Adoption of the Belgian Law transposing the NPL Directive
On December 19, 2024, the Chamber of Representatives adopted in plenary session the final version of the law transposing Directive (EU) 2021/2167 on credit servicers and credit purchasers and amending Directives 2008/48/EC and 2014/17/EU (the NPL Directive). The NPL Directive aims to regulate the management and sale of non-performing loans (NPLs) within the European Union (EU).
The delayed transposition (originally due by December 29, 2023) marks a significant milestone in the management and transfer of NPLs. The regulation pursues a dual objective: on the one hand, to enable credit institutions to address the issue of NPLs on their balance sheets while limiting the risk of new NPLs accumulation; and on the other hand, to ensure borrower protection, particularly for consumers, when such non-performing loans are transferred to third parties.
The law faithfully reflects the provisions of the NPL Directive and will enter into force ten days after its publication in the Belgian Official Gazette (Moniteur belge / Belgisch Staatsblad).
1. Legal framework for Credit Servicers
A credit servicer is defined as a legal person that, in the course of its business, manages and enforces the rights and obligations related to a creditor’s rights under a NPL, or the NPL itself, on behalf of a credit purchaser, and carries out at least one or more credit servicing activities.
In essence, the credit servicer is the legal entity entrusted by a credit purchaser to manage a NPL.
A NPL is a credit agreement classified as a non-performing exposure by reference to another EU regulation.[1] In simple terms, it is a credit agreement with a significant risk of non-repayment, based on the criteria set out in Regulation 575/2013.
Credit servicing activities include:
Collecting payments due under a NPL;
Renegotiating the terms and conditions of a NPL with the borrower, where the credit servicer is not a credit intermediary within the meaning of Article I.9, 35°, of the Belgian Code of Economic Law (CEL);
Managing complaints related to a NPL;
Informing the borrower of any changes to interest rates, fees, or payments due under a NPL.
The law excludes certain activities and transactions from its scope. Excluded are credit servicing activities performed by:
EU credit institutions;
authorized or registered managers of alternative investment funds, as well as management companies of undertakings for collective investment in transferable securities (UCITS) and self-managed UCITS;
consumer and mortgage credit lenders performing credit servicing activities within the scope of their usual business;
lawyers, Ministerial officers or judicial representatives (officiers ministériels ou les mandataires de justice / ministeriële ambtenaren of gerechtelijke mandatarissen) acting within their professional duties.
Additionally excluded are:
Credit servicing activities concerning NPLs not issued by an EU credit institution;
Purchases of a creditor’s rights under a NPL, or the NPLs, by EU credit institutions;
Transfers of a creditor’s rights under a NPL, or of the NPL, that occurred before the law’s effective date.
The NPL Directive clarifies in its recitals that the outsourcing by credit institutions of credit servicing activities, in relation to both performing and non-performing credit agreements, to credit servicers or to other third parties, is also outside the scope of the directive. This exclusion is neither explicitly addressed in the Belgian law nor discussed in the parliamentary works of the law.
2. Authorization requirements for Credit Servicers
Credit servicers established in Belgium or third-country credit servicers operating in Belgium must obtain authorization from the Financial Services and Markets Authority (FSMA).
The authorization conditions align with common standards in financial regulation (e.g., consumer and mortgage credit license, or insurance intermediation registration) and can be summarized as follows:
the members of the applicant’s management or administrative bodies (les gérants, les administrateurs, les membres du conseil de direction et du conseil de surveillance, et les délégués à la gestion journalière du demandeur / de zaakvoerders, de bestuurders, de leden van de directieraad en van de raad van toezicht, de personen belast met het dagelijks bestuur van de aanvrager) must possess professional honorability, which refers to their reputation and integrity. This assessment is largely at the discretion of the FSMA. It requires, at a minimum: (i) a clean criminal record, free of any relevant criminal offenses or other violations of laws relating to companies, bankruptcy, insolvency, or consumer protection, (ii) to have been transparent, open and cooperative in their past business dealings with supervisory and regulatory authorities, (iii) not being subject to any ongoing insolvency procedure and nor have previously been bankrupted (unless reinstated);
the members of the applicant’s management or administrative bodies (les gérants, les administrateurs, les membres du conseil de direction et du conseil de surveillance, et les délégués à la gestion journalière du demandeur / de zaakvoerders, de bestuurders, de leden van de directieraad en van de raad van toezicht, de personen belast met het dagelijks bestuur van de aanvrager) must possess appropriate expertise (ie. knowledge and experience) ;
qualified shareholders (meaning a direct or indirect holding in an undertaking which represents 10 % or more of the capital or of the voting rights or which makes it possible to exercise a significant influence over the management of that undertaking) must also meet the professional honorability criteria, which is demonstrated by meeting the conditions of having no criminal record and no ongoing insolvency procedure nor have previously been bankrupted (unless reinstated);
the applicant has in place sound governance frameworks, internal controls, risk management systems, and borrower protection mechanisms, including personal data protection.
