Activities of Dimitrios PAPADIMOULIS related to 2018/0063A(COD)
Shadow reports (1)
REPORT on the proposal for a directive of the European Parliament and of the Council on credit servicers, credit purchasers and the recovery of collateral
Amendments (47)
Amendment 214 #
Proposal for a directive
Recital 4 a (new)
Recital 4 a (new)
(4a) In the process of developing macro-prudential approaches to prevent the emergence of system-wide risks associated with NPLs, the European Systemic Risk Board shall develop appropriate macro-prudential standards and supervision of the other financial institutions involved in the secondary market for NPLs. These regulatory measures will ensure that such institutions are required to meet the same standards as banks, including in relation to prudential requirements, disclosure requirements and the fair treatment of borrowers. These institutions shall also be bound by all relevant national and EU consumer protection requirements that may be applicable.
Amendment 216 #
Proposal for a directive
Recital 5
Recital 5
(5) Credit institutions will be required to put aside sufficient resources when new loans become non- performing, which should create appropriate incentives to address NPLs at an early stage and should prevent an excessive accumulation of them. Where loans become non- performing, more efficient enforcement mechanisms for secured loans would allow credit institutions to enforce NPLs, subject to appropriatimplement a holistic strategy that protects distressed borrowers and safeguards the sustainability of the banking system, subject to strong and effective safeguards for borrowconsumers. Nevertheless, should NPL stocks become too high – as it is currently the case for some credit institutions and some Member States – credit institutions shouldall not be able to sell them in efficient, competitive and transparent secondary marketsor transfer to other operators. Competent authorities of credit institutions will guide them in this, based on their existing bank-specific, so-called Pillar 2, powers under Regulation (EU) No 575/2013 of the European Parliament and of the Council27 (CRR). Where NPLs become a significant and broad-based problem, Member States can set up national asset management companies or other alternative measures within the framework of current state aid and banks resolution rules. _________________ 27Regulation (EU) No 575/2013 of the European Parliament and of the Council of 26 June 2013 on prudential requirements for credit institutions and investment firms and amending Regulation (EU) No 648/2012 (OJ L 176, 27.6.2013, p. 1)ird parties performing credit agreements concluded with consumers. Where NPLs become a significant and broad-based problem, Member States can set up national asset management companies or other alternative measures within the framework of current state aid and banks resolution rules.
Amendment 220 #
Proposal for a directive
Recital 9
Recital 9
(9) This Directive should fosregulater the development of secondary markets for NPLs in the Union by removing impediposing safeguards and minimum requirements to the transfer of NPLs by credit institutions to non-credit institutions, while at the same time safeguarding consumers' rights. Any proposed measure should also simplify and harmonise the authorisation requirements for credit servicers. This Directive should therefore establish a Union-wide framework for both purchasers and servicers of credit agreements issued by credit institutions, whereby credit servicers should obtain authorisation and be subject to the supervision of the member- state in which they operate; furthermore, this Directive allows member-states to subject credit servicers and credit purchasers to stricter requirements.
Amendment 224 #
Proposal for a directive
Recital 9 a (new)
Recital 9 a (new)
(9a) Other financial institutions active in the secondary market should take into account the interests of consumers and comply with all relevant national and EU consumer protection requirements, including those set out in Article 28 of Directive 2014/17/EU1a, in the EBA guidelines on arrears and foreclosure and in the EBA final guidelines on the management of non-performing and forborne exposures. _________________ 1aDirective 2014/17/EU of the European Parliament and of the Council of 4 February 2014 on credit agreements for consumers relating to residential immovable property and amending Directives 2008/48/EC and 2013/36/EU and Regulation (EU) No 1093/2010 (OJ L 60, 28.2.2014, p. 34–85).
Amendment 225 #
Proposal for a directive
Recital 9 b (new)
Recital 9 b (new)
(9b) Forbearance measures should aim to return the borrower to a sustainable performing repayment status, having regard to the fair treatment of the consumer and to all relevant national and EU consumer protection requirements that may be applicable. When deciding on which steps or forbearance measures to take, credit institutions should take into account the interests of consumers and comply with consumer protection requirements, including those set out in Article 28 of Directive 2014/17/EU, in the EBA Guidelines on arrears and foreclosure and in the EBA final guidelines on the on management of non- performing and forborne exposures.
