The European Parliament’s Committee on Economic and Monetary Affairs was voting, as we went to press on Monday 11 January, on the proposal for a directive to regulate the secondary markets for non-performing loans (NPLs). Its final negotiating position with the Council of the EU will not be known until Thursday 14 January.
MEPs aim to stimulate cross-border provision of services by granting a European passport to credit managers, while at the same time strengthening the protection of borrowers whose credit will be resold to third parties.
Negotiated before the vote by the main political groups, the compromise amendments to the ‘Tinagli/De Lange’ draft report set out the conditions for granting the European passport. In particular, the integrity requirements for service providers are more detailed, such as the establishment of robust procedures to combat money laundering and terrorist financing.
It should be noted that a compromise amendment stresses that these requirements are a “minimum” requirement. Such language would pave the way for the possibility for a Member State to add specific requirements, thus calling into question the functioning of the European passport.
A new article (8a) dedicated to consumer protection which is not foreseen in the EU Council position is being introduced (see EUROPE 12223/20).
MEPs want to ensure that there are standards for informing borrowers and respecting their privacy. Above all, a capping of fees and financial penalties - equivalent to the total amount of the management costs of the non-performing loan repurchased - is being introduced. In addition, Member States should require loan managers to endeavour to offer borrowers in difficulty forbearance measures, such as rescheduling of payments, interest rate re-evaluation, moratorium or even partial relief.
Finally, a compromise amendment envisages administrative sanctions for credit managers who fail to meet their consumer protection obligations.
Member States would have two years to comply with the future rules from their entry into force.
This proposal for a directive, which is a priority of the recent European Action Plan on NPL loans (see EUROPE 12624/5, 12622/21) dates from 2018, during the previous legislative mandate. But, unlike the EU Council, MEPs had been unable to adopt their negotiating position, in particular because of a disagreement over consumer protection (see EUROPE 12226/7).
See the compromise amendments: http://bit.ly/3oybESY (Mathieu Bion)