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PARI / PERSI portuguese regulation

Both PARI and PERSI​

  • Customers have the right to get free information, counseling and tracking to not get into or recover from arrears (there are 3rd party entities that provide this, not the actual creditors, but the creditors need to provide the information about those 3rd parties)
  • Creditors need to inform about the risks of getting indebted before contract signature. Also what are the processes to get out of debt
  • It’s forbidden to charge a commission/fee for the renegotiation of a credit contract. Creditors can however charge for “costs”, such as notarization, taxes, etc.
  • Creditors are obligated to
    • implement digital systems to identify facts that indicates financial capacity degradation, sending the appropriate alerts.
    • Define processes for the creditors’ workers to follow when they notice financial capacity degradation
    • Define processes for the creditors’ workers when the customer self-reports financial capacity degradation
    • Financial capacity degradation refers to:
      • Bounced checks
      • Being put in the list of risk for check usage
      • Debts towards taxes or social security
      • Insolvency
      • Lawsuits / litigations
      • Pledge assets
      • Other unfulfilled contracts with the credit institution

The process​

  • Credit institutions can require the adequate documentation to evaluate financial capacity. Customers have 10 days to comply. If the creditor establishes that there is financial capacity to fulfill contract obligations through renegotiation or restructuring of the debt(s), the credit institution should offer one or more proposals that are adequate to the customers’ financial situation, objectives and needs.This communication needs to be in writing.

PARI​

  • Process for customers that are at risk of not paying (but are not in arrears yet)
  • Must contain:
  1. The procedures for permanent and systematic tracking of the credit contract’s execution (defined by the Bank of Portugal)
  2. The facts that were considered for financial capacity degradation (defined by the Bank of Portugal)
  3. The procedures to collect, treat and analyse the data of at-risk customers (defined by the Bank of Portugal)
  4. The procedures and deadlines to contact at-risk customers after the first facts are detected (can’t exceed 10 days) (defined by the Bank of Portugal)
  5. Possible solutions that can be proposed
  6. The structures responsible for the development of the procedures and actions provided for in PARI, indicating, in detail, the respective competences and describing the mechanisms foreseen for their articulation with other structures or entities potentially involved in these procedures and actions.
  7. The planning for training credit institution's  workers that deal with PARI actions
  8. List of all 3rd party providers for PARI actions, if they exist, detailing their service and mechanisms
  • PARI must be available to the financial institution’s workers in ways that they can consult it immediately and permanently (not sure if I understood this, but seems to be that there is no need for approvals to “enable” it to certain customers)

PERSI​

  • Process for customers that are 1 or 2 months in arrears

Initial phase

  • After a maximum of 15 days the debtor must be informed about the arrears and the amount in debt
  • If there is no payment, the customer is obligatorily inserted into PERSI between the 31st and 60th DPD
  • The client must also be inserted into PERSI if:
    • The customer is in arrears and asks for it in writing (“writing” I inferred from “lasting support”)
    • The customer self-reported risk of not fulfilling obligations. The customer is inserted in PERSI on DPD 1.
    • When the customer fails to pay other PERSI agreements made with the same institution. The institution must inform the customer of trying to recover the debt in a single procedure (debt restructuring?)
  • Inserting the customer in the PERSI must be informed to the customer after 5 days or before. The elements communicated in all this are also defined by the Portuguese Bank

Proposal evaluation phase

  • There is a maximum of 30 days after the customer enters PERSI for the institution to communicate with the customer about:
    • Result of the financial capacity evaluation (if the customer doesn’t have the means to fulfil the obligations, there is no PERSI agreement)
    • Present regularization proposal(s)

Negotiation phase

  • If the client refuses, the institution can present alternative proposals
  • If the customer proposes changes to the proposal, the institution has up to 15 days to accept or refuse (in writing). They can present a new proposal if they wish.
  • The customer accepts, refuses or propose changes to the proposal up to 15 days after it

PERSI extinction

PERSI ends when:

  • Full payment or any legally predicted extinction of the obligation
  • When there is an agreement between the parts to regularize the full situation
  • On the 91st day after the integration in PARSI, unless the parts had agreed in writing in its prorogation
  • Declaration of insolvency of the customer

The institution can, by its initiative, end the PERSI if:

  • pledge assets
  • Some legal thing that I don’t understand (b) Seja proferido despacho de nomeação de administrador judicial provisório, nos termos e para os efeitos do disposto na alínea a) do nº 3 do artigo 17.º-C do Código da Insolvência e da Recuperação de Empresas;)
  • The institution concludes the customer doesn’t have the financial capacity
  • The customer doesn’t cooperate with the institution (not providing information, for example)
  • The customer refuses the proposal
  • The institution refuses the customer’s counterproposal

The institution must inform in writing about the extinction of the PERSI, describing its legal foundations. It is only valid after the communication. (All this is defined by the Bank of Portugal)

PERSI internal communication must contain

Must contain and be permanently and immediately available to workers:

  • The procedures for customer contact in each phase
  • The procedures to collect, treat and analyse the data of at risk customers
  • Possible solutions that can be proposed
  • The structures responsible (and 3rd parties) for the development of the procedures and actions in the PARI, stating in detail their competency and mechanisms used.
  • The planning for training credit institution’s  workers that deal with PARI actions

Individual processes

All individual customers integrated to PERSI must have their individual processes kept in for 5 years after its extinction. It must contain all the documents relevant to the procedure: communication, financial capacity assessment reports and proposals.

Guarantor

  • If the contract has a guarantor, they must be informed up to DPD 15 of the amount and how long it is in debt
  • If the guarantor requests, the PERSI can be made with the guarantor up to 10 days after the communication.

Decreto-Lei n (bportugal.pt) (Art. 6)