EU Credit Servicing Directive
The EU directive on credit servicers and credit purchasers (EU) 2021/2167, which regulates the sale, purchase and servicing of non-performing loans (NPLs) originated by EU banks, is due to be transposed by 29 December 2023. The purpose of the directive is to promote a secondary market for non-performing loans by laying down a common framework for the sale and management of bank originated non-performing loans which are transferred or sold. It provides for a new EU wide authorisation and regulatory framework for credit servicers to be overseen by national competent authorities and it allows such authorised entities to passport credit servicing activities across the EU.
We have created an easy to digest guide that details how the new directive will be adopted by key EU jurisdictions. We will continue to update here as the directive moves towards implementation.
If you have any questions that are not answered below, please reach out to our team.
1. Is there an existing credit servicing regulatory regime in your jurisdiction?
The existing credit servicing regulatory regime in Cyprus includes (i) the Consumer Protection Law of 2021 (112(I)/2021) as amended, (ii) the Laws from 1999 to 2015 on Liberalisation of interest and related matters and (iii) the Consumer Credit Contracts Law of 2010 (Law 106(I)/2010) and their respective amendments.
In addition, the Consumer Credit (Mortgage and Hire Purchase Agreements) Act 2001 (Law 39(I)/2001) was repealed in 2017 and replaced by the Credit Agreements for Consumers in Relation to Residential Properties Law of 2017 (41(I)/2017).
2. Article 32 of the Directive provides that Member States that already have in place regimes for credit servicing that are equivalent to, or stricter than, those established in the Directive may allow entities already carrying out credit servicing activities under those regimes on 30 December 2023 to be automatically recognised as authorised credit servicers by the national provisions transposing the Directive.
If there is an existing credit servicing regime in your jurisdiction, is it expected that existing authorised credit servicers will be automatically recognised under provisions transposing the Directive?
The Ministry of Finance has launched a public consultation process (Consultation) in respect of the Directive. In the Consultation, it is acknowledged that the existing regime will need amendments in order to be considered “equivalent” to the regime under the Directive.
It is, therefore, expected that the existing credit servicing regime will be amended to mirror the Directive’s requirements.
Nevertheless, the Consultation notes that some existing authorised credit servicers, such as credit buyers, will be automatically recognised under provisions transposing the Directive. Some other entities, such as credit administrators, will be required to obtain a credit management license from the Central Bank of Cyprus.
3. If there is an existing credit servicing regulatory regime in your jurisdiction, is it proposed this will be replaced by the transposition of the Directive, or will both regimes exist in parallel?
Although the drafts of the transposing legislation have not yet been finalised or approved, the Consultation seems to suggest that the Ministry of Finance proposes some amendments to the existing legislation and some of the existing legislation to be replaced to reflect the transposition of the Directive.
Some of the proposed legislation includes:
(i)The Credit Administrators and Credit Buyers and Related Matters Law of 2023;
(ii)The Consumer Credit Contracts (Amendment) Law of 2023;
(iii)The Credit Agreements for Consumers in Relation to Residential Property (Amendment) Act 2023; and
(iv)The Interest Liberalisation and Related Matters (Amendment) Law of 2023.
In relation to the above legislation, the Credit Agreements for Consumers in Relation to Residential Property (Amendment) Act 2023 was voted down by the Plenary on July 13, 2023.
4. At what stage is the transposition of the Directive?
The Ministry of Finance launched the Consultation in January 2023 and submissions were closed on 5 February 2023.
It is not clear when the Ministry of Finance is expected to publish a response to the Consultation. Nevertheless, the transposing legislation must be implemented by 29 December 2023.
At the time of writing, no draft transposing legislation has been published.
Last updated: 1st August 2023
1. Is there an existing credit servicing regulatory regime in your jurisdiction?
The current process regarding the sale of credit to third parties is regulated by three different legal systems: 1) The Consolidated Act 2022-03-29 No. 406 “Financial Business Act”, 2) The Consolidated Act 2014-09-19 “Debt Collection Business Act” and 3) uncodified general principles of bond law regarding free change of creditor.
The Danish Financial Supervisory Authority has assessed in a public “Guiding Opinion” dated the 7 January 2020 that it is possible for financial businesses to dispose of NPLs under the current legislation, but such assessment is subject to review.
