ACT No. XXXII of 2024 AN ACT to provide for the establishment of a framework for the regulation of credit purchasers, as well as credit servicers acting on behalf of such credit purchasers, of a creditor’s rights under a non-

I assent.

(L.S.)

MYRIAM SPITERI DEBONO

President

30th July, 2024

ACT No. XXXII of 2024

AN ACT to provide for the establishment of a framework for the

regulation of credit purchasers, as well as credit servicers acting on

behalf of such credit purchasers, of a creditor’s rights under a non-

performing credit agreement, or of the non-performing credit

agreement itself, issued by a credit institution established in the

European Union; and to amend the Insurance Business Act and the

Investment Services Act.

BE IT ENACTED by the President, by and with the advice and

consent of the House of Representatives in this present Parliament

assembled, and by the authority of the same as follows:-

(1) The short title of this Act is the Credit Servicers and Short title and

scope.

Credit Purchasers Act, 2024.

(2)

The principal scope of this Act is to transpose the relevant

provisions of the Directive (EU) 2021/2167 of the European

Parliament and of the Council of 24 November 2021 on credit

servicers and credit purchasers and amending Directives 2008/48/EC

and 2014/17/EU (NPL Directive), and it shall be interpreted and

applied in accordance with the said Directive.

(1)

In this Act, unless the context otherwise requires

"applicant" means a legal person established in Malta

applying to the competent authority to act as a credit servicer in

accordance with article 7;

"binding legal instrument" means any directly applicable

measures, including but not limited to, any implementing

technical standards, regulatory technical standards or similar

measures issued in accordance with European Union legislation;

"borrower" means a legal or natural person who has

concluded a credit agreement with a credit institution, including

its legal successor or assignee;

"competent authority" means the Malta Financial Services

Authority established by the Malta Financial Services Authority

Act;

"Conduct of Business Rules" means Rules, other than

Credit Servicing Rules, issued by the competent authority in

accordance with this Act;

"consumer" means a natural person who, in credit

agreements regulated by this Act or any regulations made

thereunder, or Credit Servicing Rules or Conduct of Business

Rules issued thereunder, is acting for purposes which are outside

his trade, business or profession;

"CRD" means Directive 2013/36/EU of the European

Parliament and of the Council of 26 June 2013 on access to the

activity of credit institutions and the prudential supervision of

credit institutions, amending Directive 2002/87/EC and

repealing Directives 2006/48/EC and 2006/49/EC, as may be

amended from time to time, and includes any binding legal

instruments, guidelines and other measures that have been or

may be issued thereunder;

"credit agreement" means an agreement as originally

issued, modified or substituted, whereby a credit institution

grants a credit in the form of a deferred payment, a loan or other

similar financial accommodation;

"credit institution" means a credit institution as defined in

point (1) of Article 4(1) of the CRR;

"credit purchaser" means any natural or legal person, other

than a credit institution, that purchases a creditor’s rights under a

non-performing credit agreement, or the non-performing credit

agreement itself, in the course of its trade, business or

profession, in accordance with applicable European Union law

and national law;

"credit service provider" means a third party used by a

credit servicer to perform any of the credit servicing activities;

"credit servicer" means 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 non-performing credit

agreement, or to the non-performing credit agreement itself, on

behalf of a credit purchaser, and which carries out at least one (1)

or more credit servicing activities;

"credit servicing activities" means one (1) or more of the

following activities

(a) collecting or recovering from the borrower, in

accordance with national law, any payments due related to

a creditor’s rights under a credit agreement or to the credit

agreement itself;

(b) renegotiating with the borrower, in accordance

with national law, any terms and conditions related to a

creditor’s rights under a credit agreement, or of the credit

agreement itself, in line with the instructions given by the

credit purchaser, where the credit servicer is not a credit

intermediary as defined in Article 3(f) of Directive 2008/

48/EC or in Article 4(5) of Directive 2014/17/EU;

(c) administering any complaints relating to a

creditor’s rights under a credit agreement or to the credit

agreement itself; and, or

(d) informing the borrower of any changes in

interest rates or charges or of any payments due related to a

creditor’s rights under a credit agreement or to the credit

agreement itself;

"credit servicing agreement" means a written contract

concluded between a credit purchaser and a credit servicer

concerning the services to be provided by the credit servicer on

behalf of the credit purchaser;

"Credit Servicing Rules" means Rules, other than Conduct

of Business Rules, which may be issued by the competent

authority in accordance with this Act;

"creditor" means a credit institution that has issued a credit

or a credit purchaser;

"CRR" means Regulation (EU) No. 575/2013 of the

European Parliament and of the Council of 26 June 2013 on

prudential requirements for credit institutions and investment

firms and amending Regulation (EU) No. 648/2012, as amended

from time to time, and includes any binding legal instruments,

guidelines and other measures that have been or may be issued

thereunder;

"designated representative" means the representative of a

third-country credit purchaser designated in accordance with

article 17;

"Directive 98/5/EC" means Directive 98/5/EC of the

European Parliament and of the Council of 16 February 1998 to

facilitate the practice of the profession of lawyer on a permanent

basis in a Member State other than that in which the qualification

was obtained, as may be amended from time to time, and

includes any binding legal instruments, guidelines and other

measures that have been, or may be issued thereunder;

"Directive 2008/48/EC" means Directive 2008/48/EC of

the European Parliament and of the Council of 23 April 2008 on

credit agreements for consumers and repealing Council Directive

87/102/EEC, as may be amended from time to time, and includes

any binding legal instruments, guidelines and other measures

that have been, or may be issued thereunder;

"Directive 2009/65/EC" means Directive 2009/65/EC of

the European Parliament and of the Council of 13 July 2009 on

the coordination of laws, regulations and administrative

provisions relating to undertakings for collective investment in

transferable securities (UCITS), as may be amended from time to

time, and includes any binding legal instruments, guidelines and

other measures that have been, or may be issued thereunder;

