+3.3 Feedback on the public consultation and the BSG submission
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3.3 Feedback on the public consultation and the BSG submission

3.3.1 Summary of key issues raised by respondents and EBA feedback

The EBA publicly consulted on the draft proposal contained in this paper. The consultation period lasted for 3 months and ended on 9 February 2024. 11 responses were received, of which 9 were published on the EBA website while 2 were submitted as confidential response and therefore not published on the EBA website.

In response to the public consultation almost all of respondents expressed support for the EBA’s proposed approach, welcoming the initiative to extend the applicability of the JC complaints handling Guidelines to credit servicers under the CSD. The majority of respondents, including some credit servicers, indicated that such extension would benefit the industry, the National Competent Authorities and consumers alike. However, a few respondents expressed concerns regarding the definitions of ‘firms’ and ‘complaints’ in the JC Guidelines .

One respondent commented that the extension of the JC Guidelines is limited to credit servicers under the CSD only and does not also include other, non-NPL servicers, thus omitting to enhance the protection of consumers of such other providers. The EBA assessed the comment and arrived at the view that, as the Guidelines can only be in support of provisions of a particular EU Directive, and that the scope of the entities to which the complaints-handling requirements in Article 24(1) CSD is limited to is credit servicers under the CSD, the scope of the Guidelines have to be limited to those entities, too.

In addition, some respondents representing credit servicers stressed that the definition of the ‘complaints’ in the JC Guidelines is too broad and would need to be amended to acknowledge the specificities of the credit servicing industry (e.g. not enough similarities with the banking, investment or insurance industry regarding the services provided or the contractual relationship with consumers or risks that any general statement of dissatisfaction of a consumer qualifies as a complaint). The EBA assessed these concerns but arrived at the view that no change is required. Further details on the EBA’s assessment of the consultation responses are provided in the feedback table in section 3.3.3 below.

3 .3.2 The EBA’s response to the Banking Stakeholder Group’s submission

As described in section 3.2, the BSG made a number of comments on the draft Guidelines which are addressed below.

With regard to the approach proposed by the EBA to issue new Guidelines which apply the JC Guidelines to credit servicers, the EBA acknowledged the support of the BSG, in particular on the fact that the EBA Guidelines would benefit the industry, the national competent authorities and consumers alike.

With regards to BSG’s comments regarding the need for stakeholders to anticipate and prepare in good time for the implementation of the requirements, in particular in the interest of consumers, the EBA acknowledged the support of the BSG.

As stated in the consultation paper, because the amendments included in the European Commission Proposal for a PSR are expected to enter into force only in 2025, the EBA will wait with the translation of the Guidelines, and thus the start of the compliance notification period for NCAs, until the proposed Payment Services Regulation (PSR) will have entered into force (likely in early 2025), as this will amend the definition in the EBA regulation of ‘ competent authorities ’ .

As a result, the Guidelines do not yet set a fixed application date. Instead, the application date is relative, i.e. 3 months after the entry into force of the PSR and the amendments of the EBA Regulation. This is expected to be, sometime in 2025, and the precise application date will be added to the Guidelines at that point in time. Until then, credit servicers have extra time to prepare to be compliant with the Guidelines.

However, to allow the stakeholders to anticipate and prepare in good time for the implementation of the requirements and to support the transposition of the Guidelines by the Member States the EBA will publish already in 2024 the final report with the final Guidelines.

The EBA is of the view that this approach would prove beneficial for the transposition of the Article 24(1) of the CSD by the Member States, for the industry which will have sufficient time to prepare for the application of the Guidelines, but also for consumer who will be made aware that the JC Guidelines will be extended to credit servicers, already in 2024. 3.3.3 Summary of responses to the consultation and the EBA’s analysis

Nr. Comments Summary of responses received EBA analysis Amendments to the proposals

Feedback on responses to the Question - Is there a reason why the requirements on complaints-handling for credit servicers under Directive (EU) 2021/2167 should differ from the ones in the existing JC Guidelines on complaints-handling that are applicable to other financial institutions across the banking, Investment and insurance

1. Yleiskatsaus

sectors?

