Diploma transposing EU directive sent to parliament. The delay prompted Brussels to lodge a formal complaint against Portugal.
The draft law transposing the European directive establishing rules for the sale of non-performing loans (NPLs) was already approved by the Council of Ministers (CM). This was the first step towards transposing the directive into national law, the deadline for which was 29 December 2023, prompting the European Commission to take Portugal to the European Court of Justice.
The government has “approved a bill to transpose the European directive, which harmonises the rules applicable to credit managers and credit purchasers and supports the development of secondary markets for non-performing loans (so-called NPLs) in the European Union, while ensuring that the sale of such loans does not prejudice the rights of customers (debtors),” according to the CM’s press release.
No further information has been given on the content of the proposal, but Member States have some room for manoeuvre to protect the interests of individuals, particularly when it comes to the sale of mortgage loans.
The next step in the transposition process will be taken by the Assembly of the Republic, where the government’s proposal will be presented and where a few days ago a bill from the Left Bloc on the sale of NPLs was rejected and two resolutions from the PS and Livre were approved, recommending that the government speed up the transposition and calling for the protection of individuals.
The legislation in question is important for families, as the sale of loans that they have stopped paying has taken place without a specific legal framework, with many individuals being informed of the sale by the buyer. E
At this stage, individuals are given the opportunity to repay the loans, but only in one lump sum, which, if they are unable to do so, results in the loss of the assets pledged as collateral. Individuals often complain about the lack of information and the use of aggressive methods to collect debts, especially when this task is outsourced to other organisations.
In its statement on the opening of proceedings against Portugal, the European Commission stresses that “Directive (EU) 2021/2167 attaches great importance to debtors and includes safeguards to strengthen consumer protection, such as restructuring measures and information requirements to increase the level of transparency in debt collection.
Information requirements to increase the level of transparency in the relationship with the creditor’.
When finally implemented, the effectiveness of the EU legislation will be diminished given the massive sales of non-performing loans already undertaken by banks operating in Portugal in recent years. From 2013 to 2023 alone, banks will ‘cleanse’ their balance sheets of more than 40 billion euros of non-performing loans, a process that will continue in 2024.
Original Story: Público | Author: Rosa Soares
Edition and translation: Prime Yield