"Directive 2011/61/EU" means Directive 2011/61/EU of

the European Parliament and of the Council of 8 June 2011 on

Alternative Investment Fund Managers and amending Directives

2003/41/EC and 2009/65/EC and Regulations (EC) No. 1060/

2009 and (EU) No. 1095/2010, as may be amended from time to

time, and includes any binding legal instruments, guidelines and

other measures that have been, or may be issued thereunder;

"Directive 2014/17/EU" means Directive 2014/17/EU of

the European Parliament and of the Council of 4 February 2014

on credit agreements for consumers relating to residential

immovable property and amending Directives 2008/48/EC and

2013/36/EU and Regulation (EU) No. 1093/2010, as may be

amended from time to time, and includes any binding legal

instruments, guidelines and other measures that have been, or

may be issued thereunder;

"European regulatory authority" means a body or bodies

designated by a Member State other than Malta in accordance

with Article 21(3) of the NPL Directive to carry out the functions

and duties stipulated in the said Directive;

"GDPR" means Regulation (EU) 2016/679 of the

European Parliament and of the Council of 27 April 2016 on the

protection of natural persons with regard to the processing of

personal data and on the free movement of such data, and

repealing Directive 95/46/EC (General Data Protection

Regulation), as may be amended from time to time, and includes

any binding legal instruments, guidelines and other measures

that have been, or may be issued thereunder;

"home Member State" means, with respect to a credit

servicer, the Member State in which its registered office is

situated or, if under its national law it has no registered office,

the Member State in which its head office is situated or, with

respect to a credit purchaser, the Member State in which the

credit purchaser or its representative is domiciled, or its

registered office is situated, or if under its national law it has no

registered office, the Member State in which its head office is

situated;

"host Member State" means the Member State, other than

the home Member State, in which a credit servicer has

established a branch or where it provides credit servicing

activities, and in any event where the borrower is domiciled, or

its registered office is situated or, if under its national law it has

no registered office, the Member State in which its head office is

situated;

"licence" means a licence to carry out credit servicing

activities issued under this Act;

"licence holder" means a person who holds a licence;

"management body" means the body or bodies of a legal

person, which is appointed in accordance with the applicable law

and which is empowered to set the strategy, objectives and

overall direction of the legal person, and which oversees and

monitors management decision-making, and includes the

persons who effectively direct the business of the legal person;

"Member State" means a Member State of the European

Union and includes an European Economic Area State;

"MiFID" means Directive 2014/65/EU of the European

Parliament and of the Council of 15 May 2014 on markets in

financial instruments and amending Directive 2002/92/EC and

Directive 2011/61/EU, as may be amended from time to time,

and includes any binding legal instruments, guidelines and other

measures that have been, or may be issued thereunder;

"Minister" means the Minister responsible for the

regulation of financial services;

"non-performing credit agreement" means a credit

agreement that is classified as a non-performing exposure in

accordance with Article 47a of the CRR;

"NPL Directive" means Directive (EU) 2021/2167 of the

European Parliament and of the Council of 24 November 2021

on credit servicers and credit purchasers and amending

Directives 2008/48/EC and 2014/17/EU, as may be amended

from time to time, and includes any binding legal instruments,

guidelines and other measures that have been, or may be issued

thereunder;

"Regulation (EU) 2017/2402" means Regulation (EU)

2017/2402 of the European Parliament and of the Council of 12

December 2017 laying down a general framework for

securitisation and creating a specific framework for simple,

transparent and standardised securitisation, and amending

Directives 2009/65/EC, 2009/138/EC and 2011/61/EU and

Regulations (EC) No. 1060/2009 and (EU) No. 648/2012;

"Regulation (EU) 2018/1725" means Regulation (EU)

2018/1725 of the European Parliament and of the Council of 23

October 2018 on the protection of natural persons with regard to

the processing of personal data by the Union institutions, bodies,

offices and agencies and on the free movement of such data, and

repealing Regulation (EC) No. 45/2001 and Decision No. 1247/

2002/EC, as may be amended from time to time, and includes

any binding legal instruments, guidelines and other measures

that have been, or may be issued thereunder.

(2) For the purposes of this Act, unless the context otherwise

requires, terms used in this Act which are not defined in the said Act

shall have the same meaning as assigned to them in the NPL Directive.

(3) In the case of conflict between the English and the Maltese

texts, the English text shall prevail in this Act and in any regulations

made thereunder.

(1) The provisions of this Act and of any regulations made Applicability.

thereunder, or Credit Servicing Rules or Conduct of Business Rules

issued thereunder shall apply to the following

(a) credit servicers acting on behalf of a credit purchaser

in respect of a creditor’s rights under a non-performing credit

agreement, or of the non-performing credit agreement itself,

issued by a credit institution; and

(b) credit purchasers of a creditor’s rights under a non-

performing credit agreement, or of the non-performing credit

agreement itself, issued by a credit institution.

(2) The provisions of this Act and of any regulations made

thereunder, Credit Servicing Rules or Conduct of Business Rules

issued thereunder shall be without prejudice to any other law relating

(a) the transfer of a creditor’s rights under a credit

agreement, or of the credit agreement itself;

(b) the protection of consumers and borrowers’ rights,

including the provisions of Regulations (EC) No. 593/2008 and

(EU) No. 1215/2012, and Directives 93/13/EEC, 2008/48/EC,

2014/17/EU as transposed in national law;

(c) any restrictions regarding the transfer of a creditor’s

rights under a non-performing credit agreement, or of the non-

performing credit agreement itself that is not past due, or is less

than ninety (90) days past due, or is not terminated in accordance

with the applicable legislation; and

(d) any requirements regarding the servicing of a

creditor’s rights under a credit agreement, or of the credit

agreement itself, when the credit purchaser is a securitisation

special purpose entity as defined in point (2) of Article 2 of

Regulation (EU) 2017/2402, provided that law

(i) does not affect the level of consumer protection

provided by the NPL Directive as transposed into national

law; and

(ii) ensures that the competent authority receives

the necessary information from credit servicers.