2. Article 32 of the Directive provides that Member States that already have in place regimes for credit servicing that are equivalent to, or stricter than, those established in the Directive may allow entities already carrying out credit servicing activities under those regimes on 30 December 2023 to be automatically recognised as authorised credit servicers by the national provisions transposing the Directive.If there is an existing credit servicing regime in your jurisdiction, is it expected that existing authorised credit servicers will be automatically recognised under provisions transposing the Directive?
Although we still await draft transposing legislation, The Danish Ministry of Industry, Business and Financial Affairs has stated in a publicly available memo that they assume the transposition of the Credit Servicing Directive will require changes in current legislation. It is further expected that these changes will result in amendments in the Consolidated Act 2022-03-29 No. 406 “Financial Business Act” and possibly the Consolidated Act 2014-09-19 “The Debt Collection Business act”.
3. If there is an existing credit servicing regulatory regime in your jurisdiction, is it proposed this will be replaced by the transposition of the Directive, or will both regimes exist in parallel?
Since there is currently no overall statutory framework for credit servicing, it is expected that the directive will result in an establishing of a license-based system, which will require amendments to the current Consolidated Act 2022-03-29 No. 406 “Financial Business Act”. In effect this new system is likely to take over the regulation of credit servicing and thus replace the current legal situation which is based on a mix of regulation.
4. At what stage is the transposition of the Directive?
At the time of writing, draft legislation has not been published yet.
We have contacted the Danish Ministry of Industry, Business and Financial Affairs, which has informed us that they expect to propose a bill in the second half of 2023.
Last updated: 1st August 2023
In absence of a speaker draft (Referentenentwurf), the implementation of the Directive into German statutory law is still unclear, and the answers given in this (German) guide might be subject to changes once the draft is available.
1. Is there an existing credit servicing regulatory regime in your jurisdiction?
Yes. In Germany, there is the Legal Services Act (Rechtsdienstleistungsgesetz) which has been in force since 1 July 2008.
2. Article 32 of the Directiveprovides that Member States that already have in place regimes for credit servicing that are equivalent to, or stricter than, those established in the Directive may allow entities already carrying out credit servicing activities under those regimes on 30 December 2023 to be automatically recognised as authorised credit servicers by the national provisions transposing the Directive.
If there is an existing credit servicing regime in your jurisdiction, is it expected that existing authorised credit servicers will be automatically recognised under provisions transposing the Directive?
As far as we can see, the few opinions (Stellungnahmen) in relation to the implementation of the Directive in Germany have not commented on this question. Most of the opinions, however, indicate that credit services in Germany are already provided by comprehensively regulated legal or collection service providers. The Legal Services Act and the Legal Services Supervision already ensure a high level of protection for debtors today.
Against this background, it seems possible that existing authorised credit servicers will be automatically recognised under the German implementation law.
3. If there is an existing credit servicing regulatory regime in your jurisdiction, is it proposed this will be replaced by the transposition of the Directive, or will both regimes exist in parallel?
In our view, it seems likely that the implementation of the Directive in Germany will be linked to the Legal Services Act. In addition, amendments to various other German laws, e.g., commercial law, banking supervisory law and tax regulations (as relevant) should be expected.
4. At what stage is the transposition of the Directive?
The Federal Ministries of Finance and Justice are currently working on a speaker draft (Referentenentwurf) which was initially expected to be released at the end of March 2023. However, at the time of writing, no draft has yet been published.
Last updated: 1st August 2023
1. Is there an existing credit servicing regulatory regime in your jurisdiction?
Greek Law 4354/2015 on «Servicing of non-performing loans, wage settlements and other urgent provisions implementing the agreement on fiscal targets and structural reforms», (Government Gazette, vol. Α’ 176/16.12.2015) regulates the credit servicing activities in Greece.
2. Article 32 of Directive provides that Member States that already have in place regimes for credit servicing that are equivalent to, or stricter than, those established in the Directive may allow entities already carrying out credit servicing activities under those regimes on 30 December 2023 to be automatically recognised as authorised credit servicers by the national provisions transposing the Directive.
