Norma vigente
With a view to promoting the smooth running and stability of the financial system, it falls to the Banco de España to supervise compliance with the rules on banking regulation and discipline, including those that safeguard the legal right to customer protection, transparency and proper banking conduct.
To this end, the Banco de España has been paying particular attention to the proper marketing of revolving credit, which, due to its particular characteristics, can sometimes leave debtors unable to meet their financial obligations.
Thus, there is a need to draw up supervisory guidelines that enable institutions to better comply with and implement the rules applicable to the governance and transparency of revolving credit, while also contributing to the best practices and procedures for this type of credit. The aim is to ensure that the products brought to market are appropriate, and to reduce the risk that such credit may remain outstanding for an excessive length of time and that the debt burden ultimately borne by contracting customers may be greater than might reasonably be expected.
These guidelines set out the best market practices identified by the Banco de España in the exercise of its supervisory function within the regulatory perimeter, as well as the criteria and procedures it deems most suitable for ensuring compliance with the rules and regulations applicable to the design, marketing and arrangement of revolving credit[1], with a view to promoting responsible practices in activities relating to this type of credit, thereby strengthening customer protection.
These guidelines have been prepared with regard to the European Banking Authority (EBA) guidelines on “product oversight and governance arrangements for retail banking products”[2], “remuneration policies and practices related to the sale and provision of retail banking products and services”[3], and “loan origination and monitoring”[4], which the Banco de España has adopted as its own. Also taken into account were the EBA Opinion of 23 October 2019, on disclosure to consumers buying financial services through digital channels[5], and the supervisory guidance on the “digitalisation of short-term, high-cost consumer credit”[6], published by the International Financial Consumer Protection Organisation (FinCoNet).
These guidelines have been drawn up in exercise of the authority granted to the Banco de España to prepare technical supervisory guidelines addressed to supervised institutions and groups, specifically, Article 54 of Law 10/2014 of 26 June 2014 on the regulation, supervision and solvency of credit institutions, Article 20(1) of Law 21/2011 of 26 July 2011 on electronic money, and Article 26(1) of Royal Decree-Law 19/2018 of 23 November 2018 on payment services and other urgent financial measures (hereinafter Royal Decree-Law 19/2018). Moreover, in application of the provisions of Article 33(2) of Royal Decree 309/2020 of 11 February 2020 on the legal regime of specialised lending institutions, the content of these guidelines applies expressly to specialised lending institutions.
These guidelines comprise eight sections and two annexes. The first annex includes, by way of example, a possible pre-contractual disclosure model in addition to the European Standardised Information Sheet (ESIS). The second annex, also by way of example, contains possible periodic disclosure models on revolving credit to be provided to customers.
1. These guidelines are addressed to supervised institutions engaged in consumer lending in the revolving credit category, as this category is defined below.
2. Any mention in the guidelines to “the institution” or “institutions” shall be understood as referring to any of the types of institutions supervised by the Banco de España, save where another meaning can clearly be inferred from the content of the guidelines.
3. The criteria set out in these guidelines should be used by institutions to assess the extent to which their procedures on the design, marketing, arrangement and operation of revolving credit are in line with the applicable rules and regulations.
4. These guidelines apply to all revolving products brought to market as from the date on which they enter into force. Moreover, the portfolio of existing revolving products already in circulation on the above date is subject to the guidance set forth in sections 4 and 5, as well as the guidance in points 57 and 68. Section 7 applies to any revolving credit already in existence on the date of entry into force of the guidelines, as regards the information that institutions provide or make available to their customers over the life of such credit. Reference is also made to Guideline 5 of Guidelines EBA/GL/2015/18[7], which notes that the products brought to market should be monitored on an ongoing basis to ensure that the interests, objectives and characteristics of consumers continue to be appropriately taken into account.
5. In accordance with the provisions of Article 33 bis of Ministerial Order EHA/2899/2011 of 28 October 2011 on transparency and customer protection in banking services (hereinafter Order EHA/2899/2011), revolving credit is defined as “interest-bearing consumer credit extended to natural persons, with no fixed maturity or an automatically renewable fixed maturity date, in which the credit drawn down is not repaid in full at the end of the agreed settlement period”.
6. Revolving credit is characterised by the fact that the borrower can make drawdowns up to the credit limit arranged without having to repay the entire amount drawn down at the end of the month or by a particular date, making deferred repayments of the credit drawn down without a fixed time limit, by paying periodic instalments, the amount of which can usually be chosen and adjusted by the borrower over the life of the agreement within certain minimum (and occasionally maximum) levels set by the institution.