The applicant has in place adequate and specific internal procedures that ensure the recording and handling of complaints from borrowers.
The NPL Directive requires the applicant to have in place adequate anti-money laundering and counter terrorist financing procedures if national AML laws classify them as obliged entities. However, Belgian law has not included credit servicers as obliged entities under the Belgian AML law of September 18, 2017.
No transitional or expedited procedures are foreseen for credit servicers already active in the Belgian market.
Authorized credit servicers in one EU Member State (MS) will benefit from the European passport, enabling them to operate in other MSs through the freedom to provide services or by establishing a branch. Passporting requires prior notification to the home country’s competent authority (FSMA in Belgium), which will then notify the host country.
3. Obligations of Credit Purchasers
A credit purchaser is any natural or legal person, other than a credit institution, that purchases a creditor’s rights under a NPL, or the NPL itself, in the course of its trade, business or profession.
Credit purchasers must:
appoint an entity authorized to manage NPLs concluded with a consumer (for Belgian credit purchasers) or with any natural person or SME (for third-country credit purchasers). This entity must be an EU credit institution, licensed lender, or authorized credit servicer;
notify the FSMA of the appointed entity’s details no later than the start date of credit servicing activities;
for third-country purchasers, designate a representative that is domiciled in the EU has its head office in the EU. If the representative is based in Belgium, the law makes it fully liable for the purchaser’s obligations.
4. Strengthened Borrower rights
The law introduces reinforced obligations to ensure responsible NPL management:
- credit servicers active in Belgium are prohibited from receiving or holding funds from borrowers. Belgium has opted not to allow this practice (unlike for instance Luxembourg, which permits credit servicers to handle borrower funds under certain conditions);
- credit servicers and credit purchasers must act in good faith, fairly and professionally, provide accurate, clear, and non-misleading information. They must respect borrowers' privacy and avoid harassment, coercion, or undue influence.
- credit purchasers (or their appointed entities) must provide borrowers with detailed information following the transfer of a creditor’s rights under a NPL, or the NPL itself. The law specifies a minimum list of required information.
This information shall be communicated in language which is clear and understandable for the general public.
These obligations apply alongside existing provisions in the CEL, particularly those of Book VI (Market Practices and Consumer Protection) and Book XIX (Consumer Debts).
5. Regulation of contractual relationships between the new actors
On the one hand, the relationship between the credit servicer and the credit purchaser must be formalized in a written credit servicing agreement, which must include certain minimum clauses, such as a precise description of the credit servicing activities performed by the credit servicer, the level or method of calculating its remuneration, and its authority to represent the credit purchaser in dealings with the borrower.
A specific data retention obligation is imposed on the credit servicer, covering all relevant correspondence with the credit purchaser and the borrower, instructions received from the credit purchaser in connection with servicing activities, and the credit servicing agreement itself. These records must be retained for 10 years after the termination of the credit servicing agreement.
On the other hand, outsourcing of credit servicing activities from the credit servicer to a credit service provider is regulated. The framework for outsourcing is as follows:
outsourcing must be established in a written agreement;
outsourcing may not involve transferring all credit servicing activities of a credit servicer to a single provider;
outsourcing does not alter the contractual relationship between the credit servicer and the credit purchaser, nor does it affect the servicer's obligations to the credit purchaser or borrowers;
outsourcing must not affect the credit servicer’s compliance with its authorization conditions or hinder supervision by the competent authorities;
the credit servicer must retain direct access to all relevant information related to the outsourced services;
after the termination of outsourcing, the credit servicer must have the resources and expertise necessary to resume the outsourced activities;
outsourcing must not compromise the quality of internal controls or the continuity of the credit servicer’s operations;
the credit service provider is not permitted to receive or hold borrowers' funds;
the credit servicer must retain, for 10 years following the termination of the outsourcing agreement, all records related to the outsourcing agreements and the instructions provided to the credit service provider.