If there is an existing credit servicing regime in your jurisdiction, is it expected that existing authorised credit servicers will be automatically recognised under provisions transposing the Directive?
The above Directive has not been yet transposed into Greek law. Moreover, a consultation has not been launched in this regard.
3. If there is an existing credit servicing regulatory regime in your jurisdiction, is it proposed this will be replaced by the transposition of the Directive, or will both regimes exist in parallel?
There is not any proposal yet in relation to the replacement or not of the existing credit servicing regulatory regime.
4. At what stage is the transposition of the Directive?
There is not an ongoing consultation. While we still await draft transposing legislation, a drafting committee has been set up for transposition into national legislation within the timeframe set out in the Directive.
Last updated: 1st August 2023
1. Is there an existing credit servicing regulatory regime in your jurisdiction?
Yes. The existing credit servicing regulatory regime is regulated under the Act CCXXXVII of 2013 on Credit Institutions and Financial Enterprises (the “Act”). Purchasing debts in a business-like manner is a financial service that is subject to licence in Hungary.
According to Section 10(1) of the Act, there are two categories of intermediaries (in Hungarian: közvetítő) under the Hungarian regime as follows:
(1) The tied intermediaries (in Hungarian: függő közvetítő) carry out their activities (i) as special intermediary services for and on behalf of a financial institution or more than one financial institution in respect of their non-competing financial services (“special services intermediary”) or (ii) as agency activities for and on behalf of a financial institution or more than one financial institution in respect of their non-competing financial services (“tied agent”), or (iii) as a payment services intermediary.
(2) The independent intermediaries (in Hungarian: független közvetítő) carry out their activities (i) as special intermediary services for and on behalf of several financial institutions in respect of competing financial services (“multiple special services intermediary”), or (ii) as agency activities for and on behalf of several financial institutions in respect of competing financial services (“multiple agent”), or (iii) in the form of brokering activities (“broker”).
We note that there are also soft-law type recommendations published by the HNB that are relating to requirements on the relations between credit servicers and retail/consumer borrowers. Such are HNB Recommendation No 2/2019 (II 13) and HNB Recommendation No 5/2022 (IV 22).
2. Article 32 of the Credit Servicing Directive (the Directive) provides that Member States that already have in place regimes for credit servicing that are equivalent to, or stricter than, those established in the Directive may allow entities already carrying out credit servicing activities under those regimes on 30 December 2023 to be automatically recognised as authorised credit servicers by the national provisions transposing the Directive.
If there is an existing credit servicing regime in your jurisdiction, is it expected that existing authorised credit servicers will be automatically recognised under provisions transposing the Directive?
We are not aware of any public consultation or relevant publicly available information/documentation relating to the current status of the implementation of the Directive.
Therefore, for the time being, we cannot assess whether it is expected that the existing authorised credit servicers will be automatically recognised under the Hungarian transposing legislation.
3. If there is an existing credit servicing regulatory regime in your jurisdiction, is it proposed this will be replaced by the transposition of the Directive, or will both regimes exist in parallel?
The draft of transposing legislation is not yet available.
Therefore, for the time being, we cannot comment on whether, by the transposition of the Directive, there will be a new piece of law setting out the new regime in parallel with the existing regime or whether the transposition will be implemented in a way of amending the Act by replacing the provisions relating to the existing regime.
However, as the current regime covers many aspects of the requirements set out in the Directive, a possible solution could be to amend the existing regime (i.e. the regulation of the intermediaries) in line with the Directive to allow intermediaries to carry out their tasks required by the Directive in relation to the NPLs and even introduce a new legal instrument at the same time to cover all the credit servicing activities under the Directive.
4. At what stage is the transposition of the Directive?
We are not aware of any consultation or published draft legislation relating to the transposition of the Directive into the Hungarian legislation to date.
Last updated: 1st August 2023
1. Is there an existing credit servicing regulatory regime in your jurisdiction?
Yes.
The existing credit servicing regulatory regime was introduced by the Consumer Protection (Regulation of Credit Servicing Firms) Act 2015 which amended Part V of the Central Bank Act, 1997 and amendments were subsequently made to the regime by the Consumer Protection (Regulation of Credit Servicing Firms) Act 2018 and the Consumer Protection (Regulation of Retail Credit and Credit Servicing Firms) Act 2022.