The provisions of this Act and of any regulations made

thereunder, of the Credit Servicing Rules or Conduct of Business

Rules issued thereunder shall not apply to the following

(a) the servicing of a creditor’s rights under a credit

agreement, or of the credit agreement itself, carried out by

(i)

a credit institution established in the European

Union;

(ii) an alternative investment fund manager

(AIFM) authorised or registered in accordance with

Directive 2011/61/EU, or a management company, or an

investment company authorised in accordance with

Directive 2009/65/EC provided that the investment

company has not designated a management company under

the latter Directive, on behalf of the fund it manages; or

(iii) a non-credit institution subject to supervision

by a competent authority of a Member State in accordance

with Article 20 of Directive 2008/48/EC or Article 35 of

Directive 2014/17/EU when performing activities in that

Member State;

(b) the servicing of a creditor’s rights under a credit

agreement, or of the credit agreement itself, that was not issued

by a credit institution except where the creditor’s rights under the

credit agreement, or the credit agreement itself, is replaced by a

credit agreement issued by such credit institution;

(c) the purchase of a creditor’s rights under a non-

performing credit agreement, or of the non-performing credit

agreement itself, by a credit institution established in the

European Union;

(d) the transfer of a creditor’s rights under a credit

agreement, or of the credit agreement itself transferred before

30th December 2023; and

(e) the servicing of a creditor’s rights under a credit

agreement, or of the credit agreement itself, executed by public

notaries or marshals or lawyers as defined in point (a) of Article

1(2) of Directive 98/5/EC when conducting credit servicing

activities as part of their profession.

(1) The competent authority shall carry out its functions Competent

under this Act and, in particular, shall ensure compliance with the authority.

provisions of the said Act and any regulations made thereunder, with

the Credit Servicing Rules or Conduct of Business Rules issued

thereunder.

(2) The competent authority shall also carry out the functions and

duties as competent authority for all purposes of the NPL Directive as

transposed in national law.

(3) Without prejudice to the provisions of this article, where

Malta is the home Member State, the competent authority shall ensure

that credit servicers and, where applicable, credit service providers to

whom credit servicing activities have been outsourced in accordance

with article 12, comply with the provisions of this Act and of any

regulations made thereunder and with the Credit Servicing Rules or

Conduct of Business Rules issued thereunder, on an ongoing basis.

(4) Without prejudice to the provisions of this article, where

Malta is the home Member State, it shall be responsible for the

supervision of the obligations set out in Article 10 and in Articles 17 to

20 of the NPL Directive, as transposed in national law, in respect of

the credit purchaser or, where applicable, its designated representative.

PART I

CREDIT SERVICERS

(1) No legal person shall act as a credit servicer, or hold itself Authorisation as

to act as a credit servicer, in Malta unless it is duly authorised by the a credit servicer.

competent authority or any European regulatory authority to act as a

credit servicer.

(2) No legal person established in Malta shall act as a credit

servicer, or hold itself to act as a credit servicer, unless it is duly

authorised by the competent authority to act as a credit servicer under

this Act.

(3) Where a legal person is authorised by the competent authority

to act as a credit servicer, it may receive and hold funds from

borrowers in order to transfer those funds to credit purchasers,

provided that it shall only do so in Malta and in any host Member State

that permits such receiving and holding of funds.

(4)

Where a legal person is authorised by a European regulatory

authority to act as a credit servicer, it may receive and hold funds from

borrowers in Malta in order to transfer those funds to credit

purchasers, provided that it shall only do so if the home Member State

permits such receiving and holding of funds.

(1) A legal person established in Malta intending to act as a

credit servicer shall apply to the competent authority for authorisation

to act as a credit servicer.

(2) An applicant shall submit to the competent authority an

application for authorisation to act as a credit servicer. An applicant

shall also provide all the information necessary for the competent

authority to verify that the applicant has satisfied all the conditions set

out in article 8.

(3) Without prejudice to the provisions of sub-article (2), the

application referred to in the said sub-article (2) shall be accompanied

by the following

(a) evidence of the legal status of the applicant and a

copy of its certificate of registration, and its memorandum and

articles of association;

(b)

the address of the applicant’s registered office;

(c) the identity of the members of the applicant’s

management or administrative body and the persons who hold

qualifying holdings in accordance with point (36) of Article 4(1)

of the CRR;

(d) evidence that the applicant fulfils the conditions laid

down in article 8(b) and (c);

(e) evidence that the persons who hold qualifying

holdings in accordance with point (36) of Article 4(1) point (36)

of the CRR fulfil the conditions laid down in article 8(d);

(f) evidence of the governance arrangements and

internal control mechanisms referred to in article 8(e);

(g)

evidence of the policy referred to in article 8(f);

(h) evidence of the internal procedures referred to in

article 8(g);

(i)

evidence of the procedures referred to in article 8(h);

(j)

where relevant, evidence of the existence of a

separate account in a credit institution as provided for in article

8(j);

(k)

any outsourcing agreement as referred to in article

13; and

(l) where the applicant does not intend to receive and

hold funds from borrowers as part of its business model, a

declaration to that effect.

(4) The competent authority shall, within forty-five (45) days of

receipt of the application referred to in sub-article (2), assess whether

that application is complete by ensuring that the information and

documentation referred to in sub-article (3) have been submitted.

