Assignment of credit claims by banks to non-banks allowed, non-bank not subject to special duty of care

On Friday 10 July 2020 the Dutch Supreme Court clarified that a bank’s duty of care does not preclude the bank from assigning a credit claim to a non-bank. The non-bank is not directly subject to the duty of care, but the non-bank might be confronted with consequences that stem from the bank’s duty of care.

This nuanced judgment is a positive step for banks and the securitization practice, both on a portfolio level, and for individual cases.

Most Dutch banks have a duty of care towards their clients, which is laid down in article 2 paragraph 1 of the General Banking Conditions, applicable in (almost) all banking relationships in the Netherlands. According to this article, banks need to be diligent in their services and take the interests of their clients into account, in a way that matches the nature of the service. The social function of banks also entails a special duty of care. This may include investigative, advisory, information and warning duties towards clients and/or third parties.

On Friday 10 July 2020 the Dutch Supreme Court clarified that the duty of care does not preclude banks from assigning claims to non-banks. The non-bank is not subject to the duty of care incumbent on banks, as this duty relates to banks’ unique position and is not an inherent aspect of the assigned claim. Obligations that arose from the duty of care prior to assignment are still binding on the non-bank. Similarly a judge would need to take into account that the claim originated from a bank subject to the duty of care when applying the universally applicable principles of reasonableness and fairness. While the duty of care does not directly apply, it is something to bear in mind when reviewing individual cases.

This nuanced judgment is a positive step for banks and the securitization practice. On a portfolio level assignment of bank originated claims are allowed; but for individual cases caveats will apply. The judgment can be read in Dutch. For further questions and background our colleagues Ewald, Dieuwertje and Frank are happy to assist.