Good practices in the relationship between banks and private individuals under Decree-Law 80-A/2022

13th April, 2023

The exceptional measures set out in Decree-Law 80-A/2022, enacted by the Government to address the rapid surge in the commonly used mortgage interest rate indexes, have reinforced the existing mechanisms prescribed in the legal framework for preventing and resolving credit default, as established in Decree-Law 227/2012, as amended by Decree-Law 70-B/2021.

Among other measures, Article 6 of Decree-Law no. 80-A/2022 gives banks the option to propose to borrowers the extension of the repayment period of the loan, with the possibility of reverting to the initial term.

The legal configuration of the right to revert to the initial term of the loan justifies the definition of best practices in its implementation.

These practices are defined with a view to ensuring a high level of protection for bank customers, standardising the period, content and terms of the notice to be sent to the clients.

List of practices

P1. During the initial five years of the new loan repayment plan, agreed upon for the purpose of prolonging the term, banks are required to inform borrowers of their option to revert to the original contracted term. This communication, as mandated by paragraph 4 of Article 6 of Decree-Law No. 80-A/2022, dated November 25, will be conveyed through a durable medium, such as the bank statement, for the month of March.

P2. The information notice referred to in P1 above, to be included in the bank statement or other durable medium, has the following content: "We hereby inform you that, if you have agreed to extend the term of your mortgage loan under Decree-Law no. 80-A/2022, of 25 November, you may revert to the term contracted prior to said extension during the respective period of application. If you wish to revert to the term contracted before the extension, you may contact [indicate the means of contact the customer should use].”