1 The existing JC Almost all respondents supported the EBA’s proposed Guidelines approach to extend the applicability of the JC Guidelines

The EBA acknowledges that many respondents supported the approach articulated in the consultation paper.

None

requirements on to credit servicers under the CSD mentioning that it complaints- would benefit all stakeholders. Those respondents handling should stressed in particular the following: be extended to - In line with the high-level consumer protection ob-credit servicers jective of the CSD stated in recital 52 of the CSD, the

extension of the JC Guidelines will prove beneficial for consumers (borrowers). According to some re-spondents, borrowers will be indeed treated equally irrespective of the provider with whom they con-clude the credit agreement or of whether the credit rights have been assigned or not. Borrowers whose loans would be transferred to credit management companies will benefit from the same complaints-handling procedures (e.g. access free, simple, and similar procedures and forms for all financial services and related activities).

- The JC Guidelines are already broadly known, ac-cepted and used as best practice on the NPL second-ary market and correspond to the existing Group-wide internal rules on complaints-handling that some credit servicers apply for almost 10 years.
- The extension of the JC Guidelines to credit servicers will not create any additional burden for NCAs; Nr. Comments Summary of responses received EBA analysis Amendments to

2 The scope of the One respondent indicated that while it supports the applicability is not extension of the JC Guideline to credit servicers, it sufficient and considers the scope of applicability of the Guidelines should be insufficient to achieve the goal of the ESAs to enhance extended to non- the protection of consumers irrespective of the provider NPL servicers with whom they conclude the credit agreement. This respondent stressed that between the CSD draft proposal of the European Commission and the final CSD, the scope has been limited to NPL sales, carving out the servicing of non-NPL loans (such as non-NPL securitizations). According to this respondent, by extending the JC Guidelines to credit servicers only, the EBA would exclude non-NPL servicers from the scope of the Guidelines and this approach would not be aligned with the objective of the Guidelines to enhance the protection of consumers irrespective of the provider with whom they conclude the credit agreement.	It is EBA’s understanding that this respondent is of the view that the JC complaints-handling guidelines should be extended to non-NPL servicers. The EBA takes note of the concern raised by the respondent that extending the JC Guidelines to credit servicers only would not be aligned with the objective of the Guidelines to enhance the protection of consumers irrespective of the provider with whom they conclude the credit agreement. The EBA is however of the view that applying the JC Guidelines on complaints-handling to credit servicers under the CSD will avoid divergent transpositions across Member States and contribute to a consistent approach to complaints-handling with the same compliance impact for all credit servicers under the CSD. It will also enhance the protection of consumers irrespective of the provider with whom they conclude the credit agreement, by imposing on credit servicers under the CSD the same requirements that already successfully apply to nearly all other financial institutions across the	None	the proposals
This respondent however acknowledged that the part of the JC Guidelines referring to supervisory reporting could not be applied to non-regulated entities	three sectors. The proposed Guidelines set out how to give effect to the provisions in Article 24(1) of the CSD which states that “Member States shall ensure that credit servicers should establish and maintain effective and transparent procedures for the handling of complaints from borrowers”. The Guidelines can only be in support of provisions of a particular EU Directive. Considering that the CSD limits the requirements on complaints-handling to credit servicers, the EBA is of the view that the Guidelines should only be extended to those entities and not to non-NPL servicers. The EBA therefore arrived at the view that the draft Guidelines do not need to be amended.
3 The definition of Few respondents stressed that the definition of the complaints in the ‘complaints’ in the JC Guidelines is too broad and would JC Guidelines is	Concerning the lack of similarities between the services offered by the banking, investment and insurance sectors and the services provided by the credit servicers, the EBA understands the concerns	None
Nr. Comments Summary of responses received	EBA analysis	Amendments	to the proposals
too broad and need to be amended to acknowledge the specificities of does not the credit servicing industry. acknowledge the According to those respondents, there are not enough specificities of similarities between the services offered by the banking, credit servicers investment and insurance sectors and the services provided by the credit servicers to apply the same definition of complaints. Those respondents also	of the respondents but is of the view that the proposed Guidelines aim to avoid divergent transpositions across Member States (MS). The proposed Guidelines intend to contribute to a consistent approach to complaints-handling across the 27 EU MS with the same compliance impact as for other financial institutions, for all credit servicers under the CSD, in the interest of consumer protection.
