3. Supporting documents

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

The EBA's Banking Stakeholder Group (BSG), too, submitted its views on the EBA's Consultation Paper. It welcomed the EBA’s approach to issue new Guidelines which apply the JC Guidelines to credit servicers. The BSG considered that this approach would “ provide advantages for all parties involved: first, for consumers (in this case, borrowers), as it is very important for them to have access to free, simple, and similar complaints-handling procedures and forms for all financial services and related activities. At the same time, it will not put an additional burden on the NCAs and it seems to be also desirable for firms. ” The BSG also expressed its support to point 11 of the Rationale referring notably to the following “[…] Because the amendments included in the Commission Proposal for a PSR are expected to enter into force only in 2025, the EBA has decided to publish the consultation paper already now, to allow stakeholders to anticipate and prepare in good time for the implementation of the requirements. Following the assessment of the consultation responses, the EBA will await the entry into force of the PSR and its amend ments to the EBA Regulation before it issues the Final Guidelines.”

According to the BSG this approach would allow stakeholders to have more time to prepare for the implementation of the requirements. The BSG 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 behavior of credit servicers. ”

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