New rules that lay down a common European framework for the transfer and management of banks’ non-performing loans come into effect today (29 December).

An EU directive on the issue was agreed in 2021, with a transposition deadline of 29 December 2023.

The Minister for Finance Michael McGrath (pictured) has now signed the European Union (Credit Servicers and Credit Purchasers) Regulations 2023 to give effect to EU Directive 2021/2167.

The directive provides for a new EU-wide authorisation and regulatory framework for credit servicers to be overseen by national authorities (in Ireland’s case, the Central Bank).

It allows such authorised entities to passport credit-servicing activities across the EU.

Lawyers exempt

The directive applies to bank-originated loans transferred after 29 December 2023.

For credit agreements that fall outside the scope of the directive and these regulations, the existing national framework in relation to credit-servicing firms will continue to apply.

Each country was given some discretion on how the rules would be implemented.

The Department of Finance took decisions on the discretion to be applied after a public consultation earlier this year.

After further consultation with the Central Bank, however, it has decided that public notaries, bailiffs and lawyers will continue to be exempt from the directive if they perform credit-servicing activities as part of their profession.