7. The credit limit decreases as and when drawdowns are made, mainly in the form of purchases of goods and services, cash drawdowns, transfers of the credit extended, etc. In turn, the available credit is replenished with the amount of any instalments used to amortise the principal, which are paid by the borrower essentially by settling periodic bills, making early repayments and returning purchases. Thus, the credit is automatically rolled over when each instalment falls due (generally, each month), making it a revolving credit comparable to a standing line of credit.
8. The capital drawn down is subject to the agreed interest rate. In the event of non-payment or where the amount of the periodic instalment is very small and does not cover the interest or other expenses accrued, such unpaid amounts or shortfalls may be capitalised and may, in turn, accrue interest. Thus, the characteristics of such credit may mean that the principal is amortised over a very long period of time, thereby entailing very high medium and long-term interest payments, or even the risk that the debt may be rolled over indefinitely.
9. Revolving credit agreements are subject, inter alia, to Law 16/2011 of 24 June 2011 on credit agreements for consumers (hereinafter Law 16/2011), regardless of the fact that most of the revolving credit currently being marketed is associated with payment instruments, such as cards[8], which provide for revolving deferred payment as the credit repayment method, whether exclusively or combined with other methods that customers can generally choose over the life of the agreement, e.g. total payment of the credit drawn down at the end of the month (end-of-month payment method) or deferred payment over a fixed period (deferred instalment payment method).
10. Pursuant to the provisions of Article 2(3) of Royal Decree-Law 19/2018, where a revolving credit is associated with a payment instrument (such as a card) or service, the rules and regulations on payment services will only apply to the terms and conditions of that payment instrument or service.
2.1. Marketing policies
11. Pursuant to the provisions of Rule 12 of Banco de España Circular 5/2012 of 27 June 2012 to credit institutions and payment service providers on the transparency of banking services and responsible lending (hereinafter Circular 5/2012), and given the characteristics and complexity of revolving credit transactions, the responsible lending policies and procedures approved by an institution’s board of directors or like body must include specific policies on the offering and marketing of revolving credit.
12. Institutions’ marketing policies should identify the target audience for revolving credit, bearing in mind the nature and risks of the product and the financing needs of potential customers. In this regard, the age, level of financial literacy and financial situation of potential customers, among other criteria, should be considered when assessing eligibility for revolving credit.
13. Institutions’ marketing policies are expected to ensure that all staff marketing revolving credit have the up-to-date expertise and skills needed to apply the criteria set by the institution and identify the target audience. Moreover, such policies must include sufficient guidance to ensure that the pre-contractual assistance referred to in Article 11 of Law 16/2011 is duly provided to customers from the outset of their commercial relationship with the institution, and that the pre-contractual information is furnished sufficiently in advance.
14. In particular, where revolving credit is marketed in a non-financial setting (e.g. public thoroughfares, public venues and, in particular, retail outlets), institutions must reinforce their controls to ensure suitable assistance prior to entering into an agreement on the product, in accordance with the provisions of Article 33 ter(3) of Order EHA/2899/2011.
2.2. Product design
15. Given that the credit drawn down is repaid by the borrower in the form of fixed or variable instalments, institutions are expected to allow customers to choose the amount of the instalment that best suits their needs from among those established in the agreement, without dictating a predetermined instalment. Institutions should not automatically select the minimum instalment contractually established for repayment of the credit. Moreover, institutions are expected to allow customers to adjust the instalments over the life of the agreement.
16. As noted in section 1, credit associated with a payment instrument (such as a card) generally allows for a range of repayment options. In such cases, institutions are expected to offer customers all of the available credit repayment methods, duly informing them of the main characteristics of each one before entering into an agreement, so that customers can choose the payment method that best caters to their needs and interests.
17. Moreover, the revolving deferred payment instalments offered to customers should not place any upper limits on the amortisation of the credit that might hinder compliance with the disclosure obligations envisaged in Article 33 quinquies(3) of Order EHA/2899/2011.
