EBA consults on guidance to assess knowledge and experience of the management or administrative organ of a credit servicer

The European Banking Authority (EBA) launched today a public consultation on its draft Guidelines on the assessment of adequate knowledge and experience of the management or administrative organ of credit servicers, as a whole, under the Non-Performing Loans Directive. The Guidelines aim at ensuring that the organs are suitable to conduct the business of the credit servicer in a competent and responsible manner. The consultation runs until 19 July 2023.

In order to protect the integrity of the market and to promote trust, it is important to ensure that the management or administrative organ of a credit servicer, as a whole, has sufficiently good repute and adequate knowledge and experience to conduct the business in a competent and responsible manner.

The Guidelines specify the criteria for the assessment of the organs’ collective knowledge and experience, which will be performed based on the individual members assessment by credit servicers, taking into account the principle of proportionality.

The Guidelines set out the main requirements of the credit servicers assessment process, including the good repute, and specify when such an assessment has to be performed.

Where short comings are identified, the credit servicer must take appropriate corrective measures, including e.g. to provide induction and training or to replace members of the management body.

Consultation process

Comments to this consultation can be sent to the EBA by clicking on the "send your comments" button on the consultation page. Please note that the deadline for the submission of comments is 17 July 2023. All received contributions will be published at the end of the consultation, unless requested otherwise.

A public hearing on the draft Guidelines on the diversity benchmarking exercise will take place via conference call on 12 June 2023  from 14:00 to 15:00 CET.

Legal basis and next steps

The Non-Performing Loans Directive establishes a Union-wide framework for both purchasers and servicers of non-performing credit agreements issued by credit institutions, whereby credit servicers should obtain authorisation from, and be subject to the supervision of competent authorities. Credit servicers must ensure that they meet the suitability requirements at all times, including where the business activities or the composition of the management or administrative organ change.

According to Article 5(1) (c) of Directive 2021/216, (commonly known as the Non-Performing Loans Directive), the credit servicer’s management or administrative organ, should have adequate knowledge and experience, as a whole, to conduct the business in a competent and responsible manner. Article 5(1)(b) requires that the members of the applicant’s management or administrative organ are of sufficiently good repute and specifies further the assessment.

To further harmonise the assessment of the adequate knowledge and experience of the management or administrative organ, as a whole, within the EU financial sector in line with the requirements introduced by Directive (EU) 2021/2167, a mandate is given to the EBA to issue Guidelines on the adequate knowledge and experience of the management or administrative organ of credit servicers to conduct the business in a competent and responsible manner in line with Article 5(2) of Directive (EU) 2021/2167.

The EBA aims at publishing the final Guidelines by the end of 2023.