(5) Where the application referred to in sub-article (2) is not

complete, the competent authority shall set a deadline by which the

applicant is to provide the missing information. If the said application

remains incomplete after the deadline referred to in this sub-article, the

competent authority may refuse to review the application and, in the

event of such refusal, shall return the submitted documents to the

applicant.

(6) Where an application referred to in sub-article (2) is complete,

the competent authority shall immediately notify the applicant thereof.

(7) The competent authority shall, within ninety (90) days of

receipt of a complete application or, if the application is considered

incomplete by the competent authority, of receipt of the required

information and, or documentation, notify the applicant whether the

authorisation to act as a credit servicer is granted or refused, and

provide reasons for refusal.

(8) In granting an authorisation under this Act, the competent

authority may subject a credit servicer to such conditions as it may

deem appropriate and, having granted such an authorisation, it may,

from time to time, vary or revoke any condition so imposed or impose

new conditions, as applicable.

(9) A credit servicer intending to extend its business to additional

services not foreseen at the time of the granting of the authorisation

under this Act shall submit a request in writing for the extension of its

licence to the competent authority by complementing and, or updating

the information and documentation referred to in this Act, as

applicable.

(10) The competent authority shall establish and maintain a list of

all credit servicers authorised under this Act and all credit servicers

authorised in any Member State other than Malta providing services in

Malta under Article 13 of the NPL Directive. The competent authority

shall publish the said list on its official website and shall update it on a

regular basis.

The competent authority shall not grant an applicant

authorisation as a credit servicer in accordance with this Act unless it

is satisfied that

(a) the applicant is a legal person as referred to in Article

54 of the Treaty on the Functioning of the European Union and

its registered office is in Malta;

(b) the members of the applicant’s management or

administrative body are of sufficiently good repute, which is

demonstrated by proving that

(i) they have a clean police record or any other

national equivalent in relation to relevant criminal

offences, in particular those relating to property, financial

services and activities, money laundering, usuary, fraud,

tax crimes, violation of professional secrecy or physical

integrity, and also in relation to any other offences under

laws relating to companies, bankruptcy, insolvency or

consumer protection;

(ii) the cumulative effects of minor incidents do not

impinge on their good repute;

(iii) they have always been transparent, open and

cooperative in their past business dealings with supervisory

and regulatory authorities;

(iv) they are not subject to any ongoing insolvency

procedure nor have previously been declared bankrupt

unless reinstated in accordance with the applicable law;

(c) the applicant’s management or administrative body,

as a whole, has adequate knowledge and experience to conduct

the business in a competent and responsible manner;

(d) the persons who hold qualifying holdings in the

applicant within the meaning of point (36) of Article 4(1) of the

CRR are of sufficiently good repute, which is demonstrated by

fulfilling the requirements set out in paragraph (b) of this article;

(e)

the applicant has in place robust governance

arrangements and adequate internal control mechanisms,

including risk management and accounting procedures, which

ensure respect for borrower rights and compliance with the laws

governing a creditor’s rights under a credit agreement, or the

credit agreement itself, and with the GDPR;

(f) the applicant applies an appropriate policy ensuring

compliance with rules for the protection, and the fair and diligent

treatment of borrowers, including by taking into account their

financial situation and, where available, the need for such

borrowers to be referred to debt advice or social services;

(g) the applicant has in place adequate and specific

internal procedures that ensure the recording and handling of

complaints from borrowers;

(h) the applicant has in place adequate anti-money

laundering and counter terrorism financing procedures where the

provisions of the Prevention of Money Laundering Act or in any Cap. 373.

regulations made thereunder, designate credit servicers as

subject persons;

(i) the applicant is subject, by virtue of applicable

national law, to reporting and public disclosure requirements;

and

(j) the applicant has a separate account in a credit

institution into which all funds received from borrowers are to be

credited and kept until their channelling to the respective credit

purchaser, under the conditions agreed with the credit purchaser

Provided that this paragraph shall not apply where

the applicant does not intend to receive and hold funds from

borrowers as part of its business model and provides the

competent authority with a declaration to that effect in

accordance with article 7(3)(l).

(1) The competent authority may at any time suspend or Suspension or

withdraw an authorisation granted to a credit servicer in accordance withdrawal

authorisation.

with this Act where any of the following applies to such a credit

servicer

(a) the credit servicer does not make use of the

authorisation within twelve (12) months of its grant from the

competent authority;

(b) the credit servicer expressly renounces to the

authorisation;

(c) the credit servicer has ceased to engage in the

activities of a credit servicer for more than twelve (12) months;

(d) the credit servicer has acquired an authorisation

through false statements or other irregular means;

(e) the credit servicer no longer fulfils the requirements

for the granting of such authorisation set out in article 8; and, or

(f) the credit servicer commits a serious infringement of

any of the provisions of this Act or any regulations made

thereunder, of Credit Servicing Rules or Conduct of Business

Rules issued thereunder, and, or any other laws regulating

consumer protection, including any applicable laws of the host

Member State or of the Member State where the credit was

granted.

(2) Where an authorisation is withdrawn in accordance with sub-

article (1), the competent authority shall, where applicable,

immediately inform the European regulatory authority of the host

Member State in cases where the credit servicer provides services

under regulations made under this Act, and also the European

regulatory authority of the Member State where the credit was granted,

when different from the host Member State and the home Member

State.

(3) When an authorisation is withdrawn in accordance with sub-

article (1), the competent authority shall update the list referred to in

article 7(10) without delay.

(1)

Where the competent authority proposes

(a) to vary any condition to which the authorisation is

subject or to impose a condition thereon; or

an authorisation.

(b) to refuse an application for an authorisation, or to

withdraw or suspend an authorisation,

it shall give the applicant or the credit servicer, as applicable, notice

in writing of its intention to do so, setting out the reasons for the

decision it proposes to take.

