Response to consultation on Implementing Technical Standards on NPL transaction data templates
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However, FIGEC considers that the definition of data field 3.17 “Legal balance at charge-off date” is unclear and deserves clarification. For FIGEC, should “charge-off” be used to refer to “write-off”, the definition would be incorrect as, in France, legal enforcement proceedings may usually start before “charge-off”.
- The estimate of the judicial value - the discount between the judicial value and the amicable value : to be non-mandatory.
- The status in case of a pending amicable sale : to be non-mandatory.
- A notion of amount pending distribution in the context of collective proceedings : to be non-mandatory.
Other FIGEC’s specific comments relate to data fields 4.10 [address of immovable property], 4.15 [land area], 4.33 [enforcement status third parties] : these fields should be mandatory for loans of EUR 25K or more.
On another note, FIGEC has doubts about the relevance of the differentiation based on the mandatory or non-mandatory nature of the fields according to the size of the claims. It adds complexity and bears the risk of creating threshold effects. FIGEC would prefer a differentiation based on a 'secured' / 'unsecured' basis.
FIGEC doubts that the “No data options” as they stand are sufficient to tackle those issues.
However, for secured loans, the value threshold should not apply. Mandatory data fields shall apply for all secured loans irrespective of the size of the loan.
For instance, with respect to loans to private individuals borrowers, FIGEC considers that data fields 1.07 (date of birth) and 1.09 (postal code) are necessary information when it comes to assessing the value of all NPLs relating to individual borrowers, irrespective of the amount of the loans.
In the same vein, data fields applicable to all types of borrowers such as data fields 1.33 [date of last contact with the counterparty], 3.14 [accrued interest] and 3.32 [total balance at date of default] are also needed irrespective of the amount of the loans.
1. Do the respondents agree that these draft ITS fits for the purpose of the underlying directive?
Without prejudice of the specific comments and suggestions made by the FIGEC about potential areas of improvement, FIGEC generally agrees that the draft ITS generally fit for the purpose of EU Directive n°2021/2167.2. What are the respondents’ views on the content of Template 1? Please provide any specific comment you may have on the data fields in the dedicated columns of the data glossary (Annex II to the draft ITS) added for your feedback.
The content of Template 1 relating to the Counterparty is rather comprehensive.3. What are the respondents’ views on the content of Template 3? Please provide any specific comment you may have on the data fields in the dedicated columns of the data glossary (Annex II to the draft ITS) added for your feedback.
The content of Template 3 relating to the Loan is rather comprehensive.However, FIGEC considers that the definition of data field 3.17 “Legal balance at charge-off date” is unclear and deserves clarification. For FIGEC, should “charge-off” be used to refer to “write-off”, the definition would be incorrect as, in France, legal enforcement proceedings may usually start before “charge-off”.
4. What are the respondents’ views on the content of Template 4? Please provide any specific comment you may have on the data fields in the dedicated columns of the data glossary (Annex II to the draft ITS) added for your feedback.
While the content of Template 4 relating to Collateral and enforcement is rather comprehensive, FIGEC submits that the following data fields (at cut-off date) could be useful for credit purchasers, if available to financial institutions :- The estimate of the judicial value - the discount between the judicial value and the amicable value : to be non-mandatory.
- The status in case of a pending amicable sale : to be non-mandatory.
- A notion of amount pending distribution in the context of collective proceedings : to be non-mandatory.
Other FIGEC’s specific comments relate to data fields 4.10 [address of immovable property], 4.15 [land area], 4.33 [enforcement status third parties] : these fields should be mandatory for loans of EUR 25K or more.
5. What are the respondents’ views on the content of Template 5? Please provide any specific comment you may have on the data fields in the dedicated columns of the data glossary (Annex II to the draft ITS) added for your feedback?
FIGEC submits that Template 5 should provide for a monthly view of the history of repayments before the cut-off date over a period of three years, instead of two.6. Do the respondents agree on the structure of Template 2 to represent the relationship across the templates? If not, do you have any other suggestion of structure?
The content of Template 2 adequately reflects the relationship across the templates.7. Do the respondents agree on the structure and the content of the data glossary? Please provide any specific comment you may have on the data fields in the dedicated columns of the data glossary (Annex II to the draft ITS) added for your feedback.
FIGEC submits that the application of data fields in accordance with the type of borrowers should be further vetted for relevancy purposes and amended as necessary. In particular, FIGEC notices that line 1.01 “Name of Counterparty Group” and line 1.06 “Related Party” should not be deemed “applicable to all” borrower types, as they are not relevant with respect to private individuals.On another note, FIGEC has doubts about the relevance of the differentiation based on the mandatory or non-mandatory nature of the fields according to the size of the claims. It adds complexity and bears the risk of creating threshold effects. FIGEC would prefer a differentiation based on a 'secured' / 'unsecured' basis.
8. What are the respondents’ views on the content of instructions?
The content of instructions appears to be relatively clear and comprehensive.9. Do the respondents agree on the use of the ‘No data options’ as set out in the instructions?
While FIGEC considers that enhanced transparency and relevant detailed information on NPLs provided by credit institutions are very important for the fluidity of the secondary market for NPLs, FIGEC is concerned that the inability of credit institutions to fill in all the mandatory fields may either potentially discourage them from selling certain loans/credit portfolios to the detriment of the development of the market, or lead them to adopt circumventing measures to avoid liability regarding their duty to provide complete, accurate and consistent data vis-à-vis the credit purchasers.FIGEC doubts that the “No data options” as they stand are sufficient to tackle those issues.
10. What are respondents’ views on whether the proposed set of templates, data glossary and instructions are enough to achieve the data standardisation in the NPL transactions on secondary markets, or there may be a need for some further technical specifications or tools to support digital processing or efficient processing or use of technology (e.g., by means of the EBA Data Point Model or XBRL taxonomy)?
From FIGEC’s viewpoint, the proposed set of templates, data glossary and instructions appear prima facie rather comprehensive to ensure the data standardization in the NPL transactions on the secondary markets. It would however be useful to include a specific review provision in the draft ITS to allow for their review after a given implementation period, as necessary.11. What are the respondents' views on the approach to the proportionality, including differentiating mandatory data fields around the threshold? Please provide any specific comment you may have on the data fields in the dedicated columns of the data glossary (Annex II to the draft ITS) added for your feedback.
FIGEC generally welcomes the approach to the proportionality criteria which consider the nature of the borrower (private individual or corporate), the size (the EUR 25K threshold) and the nature of the loan (secured or not).However, for secured loans, the value threshold should not apply. Mandatory data fields shall apply for all secured loans irrespective of the size of the loan.
For instance, with respect to loans to private individuals borrowers, FIGEC considers that data fields 1.07 (date of birth) and 1.09 (postal code) are necessary information when it comes to assessing the value of all NPLs relating to individual borrowers, irrespective of the amount of the loans.
In the same vein, data fields applicable to all types of borrowers such as data fields 1.33 [date of last contact with the counterparty], 3.14 [accrued interest] and 3.32 [total balance at date of default] are also needed irrespective of the amount of the loans.