Non-Performing Loans (NPLS)



The Directive on credit servicers and credit purchasers has been published in the Official Journal of the EU. The new Directive harmonises the rules for credit servicers and credit purchasers with regard to non-performing loans issued by credit institutions. Its aim is to support the development of secondary markets for non-performing loans in the EU while ensuring that the sale of such loans does not undermine the rights of borrowers. The updated Directive makes changes to the following provisions:

  • Authorisation: A designated authority in the home Member State will be responsible for the authorisation and supervision of credit servicers, in close cooperation with the authorities of other Member States.
  • Scope and extent of credit servicers’ activity: The scope of the Directive is limited to non-performing loans only; in addition, recital 11a has been kept to clarify that this restriction does not preclude the servicing of loans that become performing. An exemption for AIFMs and UCITS vehicles has been included.
  • Consumer/ borrower protection:  The Directive notes that forbearance should remain at the discretion of creditors. Moreover, it was agreed to focus the forbearance provisions on consumers while for non-consumers further analysis is needed ahead of any legislation.
  • Appointment of credit purchasers: Co-legislators agreed on imposing the appointment of credit servicers for: i) credit agreements involving consumers and ii) credit agreements involving other natural persons (entrepreneurs) and SMEs held by 3rd countries credit purchasers.
  • Non-performing loans (NPL) Data Templates: The following approach has been agreed upon: i) introduction of cut-off date for loans originated after 1st July 2018 which turn non-performing after the date of entry into force of the Directive, ii) for credit granted between the cut-off date and the adoption of the Implementing Technical Standards which turned non-performing after that date, the filing of templates is only to the extent of the information already available to credit institutions, iii) inclusion of bank-to-bank transactions and recital clarifying that banks’ obligations are to NPLs only and do not encompass complex transactions, iv) introduction of principle of proportionality.
  • AECE mechanism: Please note that the Accelerated Extrajudicial Collateral Enforcement (AECE) mechanism is no longer included in the updated Directive.

Upcoming actions: 

The Directive will become applicable from 30 December 2023.

(Last updated: 10 Jan 2022 )