3 Individual members ’ adequate knowledge and experience criteria

When assessing the adequate knowledge and experience of the management body, as a whole, the credit servicer should assess all individual members of the organ to establish that they have together adequate knowledge and experience to ensure the effective functioning of the organ, including that each member has the ability to present their views and discuss strategies and business objectives, and that collective decision-making processes involve appropriate discussion, challenge and oversight. For that purpose, there should be a sufficient number of members with knowledge in each area to allow a discussion of decisions to be made.

Members of the management or administrative organ should have an up-to-date understanding of the business of the credit servicer and all of its risks, at a level commensurate with their responsibilities. This includes an appropriate understanding of those areas for which an individual member is not directly responsible but is collectively accountable together with the other members of the management or administrative organ. Up-to-date knowledge may be achieved through training, professional experience and undertakings.

Members of the management or administrative organ should have a clear understanding of the credit servicer ’s governance arrangements, their respective role and responsibilities and, where applicable, the group structure and any possible conflicts of interest that may arise therefrom.

Members of the management or administrative organ should be able to contribute to the implementation of an appropriate corporate and risk culture, corporate values and behaviour within the management or administrative organ to conduct the business in a competent and responsible manner.

The assessment of adequate knowledge and experience should consider:

• a. the role and duties of the position and the required capabilities;
• b. the knowledge attained through education, training and practice;
• c. the practical and professional experience gained in previous positions and other current directorships; and
• d. the knowledge and experience acquired and demonstrated by the professional conduct of the member.

The level and profile of the education of the member and whether or not it relates to banking and financial services or other relevant areas should be considered. In particular, education in the areas of banking and finance, economics, law, accounting, auditing, administration, financial regulation, information technology, and quantitative methods can in general be considered to be relevant for the financial services sector.

The assessment should not be limited to the educational degree of the member or proof of a certain period of service in a credit servicer or other firms in areas responsible for the management of credits and non-performing loans. A more thorough analysis of the member’s practical experience with regard to the activities of the credit servicer should be conducted, as the knowledge gained from previous occupations depends on the nature, scale and complexity of the business as well as the function that the member performed within it.

When assessing the adequate knowledge and experience of a member, consideration should be given to theoretical and practical experience relating to the activity of credit servicing, including in particular:

• a. relevant legal and regulatory requirements, including national requirements for credit servicing and debt collection;
• b. sequestration, insolvency and bankruptcy procedures;
• c. consumer and borrower protection;
• d. data protection requirements; and
• e. anti-money laundering and anti-terrorist financing obligations, where credit servicers are designated as obliged entities for the purpose of preventing and combating money laundering and terrorist financing under national law provisions transposing Directive (EU) 2015/849.

When assessing the adequate knowledge and experience of a member, consideration should also be given to knowledge areas where a general understanding is needed for the purpose of the day-to-day management of the credit servicer, including:

• a. assessment of the effectiveness of a credit servicer ’ s governance, oversight and internal controls;
• b. banking and financial activities;
• c. contractual law;
• d. accounting and auditing;
• e. the interpretation of financial information, the identification of key issues based on this information, and appropriate controls and measures; and
• f. managerial knowledge.

When assessing the practical and professional experience gained from previous positions, particular consideration should be given to:

• a. the nature of the position held and its hierarchical level;
• b. the length of service;
• c. the nature and complexity of the business where the position was held, including its organisational structure;
• d. the scope of competencies, decision-making powers, and responsibilities of the member;
• e. the relevant technical knowledge gained through the position;
• f. the number of subordinates; and
• g. additional knowledge gained from academic activities.

Where applicable, members of the management or administrative organ in its supervisory function should be able to effectively challenge and monitor decisions made by the management or administrative organ in its management function.