18. In accordance with the "General principles applicable to responsible lending" set forth in Annex 6 of Circular 5/2012, and with a view to enabling customers to comply, in due time and form, with the financial obligations assumed, the amount of the periodic instalment should allow them to service, at least, the interest and, where applicable, any fees or other expenses deriving from the revolving credit or the associated payment instrument, to prevent such amounts, where not covered by the periodic instalment and where so envisaged in the agreement, from being capitalised and, in turn, accruing further interest. For such purposes, institutions must take account of the provisions of the guidance set out in points 68 and 69 of these guidelines in relation to insurance premiums. Furthermore, and with the aim of ensuring that customers can meet their financial obligations, the periodic instalments should enable the principal to be amortised.
19. In terms of the manner in which instalments are broken down into amortisations of the principal and payments of interest, fees and other associated expenses, institutions are expected to take account of the best interests of their customers, ensuring that the debt is not prolonged excessively and enabling the credit to be amortised within a reasonable time frame.
20. In the event of non-payment, any late-payment interest should not be capitalised in the form of additional credit drawdowns that, in turn, accrue interest.
21. In the event that any new post-contractual expenses or fees are charged, or where the amount of the existing expenses or fees is adjusted (e.g. changes to the annual maintenance fee for the payment instrument associated with the credit), the relevant amount should not form part of the periodic revolving credit instalment.
22. Where a revolving credit drawdown is made in the form of a transfer of funds to an account held by the same borrower, for the purposes of charging interest the credit shall be understood to have been drawn down, at the earliest, at the moment in which the customer has given the order to execute the transfer, and provided the transfer is correctly executed.
23. With respect to the customer’s right of withdrawal in the case of revolving credit associated with a payment instrument such as a card, where an institution considers the agreement to have been formalised when the card is first used or activated, the deadline by which the customer may exercise the right of withdrawal should be calculated as from such activation or use of the payment instrument, and this should be reflected in all of the information provided at the pre-contractual stage, as well as in the agreement.
2.3. Marketing channels
24. The marketing of revolving credit and, in particular, the manner in which information is provided to customers prior to and upon contracting such credit, are heavily influenced by the channel used, be it remote (e.g. online or via mobile applications, phone or ATMs) or in person (at bank branches or other points of sale). In this regard, institutions’ marketing policies are expected to identify all of the revolving credit distribution channels used, and the staff marketing such credit are expected to act accordingly.
25. In the case of in-person marketing, when using electronic devices designed to capture customers’ signatures that do not allow documents to be viewed, such documents must effectively be provided to customers before any signatures in acknowledgement of receipt are captured on these devices, as required in Article 10 of Law 16/2011 and Articles 6 and 33 ter of Order EHA/2899/2011, and institutions must be able to duly evidence such provision.
26. In the case of distance marketing via digital channels (e.g. websites or mobile applications), to ensure that the pre-contractual information referred to in Article 10 of Law 16/2011 and Articles 6 and 33 ter of Order EHA/2899/2011 is provided sufficiently in advance, institutions are expected to ensure that:
a) The pre-contractual information is provided on a screen prior to and different from the screen used for formalising the agreement, in a durable format that can be consulted subsequently for an appropriate period of time and reproduced without modifications, such as, e.g. a download of the documents shown on the screen or a copy of such documents sent to the email address indicated by the customer. It is not considered sufficient to provide such information in the form of links to documents that cannot be retained by the customer, since this would simply be making such documents available, rather than providing them.
b) Customers must take active and explicit action to bring the prior disclosure process to an end and continue to the next screen in order to formalise the agreement, and any use of boxes pre-ticked by the institution must be avoided.
2.4. Remuneration criteria relating to sales of revolving credit
27. Institutions’ remuneration policies and practices relating to the sale of retail banking products are expected to take account of the interests of their customers and ensure that the remuneration methods, whatever their form, do not encourage the staff tasked with marketing and selling revolving credit and, where applicable, any related products, to place their own interests or the interests of the institution ahead of those of customers.
28. Pursuant to the provisions of Article 8(2) subparagraph 2 of Order EHA/2899/2011, any amendments proposed by an institution to the terms and conditions of a credit agreement that are more favourable for the customer may be applied immediately. Institutions are expected to take account of the interests of their customers when assessing whether an amendment is favourable or otherwise.
29. Any amendment relating to the terms and conditions of a revolving credit agreement must be in line with the relevant provisions of Law 16/2011, Order EHA/2899/2011 and Circular 5/2012. Thus, where an agreement enables an institution to unilaterally adjust the cost of the credit to the detriment of the customer, the institution should clearly detail in the agreement the method of or, where applicable, the possible reasons behind such adjustment, thereby enabling the customer to anticipate, based on clear and coherent criteria, any potential changes in such cost.
