09/2012
DATE OF ISSUE	17/09/2012
DOC NO	12/2012
PG.	6/14

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CHAPTER III

Client Rights

Article 7

(Equal Treatment)

All clients have the right to receive equal treatment from the institutions where they operate, regardless of their socio-economic and religious status.

Article 8

(Information Transparency)

Financial institutions are obliged to inform clients about their rights regarding access to information in their possession.

Article 9

(Information on Changes)

Financial institutions are obliged to inform their clients about changes occurring in the fee structure of banking operations or insurance premiums, by letter, account statement, brochures, ATM messages, or other appropriate means of communication.

Article 10

(Right of Withdrawal)

The client has the right to withdraw deposit(s) from the institution(s) under terms to be defined by specific norm.

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CODE	RD 09
Proponent (S)	G.G
ENTRY INTO FORCE	17/09/2012
DATE OF ISSUE	17/09/2012
DOC NO	12/2012
PG.	7/14

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Article 11

(Access to Price List)

1. The price lists of financial institutions must be available to the client at all times and present, clearly and legibly, the list of commissions and other charges, as well as the interest rates representative of the products and services offered by the institution.

2. Financial institutions are obliged to make the price list available in all their branches, in a directly accessible and duly identified location, and on their Internet portal.

3. Charging commissions not included in the price list or under conditions different from those indicated is not permitted.

4. Institutions must ensure that the information contained in the price list is always updated, reflecting the institution's commercial decisions and any legislative or regulatory changes impacting the commercialization conditions of banking products and services.

Article 12

(Right to Complaints)

1. The client has the right to file a complaint both with the financial institution and with the Consumer Support Office of the Central Bank of São Tomé and Príncipe.

2. Complaints must be based on the non-compliance with norms governing the activities of financial institutions.

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CODE	RD 09
Proponent (S)	G.G
ENTRY INTO FORCE	17/09/2012
DATE OF ISSUE	17/09/2012
DOC NO	12/2012
PG.	8/14

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3. Financial institutions must display in all their branches, in a visible location and format, the telephone number and email address of the Consumer Support Office of the Central Bank of São Tomé and Príncipe, accompanied by the note that it is intended for handling client complaints and denunciations.

4. The procedure for processing client complaints will be subject to specific regulation.

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CHAPTER IV

Protection of Bank Client Accounts

Article 13

(Identification)

Financial institutions must commit to respecting current regulations regarding client identification for the purpose of opening accounts and insurance contracts.

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CODE	RD 09
Proponent (S)	G.G
ENTRY INTO FORCE	17/09/2012
DATE OF ISSUE	17/09/2012
DOC NO	12/2012
PG.	9/14

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Article 14

(Precautions)

1. Financial institutions must make efforts to inform their clients about the precautions to be observed when checking cheque books delivered to them and ensure that they are handled securely, properly keeping savings account record books, bank cards, PINs, and providing other relevant information to prevent fraud.

2. To enable the provisions of the preceding paragraph, financial institutions authorized to operate in the financial market must alert clients to the following precautions:

a) not keep the cheque book and bank card in the same place;

b) not transmit the PIN code or the bank card itself to others;

c) destroy the PIN communication provided by Credit Institutions after memorizing it;

d) keep the card in an appropriate place;

e) inform the bank where the accounts are domiciled about any anomaly that may occur;

3. Insurance companies must correctly inform clients of their duties and the company's obligations.

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CODE	RD 09
Proponent (S)	G.G
ENTRY INTO FORCE	17/09/2012
DATE OF ISSUE	17/09/2012
DOC NO	12/2012
PG.	10/14

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CHAPTER V

Contracts

Article 15

(Contract Information)

1. The client has the right to be informed about all conditions applicable to the contract they intend to enter into with the institution.

2. The institution must provide the client with the draft contract, so that they can previously know the respective clauses, and read with special attention those that establish charges and those that concern the right of withdrawal or termination of the contract and analyze the need for eventual adjustments.

3. The draft contract, as previously stated, must contain pre-contractual information that explains the essential characteristics of the proposed products and describes the specific effects resulting from these characteristics, including the consequences of non-payment.

