The Credit Servicing Directive (EU/2021/2167) (Directive) came into force in December 2021 and EU Member States have until 30 December 2023 to transpose it into national law. On 24 January 2023, the Minister for Finance announced a consultation process on the transposition of the Directive into Irish law and issued a Consultation Paper in this regard.
The Directive contains a number of discretions for Member States and the purpose of the consultation process is to seek the views of the public on these discretions so as to inform the Minister’s decisions in the context of transposing the directive.
The Consultation Paper seek views on ten areas where Member States have discretion. These include:
- whether credit servicers authorised in Ireland under the Directive should be allowed to receive and hold funds from borrowers?
- whether credit servicers should be required to keep and maintain relevant records for a period of more than five years after the termination of a credit servicing agreement with a credit purchaser?
- whether Ireland should require EU based credit purchasers to appoint credit servicers in respect of credit agreements other than nonperforming agreements concluded with consumers?
- whether Ireland should allow a credit servicer to comply, on behalf of the credit purchaser, with the obligations of the credit purchaser including in relation to credit registers?
Existing regulatory framework
The Directive will apply to post-transposition non-performing loan sales only (and will not apply to the sale of performing loans originated by credit institutions, or to the sale of non-performing loans by an EU credit institution to another EU credit institution, or the sale of performing or non-performing loans originated by non-credit institutions.) The Consultation Paper proposes to retain the existing national credit servicing regulatory framework, as provided for in the Consumer Protection (Regulation of Retail Credit Firms) Acts 2015 and 2018 and the Consumer Protection (Regulation of Retail Credit and Credit Servicing Firms) Act 2022, in respect of the servicing of those activities and agreements that fall outside the scope of the Directive.
The consultation period runs until 8 March 2023, and as noted above, the Directive is required to be implemented in Ireland before 30 December 2023.