PORTUGAL Law and Practice Contributed by: João G Gil Figueira, Rodrigue Devillet Lima and Catarina Andrade Miranda, GFDL Advogados
sent adequate information on the conditions of the loans being offered to the consumer. Micro- and short-term loans are also allowed for pay - ment, and e-money institutions are allowed, provided that the creditors meet some criteria and conditions. 4.2 Underwriting Processes Lending institutions manage the underwriting process until a loan agreement is concluded. This process entails assessing the borrower’s creditworthiness, conducting credit rating checks, and utilising inter - nal risk classification procedures and external credit assessments. The type of collateral provided also has a bearing on the approval process. Each Portuguese bank usually has its own set of underwriting criteria. Additionally, all lenders are subject to AML obligations under Law No 83/2017 of 18 August. The regulatory landscape governing credit checks on consumers, particularly for consumer real estate loans, is multifaceted. The Consumer Credit Direc - tive (2008/48/EC), incorporated into Portuguese law, is the cornerstone for overseeing all consumer loan agreements. However, the evolving nature of financial transactions necessitates ongoing updates to regula - tory frameworks. Moreover, real estate-backed loans are subject to addi - tional stringent regulations under the Mortgage Credit Directive (2014/17/EU), which is also transposed into Portuguese law. These regulations encompass vari - ous aspects, including advertising, contractual infor - mation dissemination and rigorous credit checks. The overarching goal is safeguarding consumers’ interests and ensuring responsible lending practices within the real estate sector. 4.3 Sources of Funds for Fiat Currency Loans The traditional Portuguese lending market relies on deposit-based solutions involving a banking licence. From a commercial perspective, legacy players such as banks and credit institutions are in a position to draw funding from deposits. They are usually backed by solid human and technological resources, allowing those players to collect deposits, enter into inter-bank lending, and issue debt and securitisations.
Specialised lending organisations, such as retail credit firms, have various avenues to secure funds for their lending operations. They can raise capital through securitisation or borrowing from other investors or institutions. Additionally, they may utilise peer-to- peer lending platforms, such as crowdfunding service providers, to access funds. Peer-to-peer lending plat - forms will allow investors’ funds to be sourced. 4.4 Syndication of Fiat Currency Loans Syndicated loans involve several parties, and complex documentation is mostly used for acquisitions or in the context of restructuring. Therefore, loan syndica - tion is reserved for the largest transactions, falling out - side most fintech players’ market scope and practice. Typically, the most significant financing contracts are conducted outside online platforms, contributing to the country’s limited occurrence of loan syndication. 5. Payment Processors 5.1 Payment Processors’ Use of Payment Rails Payment rails represent the digital infrastructure, facilitating cashless transactions by transferring funds from a payer to a payee. Payment processors have the flexibility to select their preferred payment rail. How - ever, certain fixed transaction systems have become established within traditional account-based payment systems. For instance, within the Single Euro Pay - ments Area (SEPA), bank transfers occur through the SEPA Instant Transfer Scheme, facilitating transfers between bank accounts. Faster Payments’ “Instant Payment” rail allows swift bank-to-bank transfers, a component of the European SEPA system widely supported by banks and savings banks in Portugal. This service operates round the clock, enabling users to execute transfers promptly. Additionally, payments can be initiated via the SWIFT network to any member bank worldwide. Modern payment methods diverge from conventional networks, enabling direct peer-to-peer transfers with - out intermediary financial institutions. This innovation allows users to transfer funds between accounts, bypassing traditional banking systems seamlessly. It should be noted that although there is no legal
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