Amendment 226 #
Proposal for a directive
Recital 9 c (new)
Recital 9 c (new)
(9c) Forbearance measures may include the following concessions to the consumer: (a) a total or partial refinancing of a credit agreement; (b) a modification of the previous terms and conditions of a credit agreement, which may include among others: i. extending the term of the mortgage; ii. changing the type of the mortgage (such as, changing the type of mortgage from a capital and interest mortgage to an interest only mortgage); iii. deferring payment of all or part of the instalment repayment for a period; iv. changing the interest rate up to a certain cap; v. offering a payment holiday.
Amendment 230 #
Proposal for a directive
Recital 12 a (new)
Recital 12 a (new)
(12a) There are currently no common minimum standards at European level to regulate credit servicing activities. Moreover, no common standards are currently laid down to regulate the activities related to debt collection.
Amendment 231 #
Proposal for a directive
Recital 15
Recital 15
Amendment 233 #
Proposal for a directive
Recital 16
Recital 16
(16) Therefore, action at Union level is necessary in order to address the protection of the borrowers as well as the sustainability of the banking system and the position of credit purchasers and credit servicers in relation to credit originally granted by credit institutions. It is not proposed to cover credit originally issued by non-credit institutions or debt collection in general at this stage, as there is no evidence of macroeconomic relevance, misaligned incentives or ill-functioning markets for such an extended scope.
Amendment 235 #
Proposal for a directive
Recital 16 a (new)
Recital 16 a (new)
(16a) Entities engaging in credit servicing activities shall be subject to the same rules, be it specialised credit servicers, banking institutions or credit purchasers. This could be a direct consequence of subjecting credit servicing activities to MiFID rules.
Amendment 236 #
Proposal for a directive
Recital 17
Recital 17
(17) Although the purpose of this Directive is to protect consumers' rights and to strengthen the credit institutions' capacity to deal with credit that has become non-performing or risks becoming non-performing, the secondary market for credit covers both performing and non- performing credit. Actual market sales encompass credit portfolios, consisting of a mix of performing,heavily under- performing and non- performing credit. The portfolios include credit that is both secured and unsecured and that is owed by consumers or businesses. Where rules for the enforcement of credit differed for each type of credit or borrower, there would be additional costs to the packaging of those credit portfolios for sale. The provisions in this Directive that target the development of the secondary market cover performing and non- performing credit in order to avoid a situation that these additional costs would result to a social crisis and at the same time discourage investor participation and fragment this emerging market. Credit institutions will benefit from facing a larger investor base and more efficient credit servicers. Similar benefits will accrue to asset management companies that are instrumental in some Member States in marketing both non-performing and performing credit originated from credit institutions that had been resolved or been restructured or that have otherwise offloaded them from their balance sheets28 . _________________ 28See Commission staff working document SWD(2018 72) on the AMC Blueprint.
Amendment 242 #
Proposal for a directive
Recital 20
Recital 20
(20) In order to ensure a high level of consumer protection, Union and national law provide for a number of rights and safeguards related to credit agreements promised or granted to a consumerthat are not consumer loans, in particular those secured by the primary residential property. Those rights and safeguards apply in particular to the negotiation and conclusion of the credit agreement and to its performance or default thereof. This is notably the case in relation to long-term consumer credit agreements falling within Directive 2014/17/EU, in respect of the right of the consumer to discharge fully or partially his obligations under a credit agreement prior to the expiry of that agreement or to be informed by means of the European Standardised Information Sheet, where applicable, on the possiblehowever, a transfer of the credit agreement to a credit purchaser. B should not be allowed whatsoever as borrower rights should also not be altered if the transfer of the credit agreement between a credit institution and a purchaser takes the form ofunder any circumstance or contract novation.
Amendment 243 #
Proposal for a directive
Recital 20 a (new)
Recital 20 a (new)
(20a) Residential mortgages for primary residences must be excluded from the scope of this Directive.
Amendment 244 #
Proposal for a directive
Recital 20 b (new)
Recital 20 b (new)
(20b) Under this Directive, a non- performing loan secured by the mortgage of a residential property must not be transferred without the written consent of the borrower.
Amendment 246 #
Proposal for a directive
Recital 23
Recital 23
(23) In order to allow existing credit purchasers and credit servicers to adapt to the requirements of the national provisions implementing this Directive and, in particular, to allow credit servicers to be authorised, this Directive will only apply to transfers of credit agreements that take place six months after the transposition deadline has expired and only after the creditor has given to distressed borrowers the right to buy back their debt at the same price.
