European directive should have been transposed into national law by the end of 2023. Political turmoil explains delay.

The government has once again approved a bill transposing the European directive on bad debt into national law, which also harmonises the rules for managers and buyers of this type of non-performing debt. However, this transposition is already a year and a half behind schedule due to political instability.

On 3 July, the Council of Ministers met and “approved a draft law to transpose the European Directive, which harmonises the rules applicable to credit managers and credit purchasers. The law also supports the development of secondary markets for non-performing loans (NPLs) in the EU, while ensuring that the disposal of such loans does not prejudice the rights of customers (debtors),” as stated in a press release published on the Government’s official website.

This is the second time that the AD Executive has given the green light to the bill transposing the European directive on bad debt. The first was in February this year, but the legislative process was interrupted by the fall of the Government in early March. Now, this bill is expected to go to Parliament.

The truth is that the political instability felt in Portugal in recent years has delayed – and greatly – the transposition of European rules on non-performing loans into national legislation. Specifically, Directive 2021/2167 was approved by the European authorities in November 2021, with the transposition deadline ending at the end of 2023. In other words, Portugal is more than a year and a half behind in this area. That is why the European Commission decided to take Portugal to the Court of Justice of the European Union in February.

Directive 2021/2167 aims to foster the development of a well-functioning secondary market for non-performing loans by establishing rules for the authorisation and supervision of credit purchasers and managers.

Original Story: Idealista | Author: Vanessa Sousa
Edition and translation: Prime Yield