4 Collective adequate knowledge and experience criteria

The management or administrative organ, as a whole, should have adequate knowledge and experience to conduct the business in a competent and responsible manner according to the activities carried out by the credit servicer and ensuring the protection and fair treatment of borrowers.

The composition of the management or administrative organ should reflect the adequate knowledge and experience necessary to fulfil all of its responsibilities. This includes that the management or administrative organ collectively has an appropriate understanding of those areas for which the members are collectively accountable and to ensure that the business is conducted in a competent and responsible manner.

The management or administrative organ, as a whole, should have adequate knowledge and experience with regard to the aspects listed under paragraphs 31 to 33 and in addition regarding:

• a. all business activities of the credit servicer and the management of the main risks related to it, including fraud detection and prevention in the context of credit risk management;
• b. the legal and regulatory environment;
• c. financial accounting and reporting;
• d. risk management, compliance and internal audit;
• e. information and communication technology (ICT) and ICT security risks;
• f. local and cross-border markets, where applicable;
• g. managerial skills and experience; and
• h. strategic planning.

When assessing the collective adequate knowledge and experience³ of the management or administrative organ, credit servicers should assess separately the management body in its management and supervisory functions. The assessment of the adequate collective knowledge and experience should provide a comparison between the required adequate knowledge and experience of the management or administrative organ, as a whole, and the management or administrative organ ’ s actual collective knowledge and experience. The assessment should cover all business activities of the credit servicer and material organisational aspects as well as the underlying processes.

³ An example of a possible methodology for assessment tables for collective suitability can be found in Annex I of the Joint EBA and ESMA Guidelines on the assessment of members of the management body and key function holders under Directives 2013/36/EU and 2014/65/EU, but would need to be adjusted to relate to the business model of a credit servicer.