Report on Banking Supervision 2017 –Conduct supervision-

Banco de España has published on March 27^th on its website the Report on Banking Supervision for 2017Abre en ventana nueva, which sums up its supervisory actions and procedures throughout the year, including banking customer protection.

The Report is structured in chapters, each of which outlines a specific aspect of Banco de España’s supervisory functions (micro and macroprudential monitoring, market conduct supervision and the exercise of sanctioning powers), as well as Banco de España’s participation in those international institutions in charge of banking regulation and supervision.

As previously mentioned, Banco de España’s supervisory duties are to monitor the market conduct and the fulfillment of transparency and customer protection regulations. These tasks are performed in addition to the Single Supervisory Mechanism (MUS in Spanish), which is a key element of Europe’s macroprudential banking supervision. This Report dedicates a specific chapter to describe the efforts made by this institution in order to achieve that supervised credit institutions improve the relationship they have with consumers, which must be of a maximum transparency.

Six sanctions proceedings were opened in 2017as a result of these supervision and monitoring tasks, sending 122 letters of formal notice to a wide range of credit institutions.

Some of the major issues referring to market conduct that are described in the last Report are:

• Transparency on the marketing of mortgage credits and loans, as one of the main objectives. Thirty four inspections were performed in 2017 in order to verify if credit institutions were in compliance with regulations on marketing transparency, on the correct application of contractual conditions and on the proper calculation of the APR for these products. Another priority for Banco de España are mortgage debtors with severe economic difficulties, evidenced by the actions taken to ensure that credit institutions comply with regulations on protection of vulnerable mortgage debtors.

• Five actions were taken regarding consumer credits, in order to verify if credit institutions were providing clear and transparent information, especially with revolving credit cards.

• Regarding the advertising of banking products, there have been a wide range of supervisory actions taken, affecting 312 credit institutions and focusing on if their advertisements comply with current regulations, as well as if there is an adequate internal policy on commercial communication with the necessary procedures and controls.

• Regarding the marketing of contribution of funds to credit unions, massive actions were taken that virtually covered the whole sector, in order to verify that the information that new members received from the credit union was absolutely transparent.