explained that the contractual relationship between banks, investment and insurance companies and their customers is not comparable to the relationship that credit servicers have with the borrowers. For those respondents, where banks, investment managers and insurance companies offer services to borrowers by virtue of a mutual agreement and interest in receiving products and services, credit servicing activities are provided towards the credit purchaser (not the borrower) and is a consequence of a contractual agreements having been terminated with the borrower for breach of contract, specifically in the case of non-performing loans.	Concerning the administrative burden due to the specificity of the credit servicing industry which receive higher number of complaints than the banking sector, the EBA acknowledges the concerns raised by the respondents but is of the view that due to the nature of the credit servicing business model, credit servicers are facing anyway borrowers’ dissatisfaction when the contractual agreement has been terminated by the creditor and later sold to a credit purchaser for collection by a credit servicer. Also, EBA believes that this administrative burden and potential costs which might arise are already born by the credit servicers irrespective of the application of the JC Guidelines to credit servicers. Concerning the other administrative burdens highlighted by the respondents, which are related to a lack of distinction in the JC
Furthermore, those respondents explained that most borrowers are dissatisfied with the situation where a credit agreement has been terminated and sold to a credit purchaser for collection by a credit servicer, also credit servicers receive much higher number of complaints than the banking sector. Consequently, if any ‘statement of dissatisfaction’ qualifies as a complaint with respect to credit servicing activities, such situation would create an increased use of human resources and administrative burdens for credit servicers (as well as for competent authorities considering the reporting obligation set in the JC Guidelines) to handle such complaints. Such situation would lead to difficulties to manage effectively borrower’s complaints related to the wrongdoings by the credit servicer in the performance of	Guidelines definition of complaints, between general dissatisfaction of borrower and dissatisfaction of actual (or alleged) wrongdoings by the credit servicer in the performance of the credit servicing activities, the EBA is of the view that the JC Guidelines’ definition of complaint addresses this concern. Indeed, the EBA is of the view that the JC Guidelines cover statement of dissatisfactions which concern ‘credit servicing activities’ as defined by Article 3(9) of the CSD and exclude statement of dissatisfactions outside of scope of those activities. Consequently, in EBA ’s view, statement of dissatisfactions addressed to credit servicers by borrowers concerning, for example, the payment obligations in relation to the debt which concern the actions and omissions of the credit purchaser, or which do not cover the actual wrongdoings by the credit Servicer, should be outside of
Nr. Comments Summary of responses received	EBA analysis	Amendments	to the proposals
the credit servicing activities and prove to be detrimental for consumer protection. These respondents therefore argued that the definition of complaints in the JC Guidelines should distinguish between a) a borrower’s general dissatisfaction due to the situation of having a credit agreement terminated and b) a borrower dissatisfaction of actual (or alleged) wrongdoings by the credit servicer in the performance of	the scope of the JC Guidelines. In consequence, complaints-handling requirements would not apply to such complaints. In addition, the JC Guidelines states in the paragraph 4b), related to the definition of the scope of the JC Guidelines, that “These Guidelines do not apply where a firm receives a complaint about: […] the activities of another entity for which that firm has no legal or regulatory responsibility (and where those activities form the substance of the complaint).”
the credit servicing activities (e.g. misconduct/breach of rules or code of conduct) and be amended accordingly. In particular one respondent stated that when	In consequence, the application of the JC Guideline definition of complaints is not expected to create any additional administrative burden for credit servicers or national competent authorities.
implemented in the Member States, many CAs have included a qualification to ensure that general	The EBA therefore arrived at the view that the draft Guidelines do not need to be amended.

statements of dissatisfaction are not to be considered as complaints, suggesting the following wording “expresses concrete dissatisfaction with the management of a financial service or product. General comments and general expressions of dissatisfaction are not considered to be complaints, nor any grievances which must be regarded as having been of little importance to the customer.”

