NPL Directive
Definition
NPL Directive is the informal name of DIRECTIVE (EU) 2021/2167 OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL of 24 November 2021 on credit servicers and credit purchasers and amending Directives 2008/48/EC and 2014/17/EU.[1]
Motivation
The Directive should enable credit institutions to better deal with loans that become non-performing by improving conditions for the sale of the credit to third parties. Moreover, 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 or to transfer the Credit Agreement to a Credit Purchaser that has the necessary Risk Appetite and expertise to manage it.
The lack of competitive pressure on the market for purchasing credit and for credit servicing activities results in credit servicing firms charging credit purchasers high fees for their services and leads to low prices on secondary markets for credit. That reduces incentives for credit institutions to offload their stock of NPLs.[2]
Not in Scope
- services offered for credit agreements issued by non-credit institutions
- credit servicing activities performed by natural persons
