Edition 2023, Issue No: 103

On 26 December 2023, the S.I. No. 644/2023 – European Union (Credit Servicers and Credit Purchasers) Regulations outlining the regulatory framework for credit servicing and credit purchasing activities within the European Union was publised for the purpose of giving effect to Directive (EU) 2021/2167 (NPLD). The regulations cover various aspects including authorization requirements for credit servicers, cross-border credit servicing activities, obligations of credit purchasers, supervision by competent authorities, safeguards, and duty to cooperate, as well as consequential amendments to existing legislation.
The regulations set out specific requirements for granting authorization to credit servicers. These requirements include the legal status of the applicant, the good repute and qualifications of board members and senior management, adequate knowledge and experience of the management or administrative body, compliance with governance arrangements and internal control mechanisms, policies for borrower protection, and adherence to reporting and public disclosure requirements.
Furthermore, the regulations address the ability of credit servicers to hold funds from borrowers and the application process for authorization. The document specifies the necessary evidence and information that must accompany an application for authorization, the timeline for assessment by the competent authority, and the appealable decisions related to the authorization process.
In the context of cross-border credit servicing activities, the regulations outline the freedom for authorized credit servicers to provide services in host Member States, subject to certain restrictions and requirements. Additionally, data templates are prescribed for the provision of information between credit institutions in cases of transfer of creditors‘ rights under non-performing credit agreements.
The obligations of credit purchasers are also detailed, including the appointment of credit servicers or designated entities for credit servicing activities, and the provision of information to competent authorities in both the home and host Member States.
Supervision by competent authorities is a key aspect of the regulations, with the designation of the Central Bank as the competent authority responsible for performing various functions, including the supervision of credit purchasers and the imposition of administrative penalties and remedial measures for non-compliance.
Safeguards and the duty to cooperate are addressed through the establishment of effective and transparent procedures for handling complaints from borrowers by credit servicers, as well as the requirement for cooperation between competent authorities of different Member States.
Finally, the document includes consequential amendments to the Central Bank Act 1942 and other relevant legislation to align with the provisions of the regulations.