Circular No. 38/2024/TT-NHNN on the advisory activities of credit institutions and foreign bank branches

CIRCULAR

Regulations on advisory activities of credit institutions and foreign bank branches

foreign

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Pursuant to the Law on the State Bank of Vietnam dated June 16, 2010;

Pursuant to the Law on Credit Institutions dated January 18, 2024;

Pursuant to Decree No. 102/2022/NĐ-CP dated December 12, 2022 of the Government stipulating the functions, tasks, powers, and organizational structure of the State Bank of Vietnam;

At the proposal of the Director of the Legal Department;

The Governor of the State Bank of Vietnam issues this Circular stipulating advisory activities of credit institutions and foreign bank branches.

PART I

GENERAL PROVISIONS

Article 1. Scope of Regulation

This Circular stipulates the implementation of advisory services regarding banking operations and other business activities of credit institutions and foreign bank branches.

Article 2. Applicability

1. Commercial banks, cooperative banks, comprehensive finance companies, specialized finance companies, people's credit funds, microfinance organizations; foreign bank branches (hereinafter referred to as credit institutions).

2. Organizations and individuals related to the advisory activities of credit institutions.

Article 3. Explanation of Terms

In this Circular, the following terms shall be understood as follows:

1. Advisory services regarding banking operations and other business activities (hereinafter referred to as advisory services) are activities carried out by credit institutions, including collecting, processing information, applying professional knowledge, identifying issues, evaluating issues to propose solutions and plans suitable for the scope of advisory activities prescribed in Article 4 of this Circular according to customer requirements.

2. Advisory staff is an employee of a credit institution providing advisory services, assigned and tasked with directly advising customers according to the content agreed upon in the advisory service contract.

3. Customer is an organization (including other credit institutions) or individual using advisory services of credit institutions. Customers using advisory services of people's credit funds are members of those people's credit funds.

4. Credit institution providing advisory services is a credit institution licensed by the State Bank of Vietnam (State Bank) with advisory services regarding banking operations and other business activities included in its license.

Article 4. Scope of advisory activities

1. Credit institutions providing advisory services may only provide advisory services regarding banking operations and other business activities specified in the license issued by the State Bank to such credit institutions.

2. Solutions and plans prescribed in Clause 1, Article 3 of this Circular must be implemented by the credit institution providing advisory services or another credit institution in accordance with the scope of banking operations and other business activities consistent with the license issued by the State Bank to the credit institution.

Article 5. Principles of advisory activities

Credit institutions providing advisory services must ensure compliance with the following principles:

1. Adhering to legal regulations and bearing legal responsibility for advisory activities conducted by advisory staff and the content of advisory services.

2. Bearing responsibility for supervising adherence to professional ethics and the implementation of advisory activities by advisory staff.

3. Ensuring the independence, honesty, and objectivity of advisory activities.

4. Adhering to legal provisions on customer information confidentiality during the provision of advisory services except where otherwise agreed in writing with the customer or where the law provides otherwise.

5. Credit institutions providing advisory services have autonomy in conducting advisory activities.

6. Conducting advisory activities through electronic means must comply with legal provisions on electronic transactions.

Chapter II

SPECIFIC PROVISIONS

Article 6. Internal regulations

1. On the basis of this Circular and relevant laws, before implementing advisory services, credit institutions providing advisory services must establish internal regulations on advisory activities.

Within ten days from the date of issuance, amendment, supplementation, or replacement of internal regulations, credit institutions providing advisory services shall submit directly or send via postal service to the State Bank branch in the province or centrally governed city (for credit institutions providing advisory services that are microfinance organizations and people's credit funds) or send to the State Bank (Supervision and Inspection Department) for other credit institutions.

2. The internal regulations of credit institutions providing advisory services regarding advisory activities must include at least the following contents:

a) Procedures for receiving customer requests and signing advisory service contracts;

b) Procedures for conducting advisory activities, including collecting, processing information, applying professional knowledge, identifying issues, assessing issues, proposing solutions, plans consistent with the scope of advisory activities prescribed in Article 4 of this Circular; and risk management procedures for advisory activities;

c) Responsibilities and obligations of each department and individual related to the implementation of advisory activities. Internal regulations must clearly specify the actions that advisory staff can perform and cannot perform during the advisory process;

d) Professional ethics standards for advisory staff as stipulated in Article 7 of this Circular and the responsibility to monitor compliance with professional ethics standards by credit institutions providing advisory services;

đ) Regulations on training, organizing training, testing, and evaluating the professional quality of advisory staff regularly;

e) Procedures for receiving and resolving complaints from customers related to advisory activities.

Article 7. Professional ethics standards for advisory staff

1. Have professional knowledge about the advisory content provided to customers.

2. Be honest, fair, careful, and incorruptible; shall not provide false or misleading information about the features, benefits, or functions of transactions being advised.

3. Act in the best interest of the customer; the advisory content proposed should be appropriate to the information provided by the customer (if any) about their financial situation, behavioral capacity, social understanding, financial goals, and needs.

4. Safeguard and keep separate the customer’s money and assets at the credit institution providing advisory services from the advised transaction unless otherwise agreed by all parties.

5. Shall not make decisions on behalf of the customer or influence the customer's decision-making; shall not disclose customer information or information related to advisory contracts to third parties without the customer's written consent, except as required by authorized agencies under the law.

6. Warn customers about potential risks that may arise when implementing advised solutions or plans.

Article 8. Customer Contact

In cases where advisory staff intend to advise customers on products, services, or transactions without a customer request, the advisory staff must inform the customer and obtain prior consent before proceeding with the advice.

Article 9. Fees in advisory activities

Credit institutions providing advisory services have the right to charge fees for advisory activities. The fee levels for advisory activities must be publicly displayed and must be recorded in the advisory contract.

Article 10. Advisory Contracts

1. Credit institutions providing advisory services and customers must agree on the terms and commitments through an advisory contract in accordance with the provisions of the law.

2. An advisory contract must include at least the following contents:

a) Name, address, other means of contact (if any); legal representative or authorized representative of the credit institution providing advisory services; name, address, other means of contact (if any) of the customer who is an organization; name, address, individual identification number, other means of contact (if any) of the customer who is an individual;

b) Objectives, scope of advisory services;

c) Methods of implementing advisory services;

d) Rights and obligations of the credit institution providing advisory services;

đ) Rights and obligations of the customer;

e) Duration of the contract;

g) Fees for advisory activities and payment methods;

h) Dispute resolution methods;

i) Effectiveness of the contract;

k) Term of the contract;

l) Agreement on liability for damages of the parties when breaching the contract.

3. Amendments and supplements to advisory contracts shall be carried out according to the agreement of the parties in accordance with this Circular and relevant legal provisions.

Chapter III

IMPLEMENTING PROVISIONS

Article 11. Effective Date

1. This Circular takes effect from July 1, 2024.

2. From the date this Circular takes effect, credit institutions that have been granted a License for banking and financial advisory services; advisory services in the banking and financial sector; advisory services on banking and finance; financial advisory services related to microfinance as stipulated in the Law on Credit Institutions dated June 16, 2010 and the Law Amending and Supplementing Certain Provisions of the Law on Credit Institutions dated November 20, 2017 shall continue to provide advisory services in accordance with this Circular without having to reapply for a License until amendments, supplements, or replacement of the License.

Article 12. Implementation Organization

The Director of the Office, Heads of the Legal Department, Directors of the Inspection Departments under the Banking Supervisory Authority, Governors of the State Bank of Vietnam Branches in provinces and centrally-administered cities, credit institutions, and foreign bank branches are responsible for organizing the implementation of this Circular./.