Michael McGrath (Cork South Central, Fianna Fail) | Oireachtas source

The credit servicers directive provides for a common EU framework for the transfer and management of bank originated, non-performing loans, including mortgages, which are transferred or sold after 29 December 2023. It sets out an EU-wide regulatory arrangement for both the purchasers and servicers of such credit agreements, and in particular provides for a new EU authorisation framework for credit servicers to be overseen by national competent authorities. In the case of Ireland this will be the Central Bank of Ireland. Any credit servicer entity authorised under this framework will have the right to passport credit servicing activities across the EU based on a home member state authorisation.

In addition, the directive makes certain amendments to the consumer credit directive and the mortgage credit directive. At EU level, the directive will impose obligations on creditors, including to have adequate policies and procedures in order that they will be required to exercise reasonable forbearance before initiating enforcement proceedings and which shall take into account, among other elements, the consumer’s circumstances. The current domestic consumer protection framework already requires regulated entities to work with and assist a personal consumer in resolving arrears on a loan.

In particular, in respect of a loan secured on a primary residence, the code of conduct on mortgage arrears, CCMA, requires that regulated entities must make every reasonable effort to agree an alternative repayment arrangement with a co-operating borrower. Further, legal proceedings may only be commenced after the time periods set out in the code have expired.

The transposition of the directive does not reduce the scope of the existing consumer protection framework at either a national or EU level, including the application of the CCMA. It amends both the consumer credit directive and the mortgage credit directive to make certain improvements to those directives in the interests of consumers.

The directive will be transposed by way of a ministerial regulation made under the European Communities Act 1972 and my Department is working with the Office of the Attorney General and the Central Bank to finalise this legal instrument by the transposition date of 29 December 2023.

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