On 7 August 2024, the European Banking Authority (EBA) published a report setting out its findings following a fact finding exercise on the creditworthiness assessment (CWA) practices of non-bank lenders.

Fact finding

Working with Member State competent authorities and a sample of 125 non-bank lenders, and using a reference period between 2020 and 2023, the EBA’s fact finding exercise took stock of Member State regulatory frameworks that apply to non-bank lenders and how they are supervised. It also analysed the types of loans offered by non-bank lenders as well as their organisational set up.

The report summarises the EBA’s key findings from the exercise, with a view to bringing about more insight into the CWA practices of non-bank lenders, on which potential legislative, regulatory and/or supervisory action can also be drawn in the future.

Key findings

Key findings from the fact finding exercise include:

  • A significant number of the surveyed non-bank lenders appear to apply inadequate practices for information gathering and verification during their CWAs. The recent revision of the Consumer Credit Directive (CCD) sets out clearer and more stringent CWA requirements and it is therefore expected that this issue will be addressed at least for consumer credit.
  • The revised CCD also introduces rules for the admission, registration and supervision of creditors and credit intermediaries that are non-credit institutions and non-payment institutions, as well as rules on the obligation to assess the creditworthiness of the consumer. These are expected to address different rules being applied to non-bank lenders across Member States.
  • Non-bank lenders’ lending activities grew significantly almost in all Member States during the reporting period, with the number of non-bank lenders providing credit products under the CCD considerably higher than the number of non-bank lenders providing mortgage credit under the Mortgage Credit Directive.

Next steps

The EBA will continue monitoring the activities of non-bank lenders and may consider, depending on the findings, initiating new ad hoc action should there be the need in order to foster further protection of EU consumers.