30. In accordance with the provisions of Article 8(2) of Order EHA/2899/2011, where an institution is entitled to unilaterally amend any term or condition of a revolving credit agreement, it must notify the customer at least one month in advance of the exact terms of such amendment, and of any such rights as may be enjoyed by the customer in such connection. This notification must be served individually, on paper or in another durable format, and must be drafted in easily understandable terms and a clearly readable manner, in accordance with the provisions of Article 11 of Order EHA/2899/2011. Moreover, it must be served separately from any settlement documents, as provided for in Rule 11(6) of Circular 5/2012.
31. Where the cost of a credit is adjusted to the detriment of the customer, for instance, by increasing the contractual interest rate, this increase and, by extension, the amount by which the total cost of the financing already arranged is set to increase, should be communicated clearly and transparently to the customer, to enable the customer to properly assess any economic and legal consequences the adjustment may entail. This communication may include an example of two scenarios "before and after" the cost increase, based on the amount drawn down on the date on which the communication is prepared, including: (i) the estimated date on which the credit is likely to be fully amortised if no further drawdowns are made and the instalments remain unchanged, and (ii) the total amount the customer is likely to end up paying.
32. Moreover, customers should be able to accept or reject such amendments (i) using a method that is no more onerous than the one with which they were notified and, in any event, using that same notification method; (ii) before the date envisaged for their entry into force, and (iii) at no cost whatsoever.
33. Moreover, in the event that an adjustment to the cost of the credit is not accepted by the customer, institutions are expected to enable them to cease any further drawdowns on the revolving credit, the amount already drawn down remaining subject to the previously agreed terms and conditions.
34. In accordance with the provisions of Article 18(2)(3)(e) of Order EHA/2899/2011, before increasing a revolving credit limit, institutions must update any financial information they have on the customer and reassess the customer’s solvency. Moreover, any increases to the revolving credit limit not envisaged in the agreement should be limited to those requested by the customer, which does not mean that institutions cannot offer such increases over the course of the commercial relationship, without prejudice to the provisions of Article 33 sexies(2) of Order EHA/2899/2011.
35. Institutions may only charge a fee for exceeding the revolving credit limit where such circumstance is envisaged in the agreement, in accordance with the provisions of Article 7(3)(c) of Order EHA/2899/2011. This fee may only be charged once per overshoot, even where the customer remains over the limit in successive credit settlements.
4.1. Commercial advertising and communications
36. In accordance with the provisions of Article 4 of Ministerial Order EHA/1718/2010 of 11 June 2010 on regulation and control of the advertising of banking services and products (hereinafter Order EHA/1718/2010) and of Banco de España Circular 4/2020 of 26 June 2020 on the advertising of banking services and products (hereinafter Circular 4/2020), the advertising of banking products and services must be clear, sufficient and impartial and may not be misleading, and the advertising nature of messages must be made explicit and obvious. To duly comply with the "Principles and criteria to be observed when advertising banking products and services" set out in the Annex to Circular 4/2020, institutions must ensure that any advertising of revolving credit satisfies, inter alia, the following requirements:
a) The language used must be straightforward and easy to understand, avoiding the inclusion of any ambiguous, biased, incomplete or contradictory information that may cause confusion.
b) In their advertising, institutions may not omit or conceal any information necessary to enable the target audience to take a duly informed decision regarding their economic behaviour. Thus, they must expressly include the term "revolving" in any messages advertising their revolving credits, particularly when advertising payment cards or other instruments that allow for this payment method, and the characteristics of this method must be referred to in the advertising message.
c) Institutions must avoid the use of any expressions that may raise doubts as to the nature and characteristics of revolving credit or the risks associated with the arrangement of such credit. In this regard, any advertising that refers only to the potential benefits of revolving credit, without referring to the potential costs or other less favourable features for customers, should be avoided.
d) Any clarifications and warnings regarding the risks of revolving credit included in advertising messages must have the appropriate format, placement and prominence, to ensure that they can be easily discerned by the target audience.
Moreover, this advertising should not emphasise the ease or speed with which revolving credit can be arranged.