2. Article 32 of the Credit Servicing Directive (the Directive) provides that Member States that already have in place regimes for credit servicing that are equivalent to, or stricter than, those established in the Directive may allow entities already carrying out credit servicing activities under those regimes on 30 December 2023 to be automatically recognised as authorised credit servicers by the national provisions transposing the Directive.
If there is an existing credit servicing regime in your jurisdiction, is it expected that existing authorised credit servicers will be automatically recognised under provisions transposing the Directive?
Yes.
Following the conclusion of its public consultation process on the Directive (the “Consultation”), in June 2023 the Irish Department of Finance (the “DoF”) published the outcome of the Consultation and its decisions on the national discretions.
Having remarked in its Consultation document that the existing regime in Ireland is “considered broadly equivalent” to the regime under the Directive, the DoF have (as expected) signalled that credit servicers already authorised in Ireland will be recognised as authorised credit servicers for the purpose of the Directive.
3. If there is an existing credit servicing regulatory regime in your jurisdiction, is it proposed this will be replaced by the transposition of the Directive, or will both regimes exist in parallel?
Although we still await draft transposing legislation, the outcome of the Consultation and its decisions on the national discretions, although subject to change, indicates that the DoF is planning for a dual-regulatory regime, as follows:
- the Directive will apply to EU bank-originate d NPLs transferred or sold post transposition; and
- the existing Irish regulatory framework will apply to:
- EU bank originatedbank-originated NPLs transferred or sold before 29 December 2023 and, pre transposition; and
- (both pre and post transposition, it will apply to) NPLs originated by non-bank lenders and to performing/re-performi ng loans.
It remains to be seen how sales of mixed portfolios (NPLs coupled with performing/re-performing loans) originated by EU banks will be dealt with under the Directive.
4. At what stage is the transposition of the Directive?
As noted, the DoF launched the Consultation in January 2023. In June 2023 the DoF published the outcome of the Consultation and its decisions on the national discretions.
No draft transposing legislation has been published.
Last updated: 1st August 2023
1. Is there an existing credit servicing regulatory regime in your jurisdiction?
Yes (in part). Credit servicing activities are regulated in the context of the Italian securitisation transactions (Law no. 130/1999) and can be performed by credit institutions and Italian financial intermediaries enrolled in a dedicated register kept by the Bank of Italy pursuant to the Consolidated Banking Act (Legislative Decree no. 385/1993). Further provisions are included in Circular no. 288 of 3 April 2015 of the Bank of Italy (as amended and supplemented from time to time).
In addition, it should be noted that, in Italy, activities of credit recovery can be delegated to debt collection agencies, licensed pursuant to Art. 115 of Royal Decree no. 773/1931 (TULPS) but not subject to the supervision of the Bank of Italy (“Collection Agencies”).
2. Article 32 of the Directive provides that Member States that already have in place regimes for credit servicing that are equivalent to, or stricter than, those established in the Directive may allow entities already carrying out credit servicing activities under those regimes on 30 December 2023 to be automatically recognised as authorised credit servicers by the national provisions transposing the Directive.
If there is an existing credit servicing regime in your jurisdiction, is it expected that existing authorised credit servicers will be automatically recognised under provisions transposing the Directive?
Given that the Directive will not apply to servicing activities carried out by credit institutions or financial intermediaries (which are subject to specific regimes/rules), the Directive will need to be fully implemented in Italy in order to regulate all other “credit servicers” (such as the Collection Agencies) which are not subject to an “existing credit servicing regime”.
In particular, with reference to NPLs originated by banks, the Directive imposes requirements for servicing of such receivables more stringent than those currently applicable under Italian law to Collection Agencies.
The Italian legislator has not started the implementation process of the Directive and, therefore, there is uncertainty about the future applicable regime (given also that the additional requirements may be problematic for current “unregulated” Collection Agencies operating within Italy).
3. If there is an existing credit servicing regulatory regime in your jurisdiction, is it proposed this will be replaced by the transposition of the Directive, or will both regimes exist in parallel?
We refer to our answer provided at question 2 above.
