Section 4 – Requirements regarding arrears and foreclosure

1.1 The creditor should establish, and keep up to date, procedures to detect, as early as possible, consumers going into payment difficulties.

1.2 The creditor should establish, and keep up to date, policies and procedures for the effective handling of and engagement with consumers in payment difficulties. The consumer engagement policy should include that the creditor provides adequate information, for example, through websites and written materials, and support for consumers in payment difficulties.

1.3 The creditor should provide adequate training for staff dealing with consumers in payment difficulties.

2.1 When a consumer goes into payment difficulties, the creditor should work with the consumer to establish why the difficulties have arisen and for the creditor to take appropriate steps.

2.2 Any interaction by the creditor with the consumer in relation to their payment difficulties should respect the consumer’s privacy.

2.3 The creditor, as well as any agents acting on behalf of the creditor, should maintain a level of contact and communication with a consumer in payment difficulties that is proportionate to the information requirements, and not excessive.

3.1 The creditor should communicate clearly and in plain language.

3.2 The creditor should provide support and, at least, the following information to consumers in payment difficulties:

• a) the number of payments either missed or only paid in part;
• b) the total sum of the payment shortfall;

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• c) the charges incurred as a result of the payment shortfall;
• d) the importance of the consumer co-operating with the creditor to resolve the situation.

3.3 In cases where the consumer’s payment difficulties persist, the creditor should provide the following information to the consumer:

• a) information regarding the consequences of missing payments (e.g. costs, default interest rate, possible loss of property, etc.); and
• b) information about available government/public schemes or support.
•  A1

4.1 [deleted]

5.1 The creditor should document the reasons why the possibility(ies) of forbearance measures offered to the consumer in accordance with Article 28(1) MCD are appropriate for his/her individual circumstances and should make and retain adequate records of its dealing with the consumer in payment difficulties for a reasonable period of time.

6.1 In cases where the activity of the creditor is in whole or in parts outsourced to third parties, creditors, which are not any of the financial institutions referred to in paragraphs 9 to 11 in EBA Guidelines on outsourcing arrangements (EBA/GL/2019/02), should ensure, that they comply with the requirements established in those Guidelines, including the final responsibility of institutions when outsourcing.³

³ EBA Guidelines on outsourcing arrangements (EBA/GL/2019/02) EBA BS 2019 xxx (EBA Draft Guidelines on outsourcing arrangements).docx (europa.eu) which repealed the CEBS guidelines on outsourcing of 14 December 2004 with effect from 30 September 2019.