37. When advertising revolving credit, institutions are expected to include an explicit, clear, accurate and up-to-date reference to the cost of the credit. In particular:
a) Any advertising referring to revolving credit associated with a payment instrument (such as a card) should avoid the inclusion of the term "free" when referring to the instrument, or, in any event, should clarify that such absence of charges refers exclusively to the issue and/or maintenance of the payment instrument, but not to the drawdown of credit, which will be remunerated in line with the stipulated terms and conditions of the revolving credit.
b) When advertising the terms and conditions applicable to a transfer of the credit extended to a payment account, information on the cost (or otherwise, where applicable) of the transfer should be provided separately from information on the cost of any credit drawdowns. Thus, where the transfer is free of charge, it should be made clear that such absence of charges applies only to the transfer, but not to any drawdowns on the credit transferred.
38. When advertising revolving credit, the representative example of the annual percentage rate (hereinafter APR) must be in line with the criteria set forth in Article 4(5)(e) of Order EHA/1718/2010, and may not include any additional items or indices that may confuse the target audience. Moreover, where the example prepared in line with such legal criteria is not representative of, inter alia, the amount of the instalment or the repayment schedule, institutions must include a clear and prominent warning of this fact in the representative example.
4.2. Pre-contractual customer assistance
39. In accordance with Article 33 ter(2) of Order EHA/2899/2011, read in conjunction with Article 11 of Law 16/2011, institutions must provide individualised assistance to customers so that they may assess whether or not the credit agreement proposed caters to their interests, needs and financial situation, explaining the content of the pre-contractual information, the essential characteristics of the products proposed and the specific consequences such products may have for the customer, including the consequences of non-payment. In this regard, in accordance with the provisions of Rule 5(2) of Circular 5/2012, before providing such assistance, institutions must gather the appropriate information from customers on their needs and financial situation, thus ensuring that their explanations on the characteristics and risks of revolving credit are sufficient and are tailored to the customers’ interests, enabling customers to take informed decisions, regardless of the channel through which the credit is marketed. In particular, where revolving credit is marketed to potential customers with whom no prior relationship exists, institutions must take extra care when gathering the information required to tailor these explanations.
40. In order to duly comply with the provisions of Rule Five of Circular 5/2012, on suitable explanations and the duty of care, as well as with the duty to provide assistance under Article 11 of Law 16/2011, the staff of institutions (or of their distributors) are expected to cover the following aspects at this pre-revolving credit agreement assistance phase:
a) The credit repayment method envisaged, expressly noting the term "revolving", and whether or not this method can be changed, with details of how it operates.
b) The indefinite term or, where applicable, the automatically renewable fixed term, of the revolving credit.
c) With respect to the cost of the credit, the interest rate applicable to any drawdowns made, expressed in terms of the nominal interest rate (hereinafter NIR), in annual terms, and of the APR, together with a representative example of the latter.
d) An explanation of how the chosen instalments are to be distributed internally, detailing the order of the items for which such amounts are to be used. In this regard, customers should be warned that choosing smaller instalments could prolong the credit repayment period, thus accruing more interest.
e) Revolving credit simulations, with different combinations of limits and instalments, in each case showing the total credit, the estimated amortisation date and the interest payable. In the case of distance marketing, institutions should offer their customers simulations that allow for various combinations.
f) The right of withdrawal.
g) The consequences in the event of non-payment.
41. With a view to addressing any doubts or queries that customers may have at the pre-contractual assistance phase, institutions are expected to offer them resources such as e.g. a free or standard-rate information hotline or a contact email address.
42. In order to duly comply with Article 9 of Order EHA/2899/2011, when selling via digital channels and in addition to providing the information required under Article 10 of Law 16/2011, institutions should make information on the product characteristics detailed in the guidance in point 40 above available to their customers in the form of videos, infographics, simulators, chat bots or the like. In particular, customers should be able to view information on the payment methods, the applicable fees, the interest rate payable and the APR of the transaction before commencing the contracting process, and such information should be highlighted, framed and effectively contextualised within the digital screens, using pop-up windows, simulations and highlighting tools or techniques. Moreover, the information provided on the home screen should enable customers to understand all of the phases of the contracting process and the documentation required to contract the product.
