The Directive on Credit Servicers and Credit Purchasers (the "Directive") will apply to the sales and servicing of non-performing loans issued by a credit institution established in the EU. We have previously provided updates and more detailed analysis on the Directive as it has progressed through the legislative process: in June 2021, August 2021 and November 2021 respectively.
Department Consultation
There is an obligation on EU member states to transpose the minimum requirements of the Directive but a limited number of discretionary options have been identified for consideration by EU member states on certain issues in relation to the Directive. In January 2023, the Irish Department of Finance (the "Department") launched a public consultation on the transposition of the Directive in Ireland. The consultation paper sought feedback on the ten points in the Directive where EU member states have an element of discretion in terms of transposing the Directive and is available here.
The Department has recently published its decisions following the consultation referenced above. The published outcome of the consultation sets out the initial decisions taken by the Department as to which discretions will be exercised in the context of the transposition of the Directive into Irish law. The decisions document is available here.
Key Clarifications
Amongst other matters and although the Department decisions are subject to change, the published decisions document appears to clarify a couple of key items (which we had highlighted in our previous updates) in terms of the likely impact of the Directive on the existing credit servicing regulatory framework in Ireland.
Firstly, the Department has indicated that the existing Irish credit servicing regulatory framework will operate alongside this new EU regime (once introduced) – effectively creating two parallel regimes. The decisions document provides as follows: "It has been decided to maintain the existing domestic regulatory regime for credit servicers and credit purchasers (including the obligation on the holder of the legal title to the rights of the creditor to be authorised) for matters and agreements not expressly covered by the scope of the Directive."
Secondly, there will be an automatic recognition of existing Irish credit servicing firm authorisations under the Directive. The decisions document provides that "entities carrying out credit servicing activities under the provisions of Part V of the Central Bank Act 1997 will be recognized as authorized credit servicers" under the Directive.
Next Steps
The Directive is due to be transposed into Irish law by 29 December 2023. The Department has confirmed that it remains its objective to meet this deadline. We are continuing to keep a close eye on developments in this area and will publish further updates as matters progress.
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