EC Welcomes Agreement on Rules on Secondary Market for NPLs
EC welcomes the political agreement between the European Parliament and the Council on the proposal for a Directive on credit servicers and credit purchasers. The agreement concerns rules related to the secondary market for non-performing loans (NPLs) while the remaining part of the proposed work is underway in the European Parliament; this part seeks to facilitate the recovery of collateral from businesses to increase their chances of obtaining credit.
One of the key objectives of the Directive on credit servicers and credit purchasers, which was adopted in 2018, is to improve the access and transparency of secondary markets for NPLs. The Directive creates common reporting requirements for credit purchasers and an obligation to appoint a credit servicer for consumers and third-country investors. In this way, the new rules will create a Single Market for credit purchasers and credit servicers. This will foster competition, raise the average sale price of NPLs, and significantly reduce servicing costs for the benefit of borrowers. In addition, the Directive amends the Consumer Credit Directive and Mortgage Credit Directive. These amendments ensure that consumers will benefit from forbearance measures, are duly informed when the credit is transferred, and are able to keep the same contractual rights they had with the credit originators.
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Keywords: Europe, EU, Banking, NPLs, Credit Risk, European Parliament, European Council, Secondary Market for NPLs, EC
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