ECB published its opinion on the Consumer Protection (Regulation of Credit Servicing Firms (Amendment)) Bill (draft law) in Ireland. ECB offers several suggestions for improvement and welcomes the intention to exempt securitization from the scope of the draft law, as this will ensure that the draft law does not discourage securitization activity. However, ECB states that this exemption is not fully clear from the current text of the draft law. Therefore, it is suggested that the drafting be further reviewed, to ensure full legal certainty in this respect.
ECB, in June 2018, had received a request from the Chairman of the Oireachtas (the Irish National Parliament) Joint Committee on Finance, Public Expenditure, and Reform and Taoiseach (the Irish Prime Minister), for an opinion on this regulation (CON/2018/31) on the business of owning credit agreements. The draft law intends to regulate the owners of credit agreements entered into with natural persons and with micro, small, or medium-size enterprises. The law seeks to regulate credit agreement owners by extending existing provisions of Irish law to the entities, in particular the Central Bank Act 1997, which regulates the activities of retail credit firms and credit servicing firms.
Additional key highlights of the ECB opinion on the draft of the Irish law are as follows:
- ECB states that the draft law must carefully balance the benefits of creating well-functioning secondary markets against the impetus to protect debtors. Provisions within the draft law may create a burden of costs for investors, which could impede their participation in secondary markets, thus reducing overall participation and reducing price competition in the market place.
- The current text of the draft law may raise issues of legal certainty. The draft law amends a number of existing provisions of Irish law. In some cases, it is unclear how these amendments interact with the existing provisions and with the existing powers of the Central Bank of Ireland.
- ECB notes that, on March 03, 2018, EC published its proposal for a Directive on credit servicers, credit purchasers, and the recovery of collateral. This proposal seeks to set out a common EU framework and requirements for credit servicers, for credit purchasers, and for the recovery of collateral in respect of credit agreements concluded with business borrowers. If this proposed Directive is adopted by the European Parliament and the Council, its provisions will be transposed into Irish law, requiring further amendment of the rules applicable to credit servicing and credit ownership.
Related Link: ECB Opinion (PDF)
Keywords: Europe, EU, Banking, Securities, Credit Agreements, Credit Agreement Owners, Securitization, Central Bank of Ireland, ECB
Previous ArticleEIOPA Opines Insurers Must Inform Customers About Impact of Brexit
ECB published a decision allowing the euro area banks under its direct supervision to exclude certain central bank exposures from the leverage ratio.
ESAs launched a survey seeking feedback on the presentational aspects of product templates under the Sustainable Finance Disclosure Regulation (SFDR or Regulation 2019/2088).
ECB published input of the European System of Central Banks (ESCB) into the EBA feasibility report on reducing the reporting burden for banks in EU.
ECB finalized the guide on assessment methodology for the internal model method for calculating exposure to counterparty credit risk (CCR) and the advanced method for own funds requirements for credit valuation adjustment (A-CVA) risk.
EBA published an Opinion addressed to EC to raise awareness about the opportunity to clarify certain issues related to the definition of credit institution in the upcoming review of the Capital Requirements Directive and Regulation (CRD and CRR).
APRA is consulting on updates to ARS 210.0, the reporting standard that sets out requirements for provision of information on liquidity and funding of an authorized deposit-taking institution.
FED released hypothetical scenarios for a second round of stress tests for banks.
FED is proposing to temporarily revise the capital assessments and stress testing reports (FR Y-14A/Q/M) to implement the changes necessary to conduct stressed analysis in connection with the re-submission of capital plans, using data as of June 30, 2020.
FED adopted a proposal to extend for three years, with revision, the information collection under the market risk capital rule (FR 4201; OMB No. 7100-0314).
EBA published a voluntary online survey seeking input from credit institutions on their practices and future plans for Pillar 3 disclosures on the environmental, social, and governance (ESG) risks.