Amendment 247 #
Proposal for a directive
Recital 24
Recital 24
(24) The authorisation of a credit servicer to provide credit servicing activities throughout the Union should be subject to a uniform and harmonised set of conditions that should be applied in a proportionate manner by the competent authorities. To avoid a reduction in debtor or borrower protection and in order to promote trust, the conditions for granting and maintaining an authorisation as a credit servicer should ensure that credit servicers, persons who hold a qualifying holding in the credit servicer or who are part of the management of the service provider have a clean police record in relation to serious criminal offences linked to crimes against property, to crimes related to financial activities or to crimes against the physical integrity and that they are of good repute. Similarly, these persons as well as the credit servicer should not be subject to an insolvency procedure or have not previously been declared bankrupt, unless they have been reinstated in accordance with national law. Finally, to ensure compliance with debtor protection as well as personal data protection rules, it is necessary to require that appropriate governance arrangements and internal control mechanisms and recording and handling of complaints, are established and subject to supervision. Moreover, credit servicers should be obliged to act fairly and with due consideration for the financial situation of the borrowers. In addition, when dealing with borrowers, credit servicers should follow minimum EU common standards as laid down in this Directive and transposed by Member States. Where debt advice services facilitating debt repayment are available at national level, the credit servicers should considerare obliged to referring borrowers to such services.
Amendment 254 #
Proposal for a directive
Recital 34
Recital 34
(34) Third-country credit purchasers may make it harder for the Union consumer to rely on their rights under Union law and for the national authorities to supervise the enforcement of the credit agreement. Credit institutions may also be discouraged from transferring such credit agreements to third-country credit purchasers because of the reputational risk involved. Imposing an obligation on the representative of the third-country purchasers of consumer credit to appoint a credit institution or a credit servicer authorised in the Union for servicing a credit agreementAs a result, both the credit purchasers and credit servicers operating in the Union must be obliged to be authorised in the Union to ensures that the same standards of consumers' rights are preserved after the transfer of the credit agreement. The credit purchaser and credit servicer isare under an obligation to respect the applicable Union and national laws and the national authorities in individual Member States should be given the necessary powers to effectively supervise itstheir activityies.
Amendment 255 #
Proposal for a directive
Recital 34 a (new)
Recital 34 a (new)
(34a) Credit purchasers generally rely on a short-term business model that specialises in purchasing distressed debt at a large discount and attempting to procure the underlying asset as quickly as possible. As it is the credit purchaser that makes the key decisions regarding the distressed loan, including on the setting of interest rates, whether to restructure a loan, and the enforcement of the loan, it is crucial that the credit purchaser - and not only the credit servicer that acts as an intermediary - is authorised and regulated in the Union, and subject to supervision, investigation and sanctions by the national competent authorities in the Member State in which it operates.
Amendment 258 #
Proposal for a directive
Recital 53 a (new)
Recital 53 a (new)
(53a) In order to achieve a sufficient level of borrower protection and to address debt collection malpractice, harmonised EU regulation should ensure that the costs and remuneration of credit servicers are never charged to borrowers.
Amendment 259 #
Proposal for a directive
Recital 54 a (new)
Recital 54 a (new)
(54a) Member States shall ensure that behaviour or practices that are likely to negatively impact on borrower privacy and/or human dignity, or are likely to mislead them are prohibited. Practices that can be considered as harassment include sending excessive numbers of dunning letters, using intimidating language, using stigmatizing envelopes, visiting the borrower during working hours or at the workplace, or contacting their colleagues or family members. These practices can aggravate the borrower's situation causing possible loss of employment and reduce their capacity to repay a debt.
Amendment 271 #
Proposal for a directive
Article 1 – paragraph 1 a (new)
Article 1 – paragraph 1 a (new)
This Directive relates to non-performing credit agreements. Creditors shall not be allowed to transfer to third parties performing credit agreements concluded with consumers.