Another respondent suggested to apply the following definition: “Borrower Complaint means substantive and relevant remarks attributable to firm’s management of the services within the framework of its duties as a Credit Servicer. A disputed case by the borrower or general dissatisfaction is not considered in this context as a complaint, nor is dissatisfaction that must be considered to have little significance for the borrower.”

4 JC Guidelines According to one respondent the EBA should consider an should be alternative policy option to the one stated in the amended to consultation paper, which is using JC Guidelines as a basis reflect credit and adapting or amending them with an annex specifying	The EBA understands the concerns of the respondents but is of the view that the proposed Guidelines aim to avoid divergent transpositions across Member States (MS) and contribute to a consistent approach to complaints-handling across the 27 EU MS	None
Nr. Comments Summary of responses received	EBA analysis	Amendments	to the proposals
servicers the differences between financial institutions and credit specificities servicers. According to this respondent credit servicers cannot be	with the same compliance impact as for other financial institutions, for all credit servicers under the CSD, in the interest of consumer protection.
compared to bank because they are not financial institutions per se as they do not originate loans or have	The EBA therefore arrived at the view that the draft Guidelines do not need to be amended.

any direct contractual relationship with consumers. Instead, borrowers only find themselves in contact with credit servicers after they have consistently defaulted on their payment obligation to the point where their contractual partner (the bank) terminates the agreement, declares all outstanding amounts as immediately due and payable and sells the remaining claim. It leads to a situation where significantly different situations are treated equally.

