Mid-January 2021, the ECON Committee of the European Parliament finally adopted the report from MEP Esther de Lange on the proposed directive on credit servicers and credit buyers. The link to the adopted text can be found here: REPORT on the proposal for a directive of the European Parliament and of the Council on credit servicers, credit purchasers and the recovery of collateral (europa.eu)
The report has been formally endorsed by the EP Plenary so trilogue discussions between the 3 institutions (Council, Commission and European Parliament) started beginning February on any remaining contentious points and then the directive will be adopted.
It aims at ensuring a better secondary market for Non-Performing Loans by tackling undue obstacles to credit servicing and to the transfer of bank loans to third parties across the EU. The proposal provides for a definition of the activities of credit servicers, establishes common standards for authorisation and supervision and imposes conduct rules across the EU.
Purchasers of bank loans are required to notify authorities when acquiring a loan. Third-country purchasers of consumer loans are required to utilise authorised EU credit servicers. Legal safeguards and transparency rules are set out to ensure that the transfer of a loan does not affect the rights and interest of consumers. The proposal also intends to provide banks with a mechanism to accelerate the value recovery from secured loans via an extrajudicial enforcement of procedures commonly used to realise collateral, such as public auction or private sale.
The proposed out-of-court collateral enforcement (accelerated extrajudicial collateral enforcement, AECE) is strictly limited to loans granted to corporates and applies only if prior agreement between the secured creditor and business borrower is achieved when concluding the loan contract. Consumer loans are excluded.
From the text below of the adopted article 3 of the report on definitions, business information is NOT per se in the scope of the directive, but all information that is passed for credit worthiness checks would be.
A point to be noted is that in its article 2 on scope, the European Parliament kept the article 4.a which gives the Member States the possibility to exempt notaries and bailiffs from the scope of application of the directive.
Article 3: definitions
- (7a) ‘credit service provider’ means a third party used by a credit servicer to perform any of the activities listed in point (7b);
- (7b) ‘credit servicer’ means a legal person who, in the course of its business, manages and enforces the rights and obligations related to the creditor’s rights under a non-performing credit agreement or to the non-performing credit agreement itself on behalf of the creditor or on behalf of itself, and carries out at least one or more of the following activities:
- collecting or recovering payments due related to the creditor's rights under a credit agreement or to the credit agreement itself from the borrower where it is not a payment service as defined in Annex I of Directive 2015/2366, in accordance with national law;
- renegotiating, in accordance with the requirements provided in the national law, of the terms and conditions related to the creditor’s rights under a credit agreement or of the credit agreement itself with borrowers in line with the instructions given by the creditor, where he is not a credit intermediary as defined in point (5) of Article 4 of Directive 2014/17/EU or point (f) of Article 3 of Directive 2008/48/EC;
- administering any complaints in relation to the creditor’s rights under a credit agreement or to the credit agreement itself;
- informing the borrower of any changes in interest rates, charges or of payments due related to the creditor’s rights under a credit agreement or the credit agreement itself.
- (9) ‘home Member State’ means, in respect to the credit servicer, the Member State in which its registered office is situated or, if under its national law it has no registered office, the Member State in which its head office is situated or, in respect to the credit purchaser, the Member State in which the credit purchaser is domiciled or established.
- (10) ‘host Member State’ means a Member State, other than the home Member State, in which a credit servicer has established a branch, has appointed a credit service provider referred to in Article 10 or where the borrower is domiciled or established at the time of concluding the credit agreement.
- (11) 'consumer' means a natural person who, in credit agreements covered by this Directive, is acting for purposes which are outside his trade, business or profession.
- (11a) non-performing credit agreement’ means a credit claim that meets the criteria set by Annex V, Part 2, paragraph 213 of Commission Implementing Regulation (EU) No 680/2014 to be considered as a non-performing exposure.
Article 4: scope
- 4a. Member States may exempt from the application of this Directive the servicing of creditor’s rights under a credit agreement or the credit agreement itself carried out by members of a profession, subject to the supervision of each Member State, such as public notaries and bailiffs as defined by national law, or lawyers as defined in point (a) of Article 1(2) of Directive 98/5/EC of the European Parliament and of the Council when conducting activities referred to in Article 3(9) of this Directive as part of their profession.
Source: FEBIS, European Parliament