On 14 March 2018, the European Commission published a package of measures targeting non-performing loans (NPLs). Among these measures was a proposal for a Directive on credit servicers, credit purchasers and the recovery of collateral (the draft Directive). The aim of the draft Directive is to increase the efficiency of debt recovery procedures through the availability of a distinct common accelerated extrajudicial collateral enforcement procedure as well as to encourage the development of secondary markets for NPLs.
On 20 November 2018, the European Central Bank (ECB) published its opinion on the draft Directive. The ECB’s key observations are that:
- legislator’s should carefully consider whether proposed reporting requirements in the draft Directive will impede the efficient functioning of the secondary market for non-performing loans, since a significant reporting burden could deter new entrants to the market;
- with regards the European Banking Authority’s (EBA’s) proposed mandate within the draft Directive to develop draft implementing technical standards that specify the formats for the provision of certain detailed information – the EBA should take into account the collection of granular credit and credit risk data or any other relevant initiatives to ensure that there is no duplication of efforts and to minimise reporting requirements for credit institutions; and
- the draft Directive requires competent authorities that supervise credit institutions to collect, on an annual basis, information from creditors on the number of secured credit agreements which are enforced through the accelerated extrajudicial collateral enforcement mechanism and the timeframes for such enforcement. As the collection of this information relates to the efficacy of the accelerated extrajudicial collateral enforcement mechanism rather than the prudential supervision of credit institutions, the ECB requests legislators to clarify that the task to collect such information should not be conferred on the ECB.
The proposed textual amendments to the draft Directive are included in a technical working document annexed to the opinion.