5 Costs borne by According to one respondent, the percentage of the private sector complaints received by banks during the course of active will not be credit agreements is significantly lower compared to the exceeded by the percentage of complaints received by credit servicers benefits which, based on the very nature of their business, only service non-performing loans which were sold to a credit purchaser. This respondent therefore disagrees with the statement	The EBA understands the concerns raised by the respondents but is of the view that due to the nature of the credit servicing business model, credit servicers are facing anyway borrowers’ dissatisfaction when the contractual agreement has been terminated by the creditor and later sold to a credit purchaser for collection by a credit servicer. Also, EBA believes that this cost is already born by the credit servicers irrespective of the application of the JC Guidelines to credit servicers.	None
of the impact assessment that “The benefits will be for both credit servicers and their Competent Authorities to have a common framework for complaints-handling and thus an harmonization of credit servicers’ sectors practices in the Union. The costs associated with these draft 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 draft Guidelines hence should achieve, with acceptable costs, their objectives.”	In addition, considering that the JC Guidelines ’ definition of complaint exclude statement of dissatisfactions outside of scope of credit servicing activities (e.g. payment obligations in relation to the debt which concern the actions and omissions of the credit purchaser, or which do not cover the actual wrongdoings by the credit Servicer), the EBA is of the view that application of the JC Guidelines will not create any disproportionate costs for the credit servicers. The EBA therefore arrived at the view that the draft Guidelines do not need to be amended.
Nr. Comments Summary of responses received	EBA analysis	Amendments	to the proposals
6 Exemption of the One respondent questioned whether the exemptions of scope of the JC the scope of the JC Guidelines under paragraphs 4 a) Guidelines which refers to an exemption of “ activities other than those supervised by the competent authority” pursuant to Article 4(3) of the ESMA Regulation, or Article 4(2) of the EBA Regulation, or Article 5 of the Mortgage Credit Directive ” and paragraph 4 b) which refers to “activities of another entity for which that firm has no legal or regulatory responsibility (and where those activities form the substance of the complaint)” would be applicable to the credit servicers under the CSD.	The EBA understands the comment raised by the respondent regarding the application of the exemption of the scope of the JC Guidelines regarding the points mentioned in paragraphs 4a) and 4b) of the JC Guidelines. As stated in the rationale section of the consultation paper Paragraphs 3, 4(a), 8 and 9 of these chapters contain wording that explains how the authorities competent to supervise the new legal entities defined in the Mortgage Credit Directive and the revised Payment Services Directive (PSD2) are subject to the JC Guidelines. This wording was introduced last time the JC Guidelines were extended, in 2018, but became out-of-date when the EBA Regulation was subsequently amended in 2020, which added the NCAs un der the MCD to the EBA’s scope of action. Consequential changes to the JC Guidelines would be warranted that do not change the substance of the Guidelines but reflect the amendments in the EBA Regulation and simplify the aforementioned explanations. However, the EBA has decided not to include them in the Consultation Paper to refer instead to the current version of the JC Guidelines as such changes impact neither the NCAs nor the legal entities defined under the CSD. The EBA has made those changes in the final Guidelines by repealing the extension of the EBA Guidelines on complaints-handling to authorities competent for supervising the new institutions under PSD2 and/or the MCD published in 2018 and amending the JC Guidelines. Consequently, paragraph 4a) of the JC Guidelines referring to the Article 5 of the Mortgage Credit Directive will not apply to the credit servicers under the CSD. Regarding paragraph 4b) related to the scope of the JC Guidelines, EBA confirms that it applies to credit servicers under the CSD.	The the Guidelines complaints-handling authorities competent supervising new under and/or published will consequently reference Article MCD sentences explaining the the not scope the addressed JC paragraphs (or), the will applicable.	extension of EBA on to for the institutions PSD2 the MCD in 2018 be repealed, the to the 5 of the and t he how NCAs under MCD that are within the of action of EBA are by the Guidelines in 3, 4(a) 8 and 9 of JC Guidelines not be
Nr. Comments Summary of responses received	EBA analysis	Amendments	to the proposals
7 Guidelines 6b) One respondent stated that Guidelines 6b) related to the requirements to “Keep the complainant informed about further handling of the complaint” , should read 6d) instead	The EBA acknowledges the comments received and confirms that the numbering of the Guidelines 6b) related to the requirements to “Keep the complainant informed about further handling of the complaint” , should read 6d).	The the 6b) requirements “Keep complainant informed further of should	numbering of Guidelines related to the to the about handling the complaint” , read 6d).
8 Need for The EBA Banking Stakeholder Group (BSG) expressed its stakeholders to support to point 11 of the Rationale referring notably to anticipate and the following “[…] Because the amendments included in prepare in good the Commission Proposal for a PSR are expected to enter time for the into force only in 2025, the EBA has decided to publish the implementation consultation paper already now, to allow stakeholders to of the anticipate and prepare in good time for the requirements, in implementation of the requirements. Following the particular in the assessment of the consultation responses, the EBA will interest of await the entry into force of the PSR and its amendments consumers. to the EBA Regulation before it issues the Final Guidelines. ” According to the BSG this approach will allow stakeholders to have more time to prepare for the implementation of the requirements. This respondent also stated that it is important for consumers to have access, as soon as possible, to more efficient procedures which could help them to be better protected from a potential abusive behaviour of credit servicers.	The EBA acknowledges the comments received regarding the need for stakeholders to anticipate and prepare in good time for the implementation of the requirements, in particular in the interest of consumers. As stated in the consultation paper, because the amendments included in the European Commission Proposal for a PSR are expected to enter into force only in 2025, the EBA will wait with the translation of the Guidelines, and thus the start of the compliance notification period for NCAs, until the proposed Payment Services Regulation (PSR) will have entered into force (likely in early 2025), as this will amend the definition in the EBA regulation of ‘competent authorities’. As a result, the Guidelines will not yet set a fixed application date. Instead, the application date is relative, i.e. 3 months after the entry into force of the PSR and the amendments of the EBA Regulation. This is expected to be, sometime in 2025, and the precise application date will be added to the Guidelines at that point in time. Until then, credit servicers have extra time to prepare to be compliant with the guidelines. However, to allow the stakeholders to anticipate and prepare in good time for the implementation of the requirements and to support the transposition of the Guidelines by the Member States	The date Guidelines set after into proposed Payment Regulation which sometime 2025.	application of the final will be for 3 months the entry force of the Services (PSR), is expected in
Nr. Comments Summary of responses received	EBA analysis the EBA will publish already in 2024, the final report with the final Guidelines. The EBA is of the view that this approach would prove beneficial for the transposition of the Article 24(1) of the CSD by the Member States, for the industry which will have sufficient time to prepare for the application of the Guidelines, but also for consumer who will be made aware that the JC Guidelines will be extended to credit servicers, already in 2024.	Amendments	to the proposals

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