Outsourcing is subject to prior notification to the FSMA.
6. New obligations for credit institutions
The law applies to Belgian credit institutions intending to conclude an agreement with a credit purchaser for the transfer of a creditor’s rights under a NPL or the NPL itself.
Belgian credit institutions are required to provide detailed information to potential credit purchasers to enable them to conduct their own assessment of the value of the creditor’s rights under the NPL or the NPL itself, as well as the likelihood of recovering the debt. This information must be provided prior to the conclusion of the transfer agreement. The law specifies a minimum set of information that must be included.
Furthermore, credit institutions are subject to a new reporting obligation, generally on a biannual basis, though it may be required on a quarterly basis in certain cases. Reports must be submitted to the competent authorities (to the FSMA if the borrower is domiciled or has its statutory seat in Belgium). The specific data to be reported is outlined in the law.
7. Impact on authorized modifications of ongoing consumer and mortgage credits
NPLs may include consumer or mortgage loans. The NPL Directive amended Directives 2008/48/EC and 2014/17/EU to require Member States to ensure that lenders implement appropriate policies and procedures to encourage, where necessary, the exercise of reasonable forbearance before initiating enforcement proceedings. These measures, referred to as forbearance measures (in the French version of the NPL Directive mesures de renégociation), were not initially included in the proposed law submitted to the Chamber. Their inclusion was achieved through amendments introduced on December 11, 2024.
In practice :
lenders must establish appropriate policies and procedures to encourage, where appropriate, the granting of forbearance measures (mesures de grâce / respijtmaatregelen) before initiating enforcement proceedings;
for consumer credit, forbearance measures may only consist of offering a credit agreement referred to in Article VII.3, § 3, 6° of the CEL. This refers to a partially excluded consumer credit agreement which provide for arrangements to be agreed by the lender and the consumer in respect of deferred payment or repayment methods, where the consumer is already in default on the initial credit agreement. This new credit agreement will be fully subject to the provisions of Book VII CEL explicitly referred to in Article VII.3, § 3, 6° of the CEL.
for mortgage credit with a movable purpose, any modification of existing terms requires the conclusion of a new credit agreement fully subject to Book VII of the CEL. Such modifications cannot benefit from the partial exclusion provided for in Article VII.3, § 3, 6° CEL, as this exclusion does not apply to mortgage credit.
for mortgage credit with an immovable purpose, forbearance measures involving a modification referred to in Article VII.145, paragraph 2 of the CEL (i.e., authorized changes to mortgage loan conditions or guarantees) are agreed upon through an addendum. Any other modification, such as a reduction in the loan amount, requires a new agreement fully subject to Book VII CEL.
forbearance measures are granted without administrative fees, late payment interest, or other charges, except for the contractually agreed interest rate and any costs related to the normal execution of the agreement, calculated over the forbearance period.
The lender must provide the consumer, in paper or durable medium as specified in the credit agreement, mandatory pre-contractual information. These include descriptions of the modifications, implementation timelines, and information on complaint procedures.
Parliamentary discussions further clarified that lenders may only grant forbearance measures for their own credit agreements. It is not permissible, within the framework of forbearance measures, to regroup debts involving a credit agreement from another lender or to grant additional credit by the same lender.
The new framework does not alter the existing restrictive provisions governing the transfer of consumer or mortgage credit agreements and the claims arising therefrom, which remain fully applicable. Regarding mortgage credit, the restrictions on transfers (Articles VII.147/17 to VII.147/19 of the CEL), previously limited to mortgage credit with a movable purpose, are now extended to mortgage credit with an immovable purpose.
New civil and criminal sanctions related to these obligations have also been introduced in Books VII and XV of the CEL.
Conclusions
The adoption of this law establishes a structured legal framework for the management and transfer of NPLs, balancing risk reduction for credit institutions with borrower protection. This framework enhances transparency and visibility in the secondary market for NPLs while strengthening the responsibilities of market participants in managing these claims and agreements.
For legal practice and industry, it is now time to prepare authorization applications and review internal procedures and collaboration agreements in light of the new obligations.
Prescillia ALGRAIN - Counsel Janson, specialized in Banking & Finance, Financial Regulatory - p.algrain@janson
[1] More specifically, Article 47a of Regulation (EU) No 575/2013 of 26 June 2013 on prudential requirements for credit institutions and investment firms, and amending Regulation (EU) No 648/2012.