Credit Servicing: Outcome of Consultation on Transposition of EU Directive

Question and discretion

Decision of the Department of Finance

Question 1: Do you think that Ireland should exclude public notaries, bailiffs and lawyers from the application of the Directive as transposed into Irish law?

(Article 2(6) discretion)

This discretion will not be exercised. Under the domestic regulatory framework for credit servicing firms, these entities are not exempted from the requirement to be authorised if they perform credit servicing activities. A similar position will be taken in the transposition of the Directive.

Question 2: Do you think that credit servicers authorised in Ireland under this Directive should be allowed to receive and hold funds from borrowers, or should be prevented from doing so?

(Article 6(1) discretion)

This discretion will be exercised. The management of payments by borrowers and the holding of funds on behalf of credit purchasers is considered to be an important function of credit servicers. It has been decided to exercise this discretion and to provide for the measures required of credit servicers in Article 6(2) in the transposition of the Directive.

Question 3: Do you think that Ireland should require credit servicers 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?

(Article 11(4) discretion)

This discretion will be exercised. In line with the record retention period as provided for in the Consumer Protection Code, a record retention period of six years will be provided for in the transposition of the Directive.

Question 4: Do you think that Ireland should exercise this discretion and provide that EU based credit purchasers should appoint credit servicers under this EU framework in respect of credit agreements other than non-performing agreements concluded with consumers?

(Article 17(1) discretion)

This discretion will not be exercised.  It has been decided to maintain the existing domestic regulatory regime for credit servicers and credit purchasers (including the obligation on the holder of the legal title to the rights of the creditor to be authorised) for matters and agreements not expressly covered by the scope of the Directive.

Question 5: Do you think Ireland should exercise this discretion to allow natural persons to service credit agreements which fall within the scope of this Directive?

(Article 17(4) discretion)

This discretion will not be exercised.  It has been decided to maintain the default Directive position that a credit servicer must be a legal person.

Question 6: Do you think 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?

(Article 17(5) discretion)

This discretion will not be exercised. The Credit Reporting Act 2013 provides for the reporting obligations and duties of all credit information providers in relation to the Central Credit Register and it is considered that these are appropriate and effective and should continue to apply.

Question 7: Do you think Ireland should exercise this discretion and not provide for all of the identified forbearance measures in the transposition of the new Article 16a of the Consumer Credit Directive?

(Article 27 discretion)

This discretion will not be exercised. All the forbearance options listed in the new Article 16a of the Consumer Credit Directive will be included in the statutory instrument transposing this Directive.

Question 8: Do you think that Ireland should allow creditors to (i) define and impose charges on a consumer arising from default, (ii) if so, require that those charges shall be no greater than is necessary to compensate the creditor for costs it has incurred as a result of the default, (iii) allow creditors to impose additional charges on the consumer in the event of default and (iv) if the answer to (iii) is in the positive, what cap should be placed on those charges?

(Article 27 discretion)

This discretion will be exercised in part. In line with a similar provision contained in the  European Union (Consumer Mortgage Credit  Agreements)  Regulations  2016, the new  Article  16a  of the Consumer Credit Directive will be transposed in a manner to provide that (i) a creditor can impose a charge on a consumer arising from a consumer’s default but that any such charge, if imposed by a creditor, shall be no greater than is necessary to compensate the creditor for the cost it has incurred as a result of the default and (ii) a creditor shall not be allowed to impose ‘additional’ charges on a consumer in the event of default.

Question 9: Similar to Question 7, do you think Ireland should exercise this discretion and not provide for all of the identified forbearance measures in the transposition of the amendment to Article 28 of the Mortgage Credit Directive?

(Article 28 discretion)

This discretion will not be exercised. The Department will adopt the same position to the transposition of the amended Article 28 of the Mortgage Credit Directive as that set out in respect of the new Article 16a of the Consumer Credit Directive.

Question 10: Do you think that Ireland’s existing national authorisation and regulatory regime in respect of credit servicing firms (i) is equivalent to, or stricter than, those established in this Directive for credit servicing activities and (ii) if so, should such regulated entities be automatically recognised as authorised credit servicers?

(Article 32(2) discretion)

This discretion will be exercised and entities carrying out credit servicing activities under the provisions of Part V of the Central Bank Act 1997 will be recognized as authorized credit servicers.