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One of the key objectives of the Directive, adopted back in 2018, is to improve the access and transparency of secondary markets for Non-Performing Loans (NPLs). In particular, the Directive creates common reporting requirements for credit purchasers and an obligation to appoint a credit servicer for consumers and third-country investors.
In this way, the new rules will create a Single Market for credit purchasers and credit servicers. This will foster competition, raise the average sale price of NPLs and significantly reduce servicing costs for the benefit of borrowers. In addition, the Directive amends the Consumer Credit Directive and Mortgage Credit Directive.
These amendments ensure that consumers will benefit from forbearance measures, are duly informed when the credit is transferred, and are able to keep the same contractual rights they had with the credit originators. Mairead McGuinness, Commissioner responsible for financial services, financial stability and Capital Markets Union said: “The new rules will strengthen and improve market transparency and consumer protection and help ensure that the current crisis and the potential rise of NPLs will not affect financial stability in the EU.” The agreement concerns the specific rules related to the secondary markets of NPLs. Work is ongoing in the European Parliament on the remaining part of the March 2018 proposal. This part seeks to facilitate the recovery of collateral from businesses in order to increase their chances of obtaining credit.
More information on non-performing loans (NPLs) is available here.
Directive on credit servicers and credit purchasers