(2) Every notice given under sub-article (1), shall state that the

recipient of the notice may, within such reasonable period after the

notification thereof as may be stated in the notice, make

representations in writing to the competent authority indicating

reasons why the proposed decision should not be taken, and the

competent authority shall consider any representation so made before

reaching a final decision.

(3) Without prejudice to the provisions of article 7(7), the

competent authority shall as soon as practicable notify its final

decision in writing to any person to whom notice is to be given in

accordance with sub-article (1).

(1) When Malta is the home Member State, the competent Supervision of

authority shall evaluate, by applying a risk-based approach, the credit servicers.

implementation by a credit servicer of the requirements set out in

paragraphs (e) to (h) of article 8

Provided that the competent authority shall determine the

extent of the evaluation referred to in this sub-article, having regard to

the size, nature and complexity of the activities of the credit servicer

concerned.

(2) The competent authority shall inform the European regulatory

authority of the host Member State, or of the Member State where the

credit was granted, when the latter is different from the host and the

home Member State, of the results of the evaluation referred to in sub-

article (1), upon request of any one (1) of the said European regulatory

authorities, or where the competent authority considers it appropriate.

The details of any administrative penalty or other administrative

measures imposed shall be transmitted by the competent authority to

the European regulatory authority of the host Member State and, where

appropriate, of the Member State where the credit was granted, when

the latter is different from the host and the home Member State.

(3) When carrying out the evaluation referred to in sub-article (1),

the competent authority shall exchange information with the European

regulatory authority of the host Member State, and of the Member

State where the credit was granted, when the latter is different from the

host and the home Member State, as is necessary to enable them to

carry out their respective functions and duties laid down in the NPL

Directive.

(1) When a credit servicer intends to receive and hold funds Ability to hold

on behalf of borrowers as part of its business model in accordance with funds.

this Act, such funds shall, in accordance with the provisions of any

applicable laws, be protected in the interest of the credit purchasers

against the claims of the other creditors of the credit servicers, in

particular in the event of insolvency.

(2) When a credit servicer intends to receive and hold funds on

behalf of borrowers as part of its business model in accordance with

this Act, and a borrower makes a payment to that credit servicer in

order to partially or totally reimburse the amounts due related to a

creditor’s rights under a non-performing credit agreement, or to the

non-performing credit agreement itself, that payment shall be deemed

to have been paid to the credit purchaser.

(3) When a credit servicer intends to receive and hold funds on

behalf of borrowers as part of its business model in accordance with

this Act, that credit servicer shall be required to deliver a receipt or a

letter of discharge to the borrower on paper or another durable

medium, whenever the credit servicer receives funds from the

borrower, acknowledging the amounts received.

(4) Credit service providers shall not be permitted to receive and

hold funds from borrowers.

(1) When a credit servicer uses a credit service provider to

perform any of the credit servicing activities, the credit servicer shall

remain fully responsible for complying with all the obligations

emanating from this Act, or any regulations made thereunder, or Credit

Servicing Rules or Conduct of Business Rules issued thereunder.

(2) The outsourcing of any credit servicing activities as referred

to in sub-article (1) shall be subject to all of the following conditions

(a) the conclusion of a written outsourcing agreement

between the credit servicer and the credit service provider under

which the credit service provider shall be required to comply

with the applicable legal provisions, including the provisions of

this Act or any regulations made thereunder, Credit Servicing

Rules and Conduct of Business Rules issued thereunder, and the

relevant national and European Union law applicable to a

creditor’s rights under a credit agreement, or to the credit

agreement itself;

(b) the outsourcing to a credit service provider of all

credit servicing activities at the same time is prohibited;

(c) the contractual relationship between the credit

servicer and the credit purchaser and the obligations of the credit

servicer towards the credit purchaser or towards borrowers is not

altered by the outsourcing agreement with the credit service

provider;

(d) the compliance of a credit servicer with the

authorisation requirements set out in article 8 is not affected by

the outsourcing of some of its credit servicing activities;

(e) the outsourcing to the credit service provider does

not prevent the supervision of the credit servicer by the

competent authority and, where applicable, the European

regulatory authority of the host Member State and the Member

State where the credit was granted, when the latter is different

from the home Member State and the host Member State, in

accordance with Article 5 and Article 14 of the NPL Directive,

as applicable;

(f) the credit servicer has direct access to all relevant

information concerning the credit servicing activities outsourced

to the credit service provider;

(g) after the outsourcing agreement is terminated, the

credit servicer has the expertise and resources to be able to

provide the outsourced credit servicing activities; and

(h) the outsourcing of credit servicing activities shall not

be undertaken in such a way as to impair the quality of the credit

servicer’s internal control, or the soundness or continuity of its

credit servicing activities.

(3) Credit servicers shall inform the competent authority of the

home Member State and, where applicable, of the host Member State,

prior to outsourcing their credit servicing activities in accordance with

this article.

(4) Credit servicers shall keep and maintain records of relevant

instructions provided to the credit service provider, in accordance with

the conditions provided for under applicable national law, and of the

outsourcing agreement referred to in this article, for a period of at least

five (5) years, but not more than ten (10) years, from the date on which

the outsourcing agreement is terminated.

(5) Credit servicers and the credit service providers shall make

the information referred to in sub-article (4) available to the competent

authority upon request.

PART II

CREDIT PURCHASERS

(1) Credit institutions shall provide a prospective credit Right to

purchaser with necessary information regarding a creditor’s rights information.

under a non-performing credit agreement, or the non-performing credit

agreement itself, and if applicable, the collateral in order to enable the

prospective credit purchaser to conduct its own assessment of the

value of the creditor ’s rights under the non-performing credit

agreement, or of the non-performing credit agreement itself, and the

likelihood of recovery of the value of that agreement prior to entering

into a contract for the transfer of that creditor’s rights under the non-

performing credit agreement, or of the non-performing credit

agreement itself, while ensuring the protection of information made

available by the credit institution and of the confidentiality of business

data.

