November 22, 2023 10:55 am

Deadline looms to implement EU Credit Servicers Directive which creates NPL secondary market framework

  • The directive establishes an EU-wide regime governing secondary NPL transactions and servicing
  • The intention is to strengthen the secondary European market, by raising risk management standards and transparency,
  • Member states preparations ahead of the 29 December compliance deadline is mixed


Frankfurt – November 22, 2023:

Non-performing loan (NPL) buyers, sellers and servicers within the European Union must comply with a mandatory EU directive which aims to establishes a common framework for the sale and servicing of NPLs in the secondary market.

The EU Credit Services Directive, which comes into effect on 29 December, creates a harmonised licensing process for providers of credit services of NPLs and regulates access of European providers to individual EU member states. The purpose of the EU-wide regulatory regime is to strengthen the European secondary NPL market, raise risk management standards and transparency, and help to reduce the burden of NPLs on bank balance sheets.

Under the directive, investors who acquire, administer, or sell NPLs, issued by EU banks in the secondary market must either appoint an authorised EU entity (e.g., an EU credit servicer), an EU bank or directly become an authorised EU credit servicer accredited by a financial regulatory authority in an EU member state. Credit servicers must be overseen by a national financial regulatory authority which has the power to passport credit servicing activities throughout the EU.

The directive expands the supervisory powers of regulatory authorities regulating obligations of NPL vendors and servicers towards borrowers. The standardised reporting requirements on buyers and sellers is intended to improve market transparency. The directive will impact NPL sellers, buyers and servicers within the EU.

Additional requirements also include a written contract between credit servicers and purchasers, and the maintenance of high professional standards of engagement and transparency in dealing with underlying borrowers as well as in the level of information to be provided to prospective NPL buyers.

EU member states are required to pass a law at the national level that complies with the directive. Currently, member states have widely different rules governing the  servicing of NPLs. Local credit servicing regimes will continue to apply during a transitional period. Legislative parliaments are also at differing stage of readiness to comply with the 29 December deadline. (See below for an update across Debitos key markets).

The directive is mandatory and failure to comply carries possible administrative and financial penalties. It applies to non-EU NPL investors and servicers who must appoint an EU representative responsible for compliance. There are two exemptions for the directive. It does not apply to AIFMD-registered EU banks and EU Alternative Investment Fund Managers (AIFMs), or credit servicers of NPLs originating from non-EU banks (unless the NPL is novated or assigned to an EU Bank).

“The harmonisation of the EU-wide regulatory environment for NPL servicing will enhance standardisation and transparency in secondary markets,” says Timur Peters, founder and CEO of Debitos. “The directive will help encourage new market entrants and ultimately stimulate higher competition .”

Peters added, “However, we understand many market participants are yet to assess the next steps they need to take to ensure prompt compliance with the requirements set out in the directive. The Debitos platform has tools designed to help fulfilling the compliance requirements for banks, investors and servicers.”

Ahead of the December 29 to implement the directive into national law, below is a summary of the legislative progress to date across the major secondary NPL markets in Europe.



In Germany, the Federal Ministry of Finance published a draft bill – entitled Kreditzweitmarktgesetz (“Large Credit Market Act” – on 20 July, 2023 to implement the EU directive on secondary credit markets. Subsequently, an updated federal government bill dated October 11, 2023 was drafted to implement the directive and amend other financial market regulations, entitled Kreditzweitmarktförderungsgesetz (“Credit Wide Market Promotion Act”). The Act is still pending final approval in the German Bundestag.

The entity to regulate the licensing process and registry is expected to be BaFin.

Many of the 500 debt collection companies are represented by Bundesverband Deutscher Inkasso-Unternehmen (the Federal Association of German Debt Collection Companies) will be impacted by the incoming EU directive in Germany.



The Italian government has not started the implementation process of the directive and there remains some uncertainty about likelihood of compliance by the late December deadline.  There are approximately 30 credit servicers operating in Italy that will be impacted by the  directive. The entity to regulate the licensing process and registry is expected to be Bank of   Italy.  Currently, credit servicing activities are regulated under the Italian securitisation  transactions law which are undertaken by credit institutions and Italian financial  intermediaries, in accordance with the Consolidated Banking Act.



Spain’s Ministry for Economic Affairs and Digital Transformation launched a public  consultation on 26 October 2022 in response to the EU directive. Submissions closed in   January 2023. The government intended to publish a first draft before the end of September,  to ensure timely compliance with the directive. However, no draft legislation has yet been   published. The delay is likely due to a snap national election in July which resulted in no political party emerging with a clear majority to form a government, complicating the ability  to meet the directive deadline. Market participants suspect compliance with the directive will  be delayed at least until Q2 2024.

Currently, there is no existing credit servicing regime in force in Spain. Credit servicing is governed by Spanish civil law. However, most servicers follow the guidelines established by the Asociación Nacional de Entidades de Gestión de Crédito (Spanish National Debt Collection Association).



In Greece, the implementation of the EU directive is the subject of an ongoing and controversial consultation. In early November, the Minister of National Economy and Finance, Kostis Hatzidakis, presented a draft bill to the government cabinet, according to NPL Confidential. The draft bill sparked concern among loan servicer bosses over the prospect of heavy fines and authorities’ power to revoke servicer licences for non-compliance. Penalties of up to €500,000 have been mooted.

The government’s intention is to propose the draft bill for a parliamentary debate and vote during November, in time to ratify the bill into an Act ahead of the December compliance deadline. Servicers believe the draft bill written to implement the EU directive will put excessive pressure on them and is threatening to derail, the already lagging, business plans of the HAPS (Hercules) securitisations. Servicers remain hopeful that they can influence amendments to the bill before the vote.

In Greece, there are 23 active credit servicers that will be impacted by Greece’s implementation of the EU directive, according to the Bank of Greece. “Members of the Hellenic Loan Servicers Association will also be impacted, as will non-regulated members of the Hellenic Association of Debt Management Companies who work closely with licensed servicers.”

Debitos will follow up the regulatory changes in the local markets and will release an update in their service offer in Q1/2024 to anticipate the additional compliance requirements.


About Debitos

Debitos is the leading loan transaction platform in Europe that enables banks, funds and companies to sell their credit exposures on the market through its open and transparent auction-based online transaction platform.

The platform leverages on the digitalisation of the entire sale process and can reduce the expected disposal timing to 3-8 weeks compared to 3-6 months of the traditional process. Debitos was founded in Frankfurt in 2010 and has since successfully transacted more than 900,000 loans in 16 countries. By now, more than 1,900 investors from all over Europe have registered with Debitos.

This post was written by Timur Peters

Timur Peters is the founder of Debitos GmbH. He holds a diploma in finance and law. He has more than 10 years’ experience in the range of finance.
Before Founding Debitos Timur Peters was responsible in the distribution of Software for Banks and Financial Institutions for Comarch for the D/A/CH Region. Next to this he has worked for several years as a self employed Project Consultant in the area of Financing of Litigation cases, Peer2-Peer Credit Marketplaces and other online projects for financial institutions.


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