Credit intermediary: how many FINE documents must I present?

Is there a minimum number of FINE documents that a credit intermediary must present to each client? No. The legislation in force does not set a general quota of two, three or five FINE documents per client.

Scope: this answer applies only to credit agreements relating to immovable property covered by Decree-Law 74-A/2017. For personal or car credit that neither has a property-related purpose covered by Article 2 nor is secured by a mortgage, equivalent security or other right relating to immovable property, for example, the pre-contractual document is the FIN, not the FINE.

When must a FINE be provided?

For agreements covered by this regime, the FINE must be provided at two stages:

• For each simulation: the lender or intermediary must provide a FINE based on the information supplied by the client.
• After approval: the lender must provide a new FINE containing the approved conditions, together with the draft agreement.

Banco de Portugal confirms both stages. After approval, the lender remains bound by the proposal for at least 30 days, and the client cannot accept it during the first seven days so that there is time to consider the conditions. See the official explanation.

Fixed, mixed and variable rates do not mean three FINE documents

For credit used to purchase or build an owner-occupied primary residence, the lender presents the consumer with a FINE containing a simulation of the agreement conditions for variable, fixed and mixed interest-rate options. The lender then presents a proposal using the option selected by the consumer.

This requirement compares interest-rate options with the lender; it does not require three banks, three separate FINE documents or, by itself, create a minimum number of FINE documents.

A FINE and a proposal are not the same thing

A FINE and a proposal are not the same document, but they are directly related. Each credit intermediary that presents a proposal to a consumer must provide the corresponding FINE, even if the proposal is essentially identical to one presented earlier. When the credit is approved, the lender provides a new FINE containing the approved conditions, together with the draft agreement.

For untied credit intermediaries, the law requires them to:

• present a number of credit products representative of the market or of the specific type of product;
• state in the intermediation agreement the minimum number of proposals to be presented.

That number is set in the agreement. The law does not impose a nationwide minimum of two, three or five proposals.

What should be kept in the case file

As good practice, the case file should identify:

• the date, institution and main conditions of each simulation;
• the version of the FINE provided to the client;
• the approved FINE and corresponding draft agreement;
• for untied intermediaries, the express statement in the intermediation agreement on whether the credit proposals are binding, where applicable;
• in the same agreement, the consumer’s right to terminate it without giving a reason within three days.

Conclusion

For credit relating to immovable property, there is no fixed general number of FINE documents per client. The corresponding FINE must be provided for every simulation or proposal actually presented and, when the credit is approved, a new FINE containing the approved conditions.

Official sources

• Portuguese Official Gazette — Decree-Law 74-A/2017, Article 13
• Portuguese Official Gazette — Decree-Law 81-C/2017, Articles 60 and 62
• Banco de Portugal — FINE rules and Instruction 19/2017
• Banco de Portugal — Report assessing the impact of the Legal Framework for Credit Intermediaries, section 9.2.3
• Banco de Portugal — Carrying on credit intermediary activity
• Banco de Portugal — How to contract a mortgage
• Banco de Portugal — Mortgage interest rates
• Banco de Portugal — Pre-contractual information for consumer credit (FIN)

Related reading

• Tied and untied credit intermediaries: what are the differences?
• Credit intermediation commissions: how to manage them in a CRM