The Council of Ministers approved the Credit Purchasers Act, which
transposes the European Directive on the same subject and amends the Consumer
Credit Contracts Act and the Real Estate Credit Contracts Act. The aim is to
regulate the market for the purchase and sale of non-performing loans and to
introduce certain obligations for mortgage and consumer credit borrowers.
Specifically, the bill regulates the purchase and sale of non-performing
loans (NPL) granted by credit institutions and financial credit institutions,
establishing common rules with the rest of the European Union.
The next step, once approved by the government, will be to send it to
the Congress of Deputies for parliamentary processing.
Firstly, it regulates the activity of doubtful credit management, which
consists of the collection or renegotiation of this type of credit, which
becomes a reserved activity and requires prior authorisation from the Bank of
Spain. In order to obtain this authorisation, the law establishes the need to
have an “adequate” internal credit management system and a policy
that “guarantees the protection and fair treatment of borrowers”.
It also regulates the purchase and sale of NPL, ensuring that the
conditions and rights of borrowers are maintained and transferring to the
purchaser of the loans the obligations of transparency, protection and
information, including compliance with the codes of good practice to which the
original creditor has subscribed.
The draft regulation sets out additional safeguards for the protection
of borrowers, requiring both purchasers and servicers to provide “fair
treatment and adequate information”, as well as an “adequate”
borrower assistance and out-of-court redress service.
In order to ensure compliance with these obligations, the Banco de
España will supervise the administrators, as well as the compliance of credit
purchasers with these obligations, and will establish the corresponding system
of infringements and sanctions.
Real estate and consumer credit
The sectoral regulations on consumer credit and real estate credit will
also be amended to introduce the obligation for creditors to have a debt
renegotiation policy. This means that creditors will have to offer their
customers measures aimed at reaching renegotiation agreements before taking
legal action or demanding full payment of the debt.
The regulation establishes special conditions for non-mortgage debtors
in a situation of economic vulnerability who are recipients of the minimum
subsistence income. In these cases, the lender who sells the doubtful loan to a
third party must offer the borrower a payment plan in order to “protect
the most indebted groups without undermining the payment culture”.
The Consumer Credit Law also introduces a limit on the amount of default
interest that can be charged in the event of non-payment by the consumer,
setting it at a maximum of the sum of ordinary interest plus three percentage
points.
In addition, charges for the recovery of overdue amounts must be in line
with the costs actually borne by the creditor and, in any event, after prior
notification to the consumer, indicating the outstanding amount, the time
available to settle the situation and the amount to be paid if the situation is
not settled.
The cases of modification of the interest rate in contracts of
indefinite duration (as in the case of revolving cards) are defined, allowing
the customer not to accept the increases or to cancel the contract, in which
case the customer may repay the outstanding debt in accordance with the
repayment conditions and the interest rate in force at the time of the
notification, at no additional cost to the borrower.
Finally, it clarifies the conditions of compensation for early repayment
in the case of financing linked to the purchase of goods or services.
Original Story: MSN News Author: Europa Press
Edition and translation: Prime Yield