A new Act No. 106/2024 Coll. on Credit Servicers and Credit Purchasers entered into force in Slovakia on 1 June 2024. This Act implements Directive (EU) 2021/2167 of the European Parliament and of the Council, which responds to the growing need to deal effectively with non-performing credit agreements.
The new regulation brings about significant changes in the area of credit servicing and the purchase of creditors’ rights aimed at dealing with non-performing credit agreements granted by credit institutions. For credit purchasers and credit servicers (“debt collection companies”), this means the need to adapt their activities to the new legal requirements and to ensure compliance with the new regulations. One of the new requirements for debt collection companies is to obtain a licence to act as a credit servicer.
What is the deadline for obtaining the new licence? What is the purpose of the new law and who does it apply to? The answers to these questions can be found in our brief overview of the new law below.
The main objectives and scope of the law
The Act applies to credit granted by credit institutions and excludes credit granted by other entities. It does not apply to the management of loans by banks, asset management companies and other defined entities, nor does it apply to the purchase of creditors’ rights by credit institutions and the transfer of loans made prior to its entry into force.
Credit servicer with registered office in Slovakia
A credit servicer is a legal entity that manages and enforces the rights and obligations of a creditor under a defaulted credit agreement. In order to perform this activity, a licence is required from the National Bank of Slovakia (NBS), and in order to obtain the licence, the credit servicer must meet certain conditions relating to its legal form, organisational and management structure and staffing.
Persons providing credit servicing in the Slovak Republic on 1 June 2024 may continue to do so without a licence until 30 November 2024, after which they must also obtain a licence from the NBS.
A credit servicer may delegate certain activities to a credit service provider, but must inform the NBS and, if it also provides credit servicing in other Member States, the competent authorities of the EU or EEA Member States concerned.
Credit purchaser
A credit purchaser is an entity that acquires the rights of a creditor under a defaulted credit agreement, or the defaulted credit agreement itself, for a consideration. Once the credit has been purchased, it may be administered by the credit purchaser itself or by another authorised entity. A credit purchaser established in Slovakia must arrange for the management of the credit by an authorised entity if the non-performing credit agreement has been concluded with a consumer or with owners of apartments and non-residential premises represented by a trustee or a community of owners.
Credit service provider
A credit service provider is a person who performs certain credit servicing activities under a written contract with a credit servicer. The Act regulates certain elements of the contract between the credit service provider and the credit servicer and sets out certain rules governing the relationship between them. In particular, the credit service provider may perform only some, but not all, of the credit servicing activities for the credit servicer.
Cross-border aspects
The Act also regulates the cross-border activities of credit servicers and credit purchasers. A credit servicer from another Member State may carry out its activities in the Slovak Republic on the basis of the freedom to provide services or through a branch. Similarly, a credit servicer established in the Slovak Republic may exercise this activity in other Member States. In both cases, the cross-border exercise of this activity is possible under the conditions set out in the Act. A credit purchaser established outside the EU must appoint a representative established in a Member State for the purpose of transferring the credit, who will be responsible for fulfilling the obligations under the Act. Such a credit purchaser is obliged to ensure that the credit is administered by an authorised entity, even if the defaulted credit agreement is concluded with an entrepreneur – a natural person or a micro, small or medium-sized enterprise.
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24 June 2024. This Legal Update has been prepared for information purposes only and does not purport to be exhaustive. Therefore, it should not be relied upon as legal advice. For further information or advice on the Act, please do not hesitate to contact our experts:
- Michaela Jurková: michaela.jurkova@cechova.sk
- Ján Vigano: jan.vigano@cechova.sk