4.3. Creditworthiness assessment
43. In accordance with Article 18 of Order EHA/2899/2011, before entering into any credit or loan agreement, institutions must assess the customer’s ability to meet the obligations thereunder. Specifically, in accordance with the above Article 18(2)(e), when arranging revolving credit, including that associated with payment instruments, customers must be assessed to check whether they have the economic wherewithal to meet their obligations over the life of the transaction without becoming over-indebted. To this end, the above Article 18(2)(e) provides that such customers must be in a position to pay instalments that, calculated annually, enable at least 25% of the credit limit granted to be amortised, calculating such instalments in 12 equal monthly instalments in line with the French amortisation system; the foregoing notwithstanding any other such instalment amount or instalment calculation method as may be contractually agreed. The same article provides that, before increasing the revolving credit limit, institutions must update any financial information they have on the customer and must reassess the customer’s creditworthiness.
44. For such purposes, in accordance with the provisions of Rule 12(2) of Circular 5/2012, institutions’ responsible lending procedures must take account of customers’ needs and interests when assessing their ability to pay, with the aim of ensuring that they do not take on too much debt.
45. Where there is no prior relationship with a potential borrower, institutions must take extra care when gathering and checking the documentation needed to ensure a proper creditworthiness assessment. For such purposes, pursuant to the provisions of Annex 6(13) of Circular 5/2012, revolving credit assessment and origination policies and procedures must detail the minimum documentation and information needed for the arrangement of revolving credit and over the life thereof. Such documentation must in any event include the documentation required to enable a customer’s ability to pay to be assessed based on reliable economic and financial information. Moreover, given the characteristics, complexity and target audience of revolving credit, institutions must also ensure that creditworthiness is properly assessed in the case of smaller credit amounts.
46. Furthermore, in accordance with the provisions of Article 18(2)(a) of Order EHA/2899/2011, when assessing a potential customer’s ability to pay, institutions must consult the customer’s credit history, to which end, regardless of the amount of the credit requested, they should consult any information available on the customer in credit or solvency databases or on the Banco de España’s Central Credit Register (CCR). In accordance with the provisions of paragraph 5 of the same article, where an application for revolving credit is turned down due to insufficient creditworthiness following such consultation, the institution must inform the customer of the result of the consultation.
4.4. Pre-contractual information
47. In line with Article 6 of Order EHA/2899/2011, read in conjunction with Article 10 of Law 16/2011, institutions must provide customers, free of charge and sufficiently in advance, on paper or in another durable format, with the information needed to compare different offers and take an informed decision on whether or not to enter into a credit agreement, by providing the ESIS. This customised information must be based on the terms and conditions of the credit offered and, where applicable, the customer’s stated preferences, so that products can be properly compared. Moreover, the additional information contemplated in Article 33 ter(1) of Order EHA/2899/2011 must be provided in a separate document.
48. Institutions are expected to provide such information sufficiently in advance to enable future customers to understand the product, identify the essential financial terms and conditions of the operation and easily compare such terms and conditions with those of other offerings available on the market, so that they can make an informed decision on whether or not to enter into a revolving credit agreement.
49. The pre-contractual documentation must be duly retained so that institutions can show that it was delivered in good time. For such purposes, merely including a standard clause in the agreement in which the borrower represents that they have been provided with such pre-contractual information, without the documentation itself having been furnished, or that they have been informed that such information is available on the institution's website, is not deemed sufficient to evidence that such pre-contractual information was delivered in due time.
50. Annex II of Law 16/2011 contains the ESIS model on consumer credit. Institutions must ensure that the contractual information does not contradict the content of the ESIS and that the various sections and parts appear in the same order. Moreover, in accordance with the provisions of Article 10(4) of Law 16/2011, institutions must provide any additional information they wish to communicate to the customer in a separate document, which may be attached to the ESIS. Institutions should have an ESIS model for each product marketed, as opposed to one single document containing information on all of their products, so that customers can better understand the characteristics of the specific product they wish to contract and the applicable terms and conditions.
51. Institutions must provide their customers with the additional pre-contractual information provided for in Article 33 ter(1) of Order EHA/2899/2011 in a separate, independent document, which may be attached to the ESIS. This information (on paper or in any other durable format) must be in line with the provisions of Rule 6(2)(3) of Circular 5/2012, thus providing customers with an appropriate means of comparing products. By way of example, a possible pre-contractual information model in addition to the ESIS on revolving credit is included in Annex 1 to these guidelines. In any event, the content of this document must be highlighted in line with the provisions of Rule 7 and Annex 3(1)(3)(3) of Circular 5/2012, without highlighting any information other than that detailed in Annex 3 and using a different method from that used to highlight any other information (including headings) in the document.
