Question ID
2021_6130
Legal act
Directive 2013/36/EU (CRD)
Topic
Credit risk
Article
74
Paragraph
1
COM Delegated or Implementing Acts/RTS/ITS/GLs/Recommendations
EBA/GL/2020/06 - Guidelines on loan origination and monitoring
Article/Paragraph
Sections 4, 5 and 8
Name of institution / submitter
Ministry of Finance
Country of incorporation / residence
Estonia
Type of submitter
Other
Subject matter
Scope of application of EBA guidelines on loan origination and monitoring
Question

Are sections 4, 5 and 8 of the EBA guidelines on loan origination and monitoring not applicable to agreements referred to in Article 2(2)( h) of Directive 2008/48/EU, while all other parts of the guidelines are still applicable to those agreements?   

Background on the question

We have understood that the aim of the EBA Guidelines on loan origination and monitoring is to: 

specify the internal governance arrangements, processes and mechanisms, as laid down in Article 74(1) of Directive 2013/36/EU; 

specify internal governance, and requirements on credit and counterparty risk, as laid down in Article 79 of Directive 2013/36/EU; 

specify how to assess the creditworthiness of consumers and use consumer information laid down in Articles 18 and 20 of Directive 2014/17/EU and Article 8 of Directive 2008/48/EC on consumer credits.

 

Our concern covers the scope of application with regard to credit agreements defined in Article 2(2)(h) of Directive 2008/48/EU on credit agreements for consumers, which are concluded with investment firms as defined in Article 4(1) of Directive 2004/39/EC of the European Parliament and of the Council of 21 April 2004 on markets in financial instruments or with credit institutions as defined in Article 4 of Directive 2006/48/EC for the purposes of allowing an investor to carry out a transaction relating to one or more of the instruments listed in Section C of Annex I to Directive 2004/39/EC, where the investment firm or credit institution granting the credit is involved in such transaction.

Submission date
Final publishing date
Final answer

The guidelines in their entirety apply to institutions as defined in point 3 of Article 4(1) of Regulation (EU) No 575/2013 (CRR) in accordance with paragraph 6 of the Guidelines, which means credit institutions authorised under Article 8 of Directive 2013/36/EU (CRD) or undertakings as referred to in Article 8a(3) of that Directive. The latter concern investment firms, which qualify as credit institutions for CRD and CRR purposes in accordance with Article 4 (1)(1)(b) of CRR.

In addition, Section 5 of the Guidelines (Loan origination procedures),excluding paragraph 93, applies to:

  • creditors as defined in Article 4(2) of Directive 2014/17/EU (Mortgage Credit Directive, MCD), and
  • creditors as defined in Article 3(b) of Directive 2008/48/EC (the Consumer Credit Directive, CDD),

and only if the loan/credit agreement falls under the scope of MCD and CCD respectively, as set out in paragraph 6 of the Guidelines. As set out in paragraph 10 of the Guidelines competent authorities may also choose to apply Sections 6 and 7 to creditors that fall under the scope of MCD and CCD and that are not credit institutions.

Therefore, in case of an undertaking, that is not an institution, and that is creditor of a consumer credit agreement not falling under CCD or MCD scope, the guidelines do not apply.

Status
Final Q&A
Answer prepared by
Answer prepared by the EBA.

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