+3.1 Cost-benefit analysis / impact assessment
---+apply its existing requirements to credit servicers

3.1 Cost-benefit analysis / impact assessment

3.1.1 Introduction

As per Article 16(2) of Regulation (EU) No 1093/2010 (EBA Regulation), any guidelines and recommendations developed by the EBA shall be accompanied by an Impact Assessment (IA), which analyses ‘the potential related costs and benefits’. This analysis presents the IA of the main policy options included in this final report on the ‘ EBA Guidelines amending the Joint Committee Guidelines on complaints- handling for the securities (ESMA) and banking (EBA) sectors (‘the amending Guidelines ’)’ . The IA is high level and qualitative in nature.

3.1.2 Problem identification and background

Directive (EU) 2021/2167 of the European Parliament and of the Council on credit servicers and credit purchasers and amending Directives 2008/48/EC and 2014/17/EU (either the ‘Credit Servicers Directive’ or ‘the Directive’) was published on 8 December 2021 and EU Member States are required to adopt and publish the national measures to transpose the provisions of the Directive by 29 December 2023.

This Directive aims at enabling credit institutions to better deal with loans that become non-performing by improving conditions for the sale of the credit to third parties and thus at harmonis ing the related market practices. In this sale’s context, when credit institutions face a large build-up of NPLs and lack the staff or expertise to properly service them, they should be able either to outsource the servicing of those loans to a specialised credit servicer (‘the credit servicer’) or to transfer the credit agreement to a credit purchaser. In this situation, credit servicers and purchasers can become a key component of the sale of NPLs – and the implied development of an harmonised NPLs’ secondary market in the Union – and thus an harmonisation of credit servicers and purchasers sectors’ practices is necessary. This Directive aims at therefore establishing a Union-wide framework for both purchasers and servicers of non-performing credit agreements issued by credit institutions. On the credit servicers side, and since the performance of NPLs’ secondary markets will depend , to a large extent, on the good reputation of the entities involved, the Directive states amongst other requirements that credit servicers should establish an efficient mechanism by which to treat complaints from borrowers. Indeed, its Article 24(1) states that ‘ Member States shall ensure that credit servicers establish and maintain effective and transparent procedures for the handling of complaints from borrowers ’ .

3.1.3 Policy objective

Following the above-mentioned elements, the amending Guidelines objectives is to give guidance on the establishment and maintenance, by credit servicers, of effective and transparent procedures for the handling of complaints from borrowers.

The EBA, together with the ESMA, already published in 2014 – and updated them in 2018 – Joint Committee Guidelines on complaints-handling for the securities (ESMA) and banking (EBA) sectors (‘The JC G uidelines’ or ‘Joint Committee g uidelines’)). Nevertheless, the credit servicers are not covered by these JC Guidelines.

3.1.4 Options considered, assessment of the options and preferred options

This section presents the main policy options discussed and the decisions made by the EBA during the development of the amending Guidelines. Advantages and disadvantages, as well as potential costs and benefits from the qualitative perspective of the policy options and the preferred options resulting from this analysis, are provided.

Application of the Joint Committee Guidelines

The amending Guidelines objectives is to give guidance on the establishment and maintenance, by credit servicers, of effective and transparent procedures for the handling of complaints from borrowers. As mentioned before, the EBA, together with the ESMA, already published in 2014 – and updated them in 2018 – the Joint Committee guidelines on complaints-handling for the securities (ESMA) and banking (EBA) sectors; and these JC Guidelines do not cover credit servicers. Nevertheless, the EBA considered how best leverage on the JC Guidelines in order to meet the objectives. In this context, two options have been considered by the EBA in this regard:

Option 1a: Issuing completely new guidelines on complaints-handling by credit servicers.

Option 1b: Issuing new Guidelines (the ‘amending G uidelines’), amending the JC Guidelines to

1. Ülevaade

,
apply its existing requirements to credit servicers

Issuing completely new Guidelines on complaints-handling of credit servicers could have the benefit to bring tailored requirements related to credit servicers specificities. Nevertheless, this tailoring would lead to distortion of requirements between those new Guidelines and the existing JC Guidelines that is uniformly applicable for many years to financial institutions across the banking, investment and insurance sectors. Moreover, for the Competent Authorities – supervising for most of them both credit servicers and firms – , this distortion would create additional costs as a specific complaints-handling supervision processes should be developed for credit servicers. Applying the JC Guidelines to credit servicers, by setting through the amending Guidelines the same requirements related to the credit servicers than the ones related to the firms mentioned in the JC Guidelines, would have the benefit of having more certainty on the relevance and efficiency of these requirements. Indeed, in 2021, the Joint Committee of the three European Supervisory Authorities (EBA, EIOPA and ESMA – ESAs) published a Report on the application of the JC Guidelines10 and this report concluded that the JC Guidelines have contributed to a consistent approach to complaints-handling across the banking, insurance and securities sectors and have resulted in better outcomes for consumers. Finally, most importantly, applying the existing JC Guidelines would harmonise the whole complaints-handling framework for the entire financial sector.

On these grounds, the Option 1b has been chosen as the preferred option and EBA will issue new Guidelines (the ‘ amending Guidelines ’), proposing to amend the JC Guidelines on complaints handling to apply its existing requirements to credit servicers. It has to be said that the costs, triggered by the amending Guidelines, for credit servicers (mainly costs of implementation of processes) and for Competent Authorities (mainly costs of supervision of credit servicers complaints- handlings’ processes) are not de emed to be material as the main costs are largely absorbed by the cost associated with the compliance with the Directive (EU) 2021/2167.

3.1.5 Conclusion

The development of Guidelines amending the Joint Committee Guidelines on complaints-handling for the securities (ESMA) and banking (EBA) sectors was deemed necessary to give guidance on the establishment and maintenance, by credit servicers, of effective and transparent procedures for the handling of complaints from borrowers. The benefits will be for both credit servicers and their Competent Authorities to have a common framework for complaints-handling and thus an harmonis ation of credit servicers’ sectors practices in the Union. The costs associated with these amending Guidelines are not deemed to be material as the main costs are largely absorbed by the cost associated with the compliance with the Directive (EU) 2021/2167. As such, costs will be exceeded by the aforementioned benefits. These amending Guidelines hence should achieve, with acceptable costs, their objectives.

10 JC 2021 24 Report on complaints-handling.pdf (europa.eu)

1.1 Viited

1.2 Tuvastatud nõuded

1.3 Seotud standardid

2. Tuvastatud nõuded

Nõuded

3. Seotud standardid

Standardid
  • EBA - Published by the European Banking Authority at https://www.eba.europa.eu/