52. Where the same credit allows for deferred repayment methods other than revolving deferred payments (e.g. the instalment credit payment method), regard must be had to the provisions of Rule 6(2)(3)(d)(i) and (ii) of the above Circular 5/2012, on the minimum instalment to be considered when preparing the representative example for each payment method envisaged in the agreement.
53. In the case of revolving credit associated with payment instruments, customers must be provided with the prospectus containing the pre-contractual information on payment services provided for in Royal Decree-Law 19/2018 and Ministerial Order ECE/1263/2019 of 26 December 2019 on transparency of the disclosure terms and conditions and requirements applicable to payment services. Where such information has not been provided beforehand and to the extent that it expands on or supplements the information required under Law 16/2011, it should be provided to the customer at the same time as the pre-contractual information on the revolving credit.
54. Rule 7 of Circular 5/2012 sets out the criteria to be observed by institutions when highlighting certain contractual information. In the event that such information is designed using different colours, any black-and-white print or photocopy thereof should not make it harder to understand.
55. The insertion of a standard clause in the pre-contractual or contractual information in which customers represent that they have received sufficient information on the product beforehand to be able to understand its characteristics and decide whether or not to enter into an agreement, is not deemed sufficient to evidence that the institution has provided the customer with (or that the customer has received) the mandatory prior assistance.
56. Article 10(7) of Law 16/2011 provides that where, at the request of the customer, a product is contracted using a means of remote communication that does not allow for the provision of the pre-contractual information, institutions must provide the pre-contractual information on consumer credit immediately after entering into the agreement. Furthermore, institutions must provide their customers with the information envisaged in Article 33 ter(1) of Order EHA/2899/2011.
57. In accordance with the provisions of Article 33 sexies(3) of Order EHA/2899/2011, where more than one year has elapsed between the date of the agreement and the date on which the revolving credit is activated, the customer must again be furnished, on the date of such activation, with the ESIS and the representative example of the credit referred to in Article 33 ter(1) of the above Order. The same applies where more than one year has elapsed from the date on which a non-revolving payment method is changed to a revolving deferred payment method.
58. Article 8(3) of Order EHA/2899/2011 provides that each time the interest or fees charged for their services are settled, institutions must provide their customers with a settlement document clearly and precisely detailing: (i) the nominal interest rate applied in the period accrued and, where applicable, the rate applicable in the period set to commence; (ii) any fees charged, with precise details of the items, base and settlement period; (iii) any other expense included in the settlement; (iv) the taxes withheld; and (v) in general, any background information that customers may need to verify the settlement and calculate the cost of the service. In particular, the content and format of the settlement document provided to customers as a result of revolving credit drawdowns must comply with the provisions of Annex 4 of Circular 5/2012.
59. Moreover, in accordance with Rule 11(6) of Circular 5/2012, settlement documents may not contain any information unrelated to the settlement, and may not therefore be used to notify customers of contractual amendments, advertise products, etc.
60. Throughout the term of the agreement, at least once a quarter, institutions must furnish the information envisaged in Article 33 quinquies(1) of Order EHA/2899/2011. Section A) of Annex II of these guidelines includes an example of how institutions can provide customers with such information. Moreover, institutions should bear in mind the criteria detailed below:
a) In terms of information on the borrowing rate, in line with the contractual information provided for in Article 7 of Order EHA/2899/2011, the annualised nominal interest rate and the APR should be used, avoiding the inclusion of any additional indices, to ensure that customers properly understand the cost of the product. The information on the revolving payment method should indicate the amount of the instalment established for paying down the credit, whether in reference to a fixed amount in euro or a percentage of the credit.
b) In accordance with the provisions of Article 33 quinquies of Order EHA/2899/2011, such information must also include the estimated date on which the customer is likely to finish paying the credit drawn down and the total amount (broken down by principal and interest) ultimately payable by the customer if no further drawdowns are made and the instalment is not modified. Where the total amount ultimately payable by a customer includes any expenses other than the amortisation of principal and interest, institutions are also expected to include such information in the above breakdown.
61. In accordance with the provisions of Article 33 quinquies(2) of Order EHA/2899/2011, where a line of credit allows for different methods for repaying different drawdowns, the information envisaged in paragraph 1 of the above provision must be broken down by payment method, such that customers can at all times check and understand the settlement made. Furthermore, where repayments of drawdowns made under different payment methods are combined in one single instalment, the customer should be notified of such circumstance, with a breakdown of the amount of the instalment corresponding to each payment method used, and the customer should be informed that the different dates estimated for the amortisation of the credit drawn down correspond to the different credit payment methods.