Amendment 286 #
Proposal for a directive
Article 2 – paragraph 4 – point c a (new)
Article 2 – paragraph 4 – point c a (new)
(ca) the purchase of a credit agreement by a credit institution or non-credit institution which has been involved in a tax avoidance or tax evasion case in any Member State of the EU;
Amendment 301 #
Proposal for a directive
Article 3 – paragraph 1 – point 8 – point f
Article 3 – paragraph 1 – point 8 – point f
Amendment 302 #
Proposal for a directive
Article 3 – paragraph 1 – point 8 – point f a (new)
Article 3 – paragraph 1 – point 8 – point f a (new)
(fa) handles any activities related to debt collection;
Amendment 306 #
Proposal for a directive
Article 3 a (new)
Article 3 a (new)
Article 3a Forbearance measures and foreclosure 1. Creditors shall make every effort to avoid transferring consumer non- performing loans to third parties. Notably, Member States shall ensure that creditors exercise reasonable forbearance towards the distressed borrowers, in accordance with Article 28 of Directive 2014/17/EU and the EBA guidelines on arrears and foreclosure EBA/GL/2015/12. 2. Forbearance measures may include the following concessions to the consumer: (a) a total or partial refinancing of a credit agreement; (b) a modification of the previous terms and conditions of a credit agreement, which may include among others: i. extending the term of the mortgage; ii. changing the type of the mortgage (such as, changing the type of mortgage from a capital and interest mortgage to an interest only mortgage); iii. deferring payment of all or part of the instalment repayment for a period; iv. changing the interest rate up to a certain cap; v. offering a payment holiday. 3. Definition of non-performing loans adopted by the Commission Implementing Regulation (EU) 2015/227 shall be without prejudice to the creditors’ forbearance obligations. 4. In case of foreclosure, when the credit is secured by the consumer’s primary residence, return or transfer to the creditor or a third-party of the security or proceeds from the sale of the security shall be sufficient to repay the credit. Article 28(4) of Directive 2014/17/EU shall be amended accordingly.
Amendment 307 #
Proposal for a directive
Article 3 a (new)
Article 3 a (new)
Amendment 308 #
Proposal for a directive
Article 3 b (new)
Article 3 b (new)
Article 3b Exclusion of primary residences Residential mortgages for primary residences are excluded from the scope of this Directive.
Amendment 309 #
Proposal for a directive
Article 3 c (new)
Article 3 c (new)
Article 3c Borrower protection A sufficient level of borrower protection shall be ensured at all times. Credit servicers dealing with borrowers must comply with the specific requirements laid down in this Directive.
Amendment 311 #
1a. Member States shall be able to maintain the existing national measures aiming at protecting distressed borrowers, as well to adopt stricter measures, such as personal insolvency measures, restriction of the activity of credit servicers and credit purchasers.
Amendment 314 #
Proposal for a directive
Article 5 – paragraph 1 – point a a (new)
Article 5 – paragraph 1 – point a a (new)
(aa) Credit servicers and credit purchasers shall act in good faith, treat consumers fairly and respect their privacy. The following practices shall be forbidden: i) provision of misleading information to consumers; ii) harassment of consumers, including communication of information about the consumers’ debt to their employer, family, friends and neighbours; iii) charging fees and penalties to consumers that exceed the costs directly related to the management of the debt. Member States shall place a cap on fees and penalties referred to in point (iii) according to the principles of fairness, rationality and proportionality.
Amendment 318 #
Proposal for a directive
Article 5 – paragraph 1 – point b – point i
Article 5 – paragraph 1 – point b – point i
(i) are of sufficiently good repute, according to Article 135 of Directive 2006/48/CE and Article 13 of Guideline: EBA/CP/2013/03 EBA Consultation Paper on draft Guidelines for assessing the suitability of members of the management body and key function holders of a credit institution;
Amendment 336 #
Proposal for a directive
Article 6 a (new)
Article 6 a (new)
Amendment 338 #
Proposal for a directive
Article 6 a (new)
Article 6 a (new)
Article 6a Debt buy-back 1. When a credit institution intends to transfer a credit agreement to a credit purchaser at a specified price, before the transfer the credit institution shall allow the debtors concerned who are consumers to buy back their debt at the same price or with a small mark-up, which would be specified by the relevant competent authorities. For that purpose, credit institutions shall be required to disclose to the relevant competent authorities the necessary details of expected deals with credit purchasers. 2. Member States shall ensure that the buy-back option can be exercised in instalments.
Amendment 343 #
Proposal for a directive
Article 7 – paragraph 1 – point f a (new)
Article 7 – paragraph 1 – point f a (new)
(fa) commits a serious breach of the applicable rules outlined in Article 6(a) (new).
Amendment 350 #
Proposal for a directive
Article 8 a (new)
Article 8 a (new)
Article 8a Borrowers' protection 1. Member States shall require that credit servicers, in their relationship with the debtors, act in good faith, fairly, professionally and respect their privacy. 2. Member States shall ensure that credit services comply with the following requirements: (a) The information provided shall not be misleading, unclear or false; (b) Credit servicers shall protect the personal information and privacy of the debtors and not to communicate with persons other than the borrower, including family members or employers, unless under authorisation by the debtor; (c) Credit services shall not communicate to debtors in way which constitutes harassment, coercion, or undue influence. 3. Member States shall ensure that fees and penalties charged on borrowers by credit servicers do not exceed the cost directly related to the management of the debt. Member States shall require that in the event of the transfer of the creditor’s rights under a credit agreement or the credit agreement itself to a credit purchaser, the debtor is notified in due time about the transfer and that all relevant Union and national law concerning in particular the enforcement of contracts, consumer protection, borrower’s rights and criminal law continues to apply to the credit purchaser or the credit servicer. 4. Member States shall ensure that credit servicers and credit purchasers foresee the possibility, if viable, and set out the conditions for non-performing borrowers to exit their non-performing status in line with measures set out in the ECB Guidance to banks on non-performing loans.