(2) On a biannual basis, credit institutions that transfer to a credit

purchaser a creditor’s rights under a non-performing credit agreement,

or the non-performing credit agreement itself, shall inform the

competent authority and the European regulatory authority of the host

Member State of at least the following

(a)

the company registration number;

(b) the legal entity identifier of the credit purchaser or,

where applicable, of its representative designated in accordance

with article 17, or where these do not exist of

(i) the identity of the credit purchaser or of the

members of the credit purchaser’s management or

administrative body and the persons who hold qualifying

holdings in the credit purchaser within the meaning of

Article 4(1)(36) of the CRR; and

(ii) the address and, or registered office of the

credit purchaser or, where applicable, its representative

designated in accordance with article 17;

(c) the aggregate outstanding balance of the creditor’s

rights under the non-performing credit agreements or of the non-

performing credit agreements transferred;

(d) the number and size of the creditor’s rights under the

non-performing credit agreements or of the non-performing

credit agreements transferred; and

(e) whether the transfer includes the creditor’s rights

under the non-performing credit agreements, or the non-

performing credit agreements themselves, concluded with

consumers and the types of assets securing the non-performing

credit agreements, when applicable.

(3) The authorities referred to in sub-article (2), may require

credit institutions to provide the information referred to in the said

sub-article on a quarterly basis whenever they deem necessary,

including in order to better monitor a high number of transfers that

might occur during a crisis period.

(4)

Where Malta is the host Member State, the competent

authority shall communicate without delay the information referred to

in sub-articles (2) and (3), and any other information that the

competent authority may consider to be necessary for carrying out

functions and duties in accordance with the NPL Directive, to the

competent authorities of the home Member State of the credit

purchaser.

(5) The provisions of this article shall be applied in accordance

with the Data Protection Act and the GDPR.

(1) A credit purchaser that is domiciled or has its registered Obligations of

office in Malta shall appoint an entity as referred to in article 4(a)(i) or credit

purchasers.

(iii) or a credit servicer, to perform credit servicing activities in respect

of a creditor’s rights under a non-performing credit agreement, or of

the non-performing credit agreement itself, concluded with consumers.

(2) Without prejudice to the provisions of sub-article (1), when a

credit purchaser domiciled in the European Union, or that has its

registered office or, if under its national law it has no registered office,

its head office in the European Union purchases a creditor’s rights

under a non-performing credit agreement, or the non-performing credit

agreement itself, concluded with a consumer domiciled in Malta, in

addition to a creditor’s rights under any other credit agreement, or any

such other credit agreement itself, it shall appoint an entity as referred

to in article 4(a)(i) or (iii) or a credit servicer, to perform credit

servicing activities in respect of such creditors’ rights, or such credit

agreements themselves.

(3) When a credit purchaser is not domiciled in the European

Union, or does not have its registered office, or if under its national

law it has no registered office, its head office in the European Union,

its designated representative shall appoint an entity as referred to in

article 4(a)(i) or (iii), or a credit servicer, except in cases where the

designated representative itself is an entity as referred to in article

4(a)(i) or (iii) or a credit servicer, to perform credit servicing activities

in respect of a creditor ’s rights under a non-performing credit

agreement, or of the non-performing credit agreement itself, concluded

with

(a) natural persons,

including

consumers

and

independent workers; and, or

(b) micro, small and medium-sized enterprises (SMEs),

as defined in Article 2 of the Annex to Commission

Recommendation 2003/361/EC

Provided that the provisions of this sub-article shall also apply

when a credit purchaser as referred to in this sub-article purchases a

creditor’s rights under a non-performing credit agreement, or the non-

performing credit agreement itself, concluded with a consumer

domiciled in Malta, in addition to a creditor’s rights under any other

credit agreement, or any such other credit agreement itself.

(4) A credit purchaser shall not be subject to any additional

requirements for the purchase of a creditor’s rights under a non-

performing credit agreement, or of the non-performing credit

agreement itself, other than as provided for in accordance with this Act

and any regulations made thereunder, or Credit Servicing Rules and

Conduct of Business Rules issued thereunder, or by any applicable

provisions of consumer protection law, contract law, civil law or

criminal law.

(5) The relevant European Union law and national law

concerning in particular the enforcement of contracts, consumer

protection, borrowers’ rights, credit origination, bank secrecy rules

and criminal law shall continue to apply to the credit purchaser upon

the transfer of the creditor’s rights under the credit agreement, or of the

credit agreement itself, to the credit purchaser.

(6) Without prejudice to any national and international laws on

promissory notes and bills of exchange, the level of protection

provided under European Union law and national law to consumers

and other borrowers, as well as insolvency laws, shall not be affected

by the transfer of the creditor’s rights under the credit agreement, or of

the credit agreement itself, to the credit purchaser.

(7) The provisions of this Act and of any regulations made

thereunder, Credit Servicing Rules and Conduct of Business Rules

issued thereunder shall be without prejudice to the power of the

competent authority and any other national authority, agency and, or

body at law to require information from credit purchasers regarding a

creditor’s rights under a credit agreement, or the credit agreement

itself, and its performance.

(8) Credit purchasers shall be prohibited from engaging natural

persons to service the credit agreements that they have acquired.

(9) A credit servicer or entity as referred to in article 4(a)(i) or

(iii) appointed in terms of this article shall comply, on behalf of the

credit purchaser, with the obligations imposed on the credit purchaser

under sub-articles (3) to (5) and articles 16 and 18. In cases where no

credit servicer or entity as referred to in article 4(a)(i) or (iii) is

appointed, the credit purchaser or its representative shall remain

subject to those obligations.