4. Whenever a modification of the initial contractual conditions is foreseen, clients must be informed of the content of these changes, with a minimum advance notice of thirty (30) days relative to their application date, in case the latter has not been previously agreed upon.

Article 16

(Minimum Contract Regulation)

1. The contract must include some essential elements such as:

a) Amount, purpose, and term of the loan or insurance premium;

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CODE	RD 09
Proponent (S)	G.G
ENTRY INTO FORCE	17/09/2012
DATE OF ISSUE	17/09/2012
DOC NO	12/2012
PG.	11/14

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b) Repayment conditions and method;

c) Regime, periodicity, and due date of installments;

d) Loan guarantees;

e) Applicable commissions;

f) Charges applicable in case of non-compliance and respective review conditions;

g) Other situations likely to affect the cost of the loan or insurance premium.

Article 17

(Contractual Term)

1. During the term of the contract, financial institutions must provide their clients with a monthly statement, allowing the client to monitor the evolution of their loan and to know in advance all changes that may occur in the installment value or other associated charges.

2. The monthly statement must include, at least, the following elements:

a) Amount of outstanding capital, as of the statement issue date;

b) Number, due date of the amount (capital + interest);

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CODE	RD 09
Proponent (S)	G.G
ENTRY INTO FORCE	17/09/2012
DATE OF ISSUE	17/09/2012
DOC NO	12/2012
PG.	12/14

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CHAPTER VI

Responsibilities of Financial Institutions

Article 18

(Loss, Theft or Robbery of Cheques, Bank Cards and Policy)

1. Financial institutions are obliged to duly inform their clients that, in any situation of loss, theft, or robbery of cheques and bank cards, they must immediately communicate with the bank where their accounts are domiciled; this communication may be made verbally, but in this case, it must be confirmed in writing within 24 hours, with the bank in question committing to act immediately to protect the interests of their clients.

2. Insurance companies must be responsible for providing correct information to their clients in situations of loss and theft of the insurance policy, and must act immediately to protect their clients.

Article 19

(Responsibility)

The financial institution assumes responsibility for not acting with the required prudence in cases where communication is made to them under the terms referred to in the previous article, specifically regarding the reimbursement of the amount of any transaction thus carried out, plus inherent interest, in the case of:

a) The client's bank card having been assigned to a third party and the latter using it improperly.

b) Illicit transfers made from the client's account, with improper use of the PIN.

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CODE	RD 09
Proponent (S)	G.G
ENTRY INTO FORCE	17/09/2012
DATE OF ISSUE	17/09/2012
DOC NO	12/2012
PG.	13/14

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c) Failures occurring due to deficient ATM operation.

d) Undue advance payment of an insurance policy to a third party.

Article 20

(Fraud and Negligence)

No responsibility can be attributed to the financial institution regarding damages resulting from negligent or fraudulent actions by clients.

Article 21

(Security in Card Operations)

Financial institutions commit to observing the necessary precautions regarding the security of ATM operations, installing them in locations considered safer, which does not exempt clients from the responsibility of taking precautions and observing care in their handling.

Article 22

(Duty of Secrecy)

Employees of financial institutions are subject to the duty of confidentiality and secrecy, with this duty ceasing only when competent judicial authorities request collaboration, based on a criminal process, duly individualized and specified.

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CODE	RD 09
Proponent (S)	G.G
ENTRY INTO FORCE	17/09/2012
DATE OF ISSUE	17/09/2012
DOC NO	12/2012
PG.	14/14

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Article 23

(Sanction)

Non-compliance with the provisions of this norm by financial institutions incurs the application of sanctions provided for in Article 42 of Law No. 9/92 – Law on Financial Institutions, Article 105 of Decree-Law No. 47/98 – Regulates the conditions of access to insurance activity, and Permanent Application Norm No. 3/2007 – SUPERVISORY ACTION and APPLICATION OF PENALTIES.

Article 24

(Final Provisions)

The Central Bank may adopt other measures deemed necessary for the execution of the provisions of this norm.

Article 25

(Entry into Force)

This NAP enters into force upon its publication.

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Central Bank of São Tomé and Príncipe, on September 17, 2012