Amendment 356 #
Proposal for a directive
Article 10 – paragraph 1 – introductory part
Article 10 – paragraph 1 – introductory part
1. Member States shall ensure that where a credit servicer uses a third party to perform activities that would normally be undertaken by that credit servicer ('credit service provider'), the credit servicer should be supervised by the same supervisory authorities the banking system of the Member State has and remains fully responsible for complying with all obligations under the national provisions transposing this Directive. The outsourcing of those credit servicing activities shall be subject to the following conditions:
Amendment 361 #
Proposal for a directive
Article 10 a (new)
Article 10 a (new)
Article 10a Right to legal representation 1. In any court hearing involving a distressed borrower there shall be consideration of the equality of representation status to ensure a full and fair hearing and full and complete understanding of all of the parameters and legal contentions being addressed. 2. This demands that there be an equivalent of legal representation provided and available to all distressed borrowers and, insufficient advance, to ensure comprehensive preparation of all relevant facts and detail for appropriate court representation of the case in dispute. 3. Where necessary, this service shall be provided at the cost of the Member State through free legal aid or its equivalent.
Amendment 366 #
Proposal for a directive
Article 11 – paragraph 1 a (new)
Article 11 – paragraph 1 a (new)
1a. With regard to credit agreements concluded between creditors and consumers, a credit servicer shall be required to obtain an authorisation and establish a branch or a subsidiary in the Member State where it intends to operate.
Amendment 376 #
Proposal for a directive
Article 12 – paragraph 1 a (new)
Article 12 – paragraph 1 a (new)
1a. Credit servicers shall not be allowed to provide cross-border services in respect of credit agreements concluded between creditors and consumers. In that case, credit servicers shall be authorised and supervised by the competent authorities of the Member State where they effectively operate.
Amendment 408 #
Proposal for a directive
Article 15 – paragraph 2
Article 15 – paragraph 2
2. Member States shall ensure that a credit purchaser is not subject to any necessary additional requirements for the purchase of credit agreements other than as provided for by the national measures transposing this Directive.
Amendment 413 #
Proposal for a directive
Article 18 – paragraph 1 – introductory part
Article 18 – paragraph 1 – introductory part
1. Member States shall ensure that a credit purchaser, entities or, where applicable, its representative designated in accordance with Article 17, shall be subject to the same rules, be it specialised credit servicers and banking institutions. Moreover, it communicates to the competent authorities of the Member State where the credit purchaser or, where applicable its representative is domiciled or established that it intends to directly enforce a credit agreement by providing the following information:
Amendment 429 #
Proposal for a directive
Article 22 – paragraph 1 – point b
Article 22 – paragraph 1 – point b
(b) a credit purchaser or credit servicer's governance arrangements and internal control mechanisms fail to ensure respect for borrower rights and compliance with personal data protection rules;
Amendment 431 #
Proposal for a directive
Article 22 – paragraph 1 – point c
Article 22 – paragraph 1 – point c
(c) a credit purchaser or credit servicer's policy is inadequate for the proper treatment of borrowers as set in Article 5(1)(d);
Amendment 432 #
Proposal for a directive
Article 22 – paragraph 1 – point d
Article 22 – paragraph 1 – point d
(d) a credit purchaser or credit servicer's internal procedures fail to provide for the recording and handling of borrower complaints according to the obligations set in the national measures transposing this directive;
Amendment 446 #
Proposal for a directive
Article 22 a (new)
Article 22 a (new)
Amendment 463 #
Proposal for a directive
Article 35 – paragraph 1 – point a
Article 35 – paragraph 1 – point a
(a) the identity of the credit servicer and, where applicable, the credit purchaser it is providing the service to;
Amendment 466 #
Proposal for a directive
Article 40 – paragraph 1
Article 40 – paragraph 1
1. FiveTwo years after the entry into force of this Directive, the Commission shall carry out an evaluation of this Directive and present a Report on the main findings to the European Parliament, the Council and the European Economic and Social Committee.