(10) The competent authority may require that the credit servicer

or entity as referred to in article 4(a)(i) or (iii) appointed in terms of

this article complies, on behalf of the credit purchaser, with the

obligations imposed on the credit purchaser in accordance with

national law, including this Act and any regulations made thereunder,

Credit Servicing Rules and Conduct of Business Rules issued

thereunder, and any law as referred to in sub-article (6).

(1) When the credit purchaser or, where applicable, its Use of credit

designated representative, appoints an entity referred to in article servicers

other entities.

4(a)(i) or (iii), or a credit servicer, to perform credit servicing activities

in relation to the transferred creditor’s rights under a non-performing

credit agreement, or the non-performing credit agreement itself, the

credit purchaser or its representative shall inform the competent

authority in writing of the identity and address of the said entity or

credit servicer, at the latest on the date on which the credit servicing

activities start.

(2) When the credit purchaser or, where applicable, its designated

representative appoints an entity other than that notified in accordance

with sub-article (1), it shall notify the competent authority thereof at

the latest on the date of that change and shall indicate the identity and

address of the new entity that it has appointed to perform credit

servicing activities in relation to the transferred creditor’s rights under

a non-performing credit agreement or the non-performing credit

agreement itself.

(3) When Malta is the home Member State of the credit

purchaser, the competent authority shall transmit without undue delay

to the European regulatory authority of the host Member State, to the

European regulatory authority of the Member State in which the credit

was granted, and to the European regulatory authority of the home

Member State of the new credit servicer, the information received in

accordance with sub-articles (1) and (2).

(1) When a transfer of a creditor’s rights under a non- Representative

performing credit agreement, or of the non-performing credit of

country credit

agreement itself is concluded, a credit purchaser

purchaser.

(a)

that is not domiciled in a Member State; or

(b) that does not have its registered office in a Member

State or, if under its national law it has no registered office, its

head office in a Member State, as the case may be,

shall designate in writing a representative that is domiciled in a

Member State or that has its registered office in a Member State, or if

under its national law it has no registered office, its head office in a

Member State.

(2) The competent authority shall address the representative

referred to in sub-article (1) in addition to, or instead of, the credit

purchaser on all issues related to the ongoing compliance with this Act

and with any regulations made thereunder, and Credit Servicing Rules

and Conduct of Business Rules issued thereunder.

(3) The representative referred to in sub-article (1) shall be fully

responsible for compliance with the obligations imposed on the credit

purchaser under this Act and under any regulations made thereunder,

and Credit Servicing Rules and Conduct of Business Rules issued

thereunder.

(1) When Malta is the home Member State, a credit

purchaser or, where applicable, its designated representative, that

transfers a creditor’s rights under a non-performing credit agreement,

or the non-performing credit agreement itself, shall inform the

competent authority on a biannual basis of the legal entity identifier

(LEI) of the new credit purchaser and, where applicable, of its

designated representative or, where such identifier does not exist, of

(a) the identity of the new credit purchaser or, where

applicable, its designated representative, or of the members of

the new credit purchaser’s or its representative’s management

body and the persons who hold qualifying holdings in the new

credit purchaser or its representative within the meaning of point

(36) of Article 4(1) of the CRR; and

(b) the address of the new credit purchaser or, where

applicable, of its designated representative.

(2) Without prejudice to the provisions of sub-article (1), where

Malta is the home Member State, the credit purchaser or its designated

representative shall inform the competent authority of at least the

following

(a) the aggregate outstanding balance of the creditor’s

rights under the non-performing credit agreements, or of the non-

performing credit agreements transferred;

(b) the number and size of the creditor’s rights under the

non-performing credit agreements or of the non-performing

credit agreements transferred;

(c) whether the transfer includes a creditor’s rights under

a non-performing credit agreement, or a non-performing credit

agreement itself, concluded with consumers and the types of

assets securing the non-performing credit agreement, when

applicable.

(3) Where Malta is the home Member State, the competent

authority may require credit purchasers or, where applicable, their

designated representative to provide the information referred to in sub-

articles (1) and (2), on a quarterly basis whenever the competent

authority deems necessary, including in order to better monitor a high

number of transfers that might occur during a crisis period.

(4) Where Malta is the home Member State, the competent

authority shall transmit without undue delay the information received

in accordance with this article to the European regulatory authority of

the host Member State and the European regulatory authority of the

home Member State of the new credit purchaser.

PART III

REGULATORY AND INVESTIGATIVE POWERS

(1) The Minister, acting on the advice of the competent Powers of the

authority, may make regulations to give effect to the provisions of this Minister.

Act, and without prejudice to the generality of the foregoing may, by

such regulations, in particular, do any of the following

(a) provide for and regulate the payment by any person

or body, as the case may be, of authorisation or other fees and

such other charges payable to the competent authority in respect

of any matter provided for, by or under this Act or any

regulations made thereunder, or Credit Servicing Rules or

Conduct of Business Rules issued thereunder, including the fees

and charges in respect of any permission, licence, authorisation,

exemption or other benefit, as well as any fees and charges in

respect of the competent authority’s regulatory, supervisory or

investigative functions under this Act and under any regulations

made, Credit Servicing Rules and Conduct of Business Rules

issued thereunder, as may be prescribed;

(b) exempt any person, service or activity from any one

or more of the provisions of this Act, subject to such variations,

additions, adaptations and modifications as may be prescribed

and subject to such conditions or other requirements, including

other forms of authorisation and notification procedures, as may

be prescribed;

(c) transpose, implement and give effect to the

provisions and requirements of the NPL Directive;