4. At what stage is the transposition of the Directive?
At the time of writing, the implementation process has not been launched by the Italian legislator.
Last updated: 1st August 2023
1. Is there an existing credit servicing regulatory regime in your jurisdiction?
There is a mandatory provision under Polish law requiring the obtaining of a licence from the Polish Financial Supervision Authority to service non-performing receivables of a securitisation fund by an entity other than the management company of such fund, however, despite this particular regulation relating to the receivables of securitisation funds, there is currently no law that comprehensively regulates credit servicing activities in Poland (they are regulated by the general rules of Polish civil law).
2. Article 32 of the Directive provides that Member States that already have in place regimes for credit servicing that are equivalent to, or stricter than, those established in the Directive may allow entities already carrying out credit servicing activities under those regimes on 30 December 2023 to be automatically recognised as authorised credit servicers by the national provisions transposing the Directive. If there is an existing credit servicing regime in your jurisdiction, is it expected that existing authorised credit servicers will be automatically recognised under provisions transposing the Directive?
Article 71(1) of the bill transposing the Directive into Polish law, as submitted in the government legislative process on 23 June 2023, stipulates that entities already carrying out credit servicing activities on the date when the legislation enters into force may carry out these activities under existing rules, but only up to 29 June 2024. After that date, they will be required to obtain a licence to perform credit servicing activities and be registered in the register of credit servicers. However, the legislative process is still ongoing and the final wording of the new law is not yet known.
3. If there is an existing credit servicing regulatory regime in your jurisdiction, is it proposed this will be replaced by the transposition of the Directive, or will both regimes exist in parallel?
The bill transposing the Directive into Polish law, as submitted in the government legislative process on 23 June 2023, does not derogate the existing measures resulting from the Act on Investment Funds and the Management of Alternative Investment Funds. Given their limited scope, we cannot exclude that they will exist in parallel with the new regime introduced by the new law. However, the legislative process is still ongoing, and therefore it is possible that these measures may still be replaced by the new regulations.
4. At what stage is the transposition of the Directive?
On 23 June 2023, the Polish Minister of Finance submitted in the government legislative process a bill transposing the Directive, which was referred for public consultation and evaluation. Entities that were provided with the draft had until 24 July 2023 to submit their comments, and their feedback is now (on the date of writing) being analysed. The new law is expected to enter into force in the third quarter of 2023.
Last updated 8th September 2023
1. Is there an existing credit servicing regulatory regime in your jurisdiction?
No. The existing credit servicing activity is subject to general rules under Portuguese law.
2. Article 32 of the Directive provides that Member States that already have in place regimes for credit servicing that are equivalent to, or stricter than, those established in the Directive may allow entities already carrying out credit servicing activities under those regimes on 30 December 2023 to be automatically recognised as authorised credit servicers by the national provisions transposing the Directive.
If there is an existing credit servicing regime in your jurisdiction, is it expected that existing authorised credit servicers will be automatically recognised under provisions transposing the Directive?
This question is not applicable because there is no specific legal framework under Portuguese law which is applicable to existing credit servicing activity.
3. If there is an existing credit servicing regulatory regime in your jurisdiction, is it proposed this will be replaced by the transposition of the Directive, or will both regimes exist in parallel?
This question is not applicable because there is no specific legal framework under Portuguese law which is applicable to existing credit servicing activity.
4. At what stage is the transposition of the Directive?
At the time of writing, no public consultation or draft transposing legislation has been published.
Last updated: 1st August 2023
1. Is there an existing credit servicing regulatory regime in your jurisdiction?
No, there isn’t any credit servicing regime currently in force in Spain. Credit servicing is currently ruled by Spanish civil law.
Notwithstanding the above, most of the servicers belong to the Spanish National Debt Collection Association (Asociación Nacional de Entidades de Gestión de Crédito) and follow the recommendations (soft law) issued by such association.
2. Article 32 of the Credit Servicing Directive (the Directive) provides that Member States that already have in place regimes for credit servicing that are equivalent to, or stricter than, those established in the Directive may allow entities already carrying out credit servicing activities under those regimes on 30 December 2023 to be automatically recognised as authorised credit servicers by the national provisions transposing the Directive.
