On 14 January 2021, the European Parliament announced that its Economic and Monetary Affairs Committee (ECON) had agreed on the text of the draft Directive on credit servicers, credit purchasers and the recovery of collateral. The ECON MEPs have also agreed to start negotiations with the Council and the European Commission on the draft text. The draft Directive is a key component in the Commission’s plan for developing a secondary market for distressed assets.
Irene Tinagli (S&D, IT), the ECON Chair and co-rapporteur said: “Non-performing loans (NPLs) could be one of the most serious economic consequences of this COVID epidemic. Therefore, their efficient management will be essential to avoid a credit crunch. But managing NPLs doesn’t necessarily mean selling them. First of all, it means that creditors must apply all necessary measures and concessions so that the debtor can return to pay. Even if their sale becomes necessary, it is essential that the secondary market for NPLs is more solid and regulated than the current one. A truly efficient secondary market for NPLs can only exist if it goes hand in hand with the preservation of financial stability and with the highest possible level of borrowers’ protection, both households and businesses. This is what we aim to do with this report.”