62. Moreover, Article 33(3) of Order EHA/2899/2011 provides for additional disclosure obligations for cases in which the repayment instalment established is lower than that which would enable 25% of the credit limit granted to be amortised annually. In particular, the obligation to include examples for three specific scenarios regarding the possible savings that would be yielded by increasing the amount of the revolving credit payment instalment above that established on the date on which the notification is prepared, as well as the amount of the monthly instalment that would enable the customer to repay the entire revolving debt within one year. The disclosure obligations set out in the Order refer only to drawdowns made under the revolving deferred payment method. Section B) of Annex II to these guidelines includes an example of how institutions can provide customers with such information, indicating the items and figures that should be highlighted, in accordance with the provisions of Rule 11(8)(3) of Circular 5/2012.
63. In accordance with the provisions of Article 33 sexies(1) of Order EHA/2899/2011, where the customers so requests, institutions must provide the information envisaged in the above paragraph within not more than five working days. Such information is independent of the settlement document referred to in Article 8(3) of Order EHA/2899/2011. Moreover, whenever a revolving credit limit is raised, institutions must serve at least one month’s advance notice on the customer of the information envisaged in paragraph 2 of the same article, unless the exceptional scenario provided for in the final subparagraph of that paragraph has arisen.
64. Institutions should inform their customers that they may request the information specified in Article 33 sexies(1) of Order EHA/2899/2011, and of the channels through which they may do so. The information must be provided using a method no more onerous than the one by which it was requested, provided it can be properly viewed and, where applicable, downloaded in a durable format. Moreover, institutions should make available to their customers a tool enabling the preparation of the amortisation table referred to in paragraph 1(c) of the same article, with the option to download the tool.
65. In the event that partial or total early repayment is made without terminating the agreement, institutions should provide any customers who so request with information on how the amounts paid have been used and, where applicable, a breakdown of the outstanding debt by principal, interest and other expenses.
66. Institutions must have regard to the provisions of Article 33 octies of Order EHA/2899/2011 on the expenses they can charge their customers for providing the information envisaged in Articles 33 ter, 33 quinquies and 33 sexies of the above Order.
67. Where institutions market revolving credit combined with an insurance policy, they are expected to inform their customers, expressly and in straightforward language, of the ancillary nature and the characteristics of this product, as well as of the potential cost and the impact the failure to arrange such insurance may have on the terms and conditions of the credit.
68. The arrangement of such insurance is independent of the arrangement of the credit. Consequently:
a) The insurance premium does not form part of the periodic revolving credit instalment.
b) The revolving credit settlement document provided to customers with each interest settlement, as well as the other additional disclosure documents provided for in Articles 33 quinquies and sexies of Order EHA/2899/2011, detail the items deriving from the revolving credit agreement. Thus, any information referring to the insurance premiums must be clearly differentiated from the information on the periodic revolving credit instalments.
c) Unpaid insurance premiums may not be deemed debt deriving from the credit and, consequently, may on no account be capitalised or accrue the ordinary or other types of interest envisaged in the revolving credit agreement.
69. Moreover, when any associated payment protection insurance is arranged, institutions should not include any formulas in their revolving credit agreements that might prevent the activation of the insurance coverage, such as, for example, those based on changes to a revolving deferred payment method or changes to smaller instalments within this payment method.
70. In accordance with the provisions of Rule 6(1) of Circular 5/2012, the pre-contractual information must be clear, relevant, sufficient and unbiased and may not be misleading. Moreover, Rule 10(3) of the above Circular provides that the contractual documents must be drafted in a clear and understandable manner for customers, avoiding the use or, where applicable, explaining the meaning, of any technical terms. Furthermore, the agreement may not include any concepts that are unnecessary or irrelevant for the proper application and interpretation thereof. Thus, institutions are expected to ensure that the content of all of the documentation and information provided or made available to their customers, whether at the pre-contractual phase or upon formalisation of the agreement and throughout the life of the credit, can effectively be understood. The language and content of the information and documentation must be clear, straightforward and easy to understand.
71. Moreover, such documentation and information should be tailored to the channel through which such information is to be provided, in particular, where facilitated via digital devices or channels, in which case the readability of the information should be guaranteed.
72. These guidelines shall apply as from 31 December 2024.