If there is an existing credit servicing regime in your jurisdiction, is it expected that existing authorised credit servicers will be automatically recognised under provisions transposing the Directive?
N/A.
3. If there is an existing credit servicing regulatory regime in your jurisdiction, is it proposed this will be replaced by the transposition of the Directive, or will both regimes exist in parallel?
N/A.
4. At what stage is the transposition of the Directive?
The Ministry for Economic Affairs and Digital Transformation launched the public consultation on 26 October 2022 and submissions were closed on 16 January 2023.
No draft transposing legislation has been published yet. The plan of the Government was to publish a first draft no later than end of September, so that the Directive could be implemented before year end.
However, snap elections have been held recently (July 23) and no political party has obtained a clear majority to form a government, which complicates the objective of implementing the directive by 2023.
Last updated: 1st August 2023
1. Is there an existing credit servicing regulatory regime in your jurisdiction?
Yes.
Banks or other financial institutions and the operations of such in Sweden are mainly regulated by The Banking and Financing Business Act (2004:297) (Act). A bank or a financial institution that acquires a claim issued by another subject does so within the framework of its ordinary course of business. Moreover, a financial institution may commission a third party to perform such financial services (which constitutes “financial operations” within the meaning of the Act).
Within the meaning of the Directive, "credit servicing" includes occasions where, on behalf of a creditor, a financial institution ,according to the Act, may commission a third party . Finally, credit servicing also includes such activities which, according to Swedish law, are subject to a permit - such as debt collection activities pursuant to the Debt Recovery Act (1974:182) (DRA).
2. Article 32 of the Directive provides that Member States that already have in place regimes for credit servicing that are equivalent to, or stricter than, those established in the Directive may allow entities already carrying out credit servicing activities under those regimes on 30 December 2023 to be automatically recognised as authorised credit servicers by the national provisions transposing the Directive
If there is an existing credit servicing regime in your jurisdiction, is it expected that existing authorised credit servicers will be automatically recognised under provisions transposing the Directive?
According to the analysis made in the Official Reports of the Swedish Government, 2023:3, such institutions that conduct debt collection operation of NPLs on behalf of a creditor under a permit may continue with such operation until 29 June 2024. Such institutions must, however, file for a new permit under the new legislation to cover the period from 30 June 2024.
3. If there is an existing credit servicing regulatory regime in your jurisdiction, is it proposed this will be replaced by the transposition of the Directive, or will both regimes exist in parallel?
It is proposed that the Directive will be incorporated into new legislation which will exist in parallel with the existing credit servicing regime. As a consequence, the new legislation will regulate the part of the debt collection business which is carried out by a credit servicer, credit purchaser, representatives and providers, whilst the applicable Debt Recovery Act would continue to regulate such other debt collection activities not covered by the new legislation.
This would mean that those whose business is covered by the new legislation will be exempt from the Debt Recovery Act and those whose business does not fall within the scope of the new legislation will be required to comply with the Debt Recovery Act.
4. At what stage is the transposition of the Directive?
A special inquiry was summoned by the Swedish government on 23 June 2021 with the remit to investigate current Swedish law in light of the Directive. Such report was published in the Official Reports of the Swedish Government, 2023:3, in January 2023, and remitted to a number of referral bodies, which had until 21 April 2023 to submit their referral statements on the report.
At the time of writing, the Swedish Government is yet to publish a draft transposing legislation, taking into account the submitted referral statements of the referral bodies, to the Swedish Parliament.
The new legislation is expected to come into force in Sweden on 1 January 2024.
Last updated: 1st August 2023
UK is no longer part of the EU and the rules do not apply to servicers of NPLs originating from a non-EU bank, or if the credit servicing activities are carried out by an EU credit institution (such as the bank itself), fund managers, UCITS investment companies or a credit servicer that is supervised by a state authority. Non-EU (including the US and UK) purchasers will still need to be aware of the requirements of the new directive. A credit purchaser that is not established in the EU must designate in writing a representative that is established in the EU whenever a transfer of a credit agreement is concluded. This representative will be responsible for the obligations imposed on credit purchasers under the Directive (Article 19).
Last updated: 1st August 2023
