The processes for licensing and supervision of credit (loan) managers are becoming stricter, who will be able to provide cross-border services within the passport mechanism framework, according to a package of bills submitted to Parliament.
There are seven legislations in total, which will constitute the new framework for the sale and management of credit facilities, both serviced and non-serviced, and will harmonise national law with European directives.
Specifically, a common framework of requirements is established for buyers and credit managers acting on behalf of the buyer regarding the rights arising from non-serviced loans taken from a banking institution in the European Union.
Additionally, restrictions are imposed, and the sale of creditor rights of a serviced contract to a credit buyer from a third country will not be allowed. Specifically, credit managers will be licensed by the competent authority of their member state of origin before commencing their activities, provided certain conditions are met, such as robust governance and control system requirements, suitability requirements for senior administrative staff, as well as the implementation of rules for the protection and fair and diligent treatment of borrowers.
In contrast to credit managers, buyers will not be licensed, except for those who choose to manage their own portfolios. At the same time, provisions are included to preserve the rights of borrowers when a non-performing loan is transferred, whereby the appointment of a manager will be imposed.
Credit buyers, although licensed by the Central Bank (CB), will be supervised for their obligations towards borrowers. Also, in case of law violation, they will be subject to penalties ranging from €1,000 to €250,000, and they will be required to take corrective measures.
The CB will have all the powers to grant and revoke credit management licenses, to supervise, conduct investigations, and impose penalties. Credit managers will even be subject to criminal sanctions.
It is worth noting that companies operating in the debt acquisition sector, before the framework change, will automatically be recognized as licensed credit managers. Moreover, loans transferred to debt acquisition companies and outside the banking system, before the implementation of the new law, remain outside the European Directive and will be governed by the existing legal framework.
At the same time, the bills submitted provide protection for consumers, ensuring that they will receive a timely comprehensive list of changes to the credit agreement, the schedule for their implementation, necessary details, as well as the name and address of the competent authority to which they can submit complaints.
Creditors will be required to have appropriate policies and procedures to make efforts to demonstrate, where required, reasonable forbearance before taking action. The bills also include provisions whereby in the event of a loan transfer, the borrower has the right to raise against the loan buyer any defense he had against the original creditor and to be informed about the assignment. Protection is also provided to debtors and their guarantors for the transparent calculation of interest rates.
