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    EU Authorities Address COVID-19 Reporting, MCD, and PSD2 Issues

    The European Banking Authority (EBA) announced that the guidelines on the reporting and disclosure of exposures subject to measures COVID-relief measures shall continue to apply until further notice. However, the competent authorities may exercise the flexibility provided in the guidelines to reduce or stop specific reporting and disclosure requirements. EBA published a discussion paper on its preliminary observations on selected payment fraud data under the Payment Services Directive (PSD2), with the comment period ending on April 19, 2022. In addition, the European Commission (EC) issued a call for advice letter for EBA on issues related to the review of Mortgage Credit Directive (2014/17/EU), with the deadline for this call for advice being June 30, 2022.

    The key topics on which EBA has been invited to provide technical advice include exclusions from the scope of the Mortgage Credit Directive, peer-to-peer lending platforms, information disclosure rule, creditworthiness assessment, ways to facilitate the cross-border provision for mortgages, ways to contribute to financial stability, and green mortgages. EC had published a, in May 2021, a report that assessed implementation and functioning of the Mortgage Credit Directive for four years after its transposition deadline. The report highlighted that the Directive has been effective in raising the standard of consumer protection and has helped harmonize mortgage-lending practices across the member states. Nevertheless, the level of protection differs across member states, with some limitations, in particular in terms of scope and information disclosure requirements for digital delivery, seeming to hinder the full effectiveness of the rules.

    The report also concluded that the impact on the creation of a single market for residential property loans has been limited, mostly for reasons outside the scope of the Directive. With the digitalization of financial services comes the possibility to increase cross-border activity in the near future. EC also adopted a proposal for a Directive on consumer credits, repealing and replacing the Consumer Credit Directive in June 2021. The new proposal included provisions on scope extension to crowdfunding credit services, rules to adapt information disclosure to digital channels and to tackle online practices exploiting consumer behavior, provisions to strengthen responsible lending especially in the digital context, and as provisions addressing consumer over-indebtedness. Given the important similarities between consumer credit and mortgage credit, EC will need to assess the proposed amendments to Consumer Credit Directive in its review of Mortgage Credit Directive with a view to ensuring coherence of the European Union law and providing clarity and consistency to credit markets.

     

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    Keywords: Europe, EU, Banking, COVID-19, Reporting, Disclosures, Guidelines, PSD2, Call for Advice, Mortgage Credit Directive, Lending, Credit Risk, Lending Marketplace, Crowdfunding Service Providers, P2P Lending, ESG, EBA, EC

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