Directive (EU) 2021/2167 on credit servicers and credit purchasers and amending Directives 2008/48/EC and 2014/17/EU

Summary:

Directive (EU) 2021/2167 - formally signed off by the co-legislators on 24 November 2021 - concerning credit servicers and credit purchases. It amends Directive 2008/48/EC and Directive 2014/17/EU. This is a text with EEA relevance.

Further information:

This Directive lays down a common framework and requirements for:

• credit servicers of a creditor’s rights under a non-performing credit agreement, or of the non-performing credit agreement itself, issued by a credit institution established in the European Union (EU), who act on behalf of a credit purchaser;
• credit purchasers of a creditor’s rights under a non-performing credit agreement, or of the non-performing credit agreement itself, issued by a credit institution established in the EU.

Directive 2008/48/EC - also known as the Consumer Credit Directive - harmonises rules across the European Union (EU) regarding credit granted to consumers who borrow to finance purchases of goods and services. Directive 2014/17/EU - also known as the Mortgage Credit Directive - aims to ensure that all consumers who take out a mortgage to purchase a property are adequately informed and protected against the risks.

The European Commission published a Communication in October 2017 setting out a way forward for the completion of the Banking Union. This initiative was also seen as part of the work conducted to strengthen the Economic and Monetary Union (EMU), for which the Commission published a Communication in December 2017.

Addressing high stocks of Non-Performing Loans (NPLs) and their potential future accumulation was seen as essential to complete the Banking Union. Similarly, well-developed secondary markets of NPLs were also thought as one of the building blocks for a well-functioning Capital Markets Union (CMU). In the context, the Council of the European Union adopted in July 2017 an Action Plan to Tackle Non-Performing Loans in Europe. The draft law for this Directive was part of the initiatives tabled by the Commission to address this effort. The initiative was complementary to a number of other measures put forward alongside a Progress Report on the reduction of NPLs in Europe.

The draft law was adopted by the Commission on 14 March 2018. The Council of the European Union adopted its full negotiating position on this matter on 27 November 2019. The European Parliament's relevant committee adopted a position on 14 January 2021. An informal agreement between the co-legislators on a compromise text for this file was reached on 28 June. The Act was signed by the co-legislators on 24 November 2021 and published in the Official Journal on 8 December 2021.

Official

EUR-Lex: SWD(2018)75 - Impact Assessment http://eur-lex.europa.eu/legal-content/EN/HIS/?uri=SWD:2018:075:FIN

EUR-Lex: SWD(2018)76 - Executive Summay of the Impact Assessment http://eur-lex.europa.eu/legal-content/EN/HIS/?uri=SWD:2018:076:FIN

European Parliament: Legislative Observatory: Procedure File for Proposal on Credit servicers, credit purchasers and the recovery of collateral https://oeil.secure.europarl.europa.eu/oeil/popups/ficheprocedure.do?reference=2018/0063A(COD)

EP: Legislative Train: Credit servicers, credit purchasers and the recovery of collateral https://www.europarl.europa.eu/legislative-train/theme-economic-and-monetary-affairs-econ/file-jd-npls-credit-servicers-credit-purchasers-and-the-recovery-of-collateral

ECB: Opinion on a proposal for a directive on credit servicers, credit purchasers and the recovery of collateral, 20 November 2018 https://www.ecb.europa.eu/ecb/legal/date/2018/html/act_15174_amend.en.html

Council of the European Union: Press Release, 27/11/2019: Non-performing loans: Council adopts position on a new mechanism for out-of-court enforcement https://www.consilium.europa.eu/en/press/press-releases/2019/11/27/non-performing-loans-council-adopts-position-on-a-new-mechanism-for-out-of-court-enforcement/

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News

Reuters, 27/11/2019: EU states reach deal to ease banks' bad loan recovery https://uk.reuters.com/article/idUKKBN1Y11HW

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Commentary and Analysis

EPRS: Briefing, November 2018: Initial Appraisal of a European Commission Impact Assessment https://www.europarl.europa.eu/thinktank/en/document.html?reference=EPRS_BRI(2018)627138

EPRS: Briefing, February 2019: Credit servicers, credit purchasers and the recovery of collateral: Fostering secondary markets for non-performing loans (NPLs) and easing collateral recovery https://www.europarl.europa.eu/thinktank/en/document.html?reference=EPRS_BRI(2019)635514

CEP: Policy Brief No. 4/2019: EU Directive credit servicers, credit purchasers and the recovery of collateral https://www.cep.eu/en/eu-topics/details/cep/credit-servicers-credit-purchasers-and-the-recovery-of-collateral-directive.html

Lexology, 30/08/2019: The proposal for an EU Directive on credit servicers, credit purchasers and the recovery of collateral - a key instrument to seize the non-performing loans or a belated initiative? https://www.lexology.com/library/detail.aspx?g=aaf0c329-2473-49f4-bede-1506acc93cb8

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