Our association, which represents the Spanish ‘quota’, together with BBVA and Santander, considers it essential that consumer protection is guaranteed
We have been appointed to form part of the recently constituted group of experts of the General Directorate of Financial Stability, Financial Services and Capital Markets Union of the Commission (DG FISMA), of the European Commission, which will be in charge of developing the Plan of action on bad loans (known as Non Performing Loans, NPL). The ultimate goal is to prevent a future accumulation of doubtful loans in the European Union as a result of the crisis triggered by COVID-19.
We are one of the three Spanish members, together with the representatives of Banco Santander and BBVA, and the only consumer association in our country among a cast of 22 experts from across the EU, as well as the United States and the United Kingdom. Therefore, it will provide the necessary consumer perspective and defense of their interests.
The future directive will create a common secondary market for non-performing loans in the EU that required banks to be healthy in their balance sheets, but in which consumers have to have their rights guaranteed. To this end, it is intended to introduce common standards for the activity of lenders and credit buyers, since, at the moment, they are very different between countries, from very liberal approaches to others more conservative, while some do not even offer of regulations.
The new EU regulation also aims to amend the Consumer Credit Directive and the Mortgage Credit Directive to ensure that consumers are properly informed when the loan is transferred and can retain the same contractual rights as they had with lenders.
We consider it essential that adequate safeguards are added to ensure that consumers are protected from harmful practices. The practice of buying and selling doubtful credit in the EU must be strictly supervised so that vulnerable consumers do not fall into the clutches of vulture funds.
A bank loan is normally considered to be doubtful if more than 90 days have elapsed without the borrower paying the agreed installments or interest, or if it is unlikely that they will repay it.
The tasks of the FISMA group of experts will be to supervise and evaluate the situation of the NPLs; provide the Commission with expert opinions and analysis on the operation and success factors of NPL’s secondary markets; identify areas where further action or a specific policy approach may be required and develop specific policy recommendations for possible future actions in the area of combating late payments.