(d)

transpose, implement and give effect to the

provisions and requirements of European Union Directives,

European Union Regulations and any other legislative measures

of the European Union requiring transposition and, or

implementation, as they may be amended from time to time,

including any implementing measures that have been, or may be

issued thereunder and relating to authorised persons and others

as may be specified therein. Regulations made under this

paragraph, and strictly related to transpositions or

implementations as aforesaid, may provide that any provision of

this Act or of any other law shall not apply to matters falling

under such regulations, and insofar as any of the provisions of

the regulations are inconsistent with the provisions of this Act or

of any other law, such provisions in any such regulations shall

prevail;

(e) assign powers and functions to the competent

authority for the purposes of this Act, and provide for the

exercise of such powers and the performance of such functions;

(f) provide for the establishment and imposition of

administrative penalties and other administrative measures that

the competent authority may impose on credit servicers, credit

purchasers, designated representatives and any other persons as

may be specified therein;

(g) prescribe that a breach of any regulations made under

this Act may amount to a criminal offence as may be specified,

and such regulations may impose punishments in respect of any

breach, consisting of a fine (multa) not exceeding one hundred

and fifty thousand euro (€150,000) or imprisonment for a term

not exceeding one (1) year or to both such fine and

imprisonment. A higher fine (multa) may be imposed where

deemed necessary or appropriate for any breach or failure of

compliance with any European Union legislation or with any

regulations made in accordance with this article to transpose or

to give effect to any European Union legislation;

(h)

prescribe anything which may be prescribed; and

(i) provide for any matter incidental to, or connected

with any of the above.

(2) Regulations made under this article may be made subject to

such exemptions or conditions as may be specified therein, may make

different provisions for different cases, circumstances or purposes and

may give to the competent authority such powers and, or functions of

adaptation of the regulations as may also be so specified.

(3) Where regulations have been made in terms of this article, the

competent authority may issue Credit Servicing Rules and Conduct of

Business Rules for the better carrying out and implementation of the

provisions of any regulations made in terms of this Act.

(4) Regulations made under this Act and any amendment or

revocation of such regulations may be published in the English

language only.

(5) The exercise of any of the powers assigned under this article

shall be subject to any obligations or rights arising from Malta’s

international commitments.

(1) The competent authority may, from time to time, issue, Power to issue

publish, amend or revoke Credit Servicing Rules and, or Conduct of Credit

Rules and

Business Rules which shall be binding on all persons authorised by it Conduct

Business Rules.

or falling under its regulatory or supervisory functions, or any other

persons, as may be specified therein.

(2) Without prejudice to the generality of sub-article (1), Credit

Servicing Rules and, or Conduct of Business Rules, as applicable,

issued by the competent authority may

(a) lay down additional requirements and conditions in

relation to persons authorised by it, seeking its approval, or

falling under the regulatory or supervisory functions of the

competent authority, their activities, the conduct of their

business, their relations with customers, the public and other

parties, their responsibilities to the competent authority,

reporting requirements, financial and other resources, and related

requirements, and any other matters as the competent authority

may consider appropriate;

(b) provide for the statements and notices that shall be

made or given for any purposes in regard to which the competent

authority exercises supervisory or regulatory functions, and the

form and contents thereof;

(c) prescribe the information that such persons are to

submit to the competent authority;

(d) transpose, implement and give effect to the

provisions and requirements of the NPL Directive;

(e) transpose, implement and give effect to the

provisions and requirements of European Union legislation and

any other legislative measures of the European Union requiring

transposition and, or implementation, as they may be amended

from time to time, including any implementing measures that

have been, or may be issued thereunder and relating to

authorised persons and others as may be specified therein; and,

or

(f) regulate any matter that is incidental to, or connected

with any of the matters mentioned above as the competent

authority may consider appropriate in the performance of its

functions.

(3) Credit Servicing Rules and Conduct of Business Rules may be

made subject to such exemptions or conditions as may be specified

t h e r e i n , m a y m a k e d i ff e r e n t p r o v i s i o n f o r d i ff e r e n t c a s e s ,

circumstances or purposes and may give to the competent authority

such powers of adaptation of the Credit Servicing Rules and, or

Conduct of Business Rules, as may also be so specified.

(1) Without prejudice to any other powers conferred to the

competent authority by this Act or by any other law, the competent

authority may, whenever it deems necessary, give by notice in writing

such directives as it may deem appropriate in the circumstances, and

any person to whom the notice is given, shall obey, comply with and

otherwise give effect to any such directive within the time and in the

manner stated in the directive or subsequent directives

Provided that the competent authority may give any such

directive even when an authorised person, for whatever reason, ceases

to be so authorised in accordance with this Act

Provided further that any directive issued in accordance with

this article shall, unless the competent authority otherwise directs,

continue to apply even when an authorised person, for whatever

reason, ceases to be so authorised in accordance with this Act.

(2) The power to issue directives under this article shall also

include the power to vary, alter, add to or withdraw any directive, as

well as the power to issue subsequent new directives.

(3) Where the competent authority is satisfied that the

circumstances so warrant, it may at any time make public any directive

it has given in accordance with this article.

(1) The competent authority may, at any time and by notice

in writing, require the persons referred to in sub-article (2) to do all or

any of the following

(a) to furnish to the competent authority, at such time

and place and in such form as it may specify, such information

and, or documentation as it may require, including the power to

require existing telephone and data traffic records;

(b) to furnish to the competent authority any information

and, or documentation as it may require verified in such manner

as it may specify;

(c) to attend before the competent authority, or before a

person appointed by it, at such time and place as it may specify,

to reply to questions and provide such information and, or

documentation as it may require;

(d) to provide the competent authority any assistance

which it may require and which that person is reasonably able to

provide.

(2) The following persons may be required by the competent

authority to provide information, documentation and, or assistance as

specified in sub-article (1)

(a) a credit servicer, an entity as referred to in article

4(a)(i) or (iii) appointed in terms of article 15, a credit purchaser,

a credit service provider, a designated representative and any

third party designated to perform functions in relation to the

provision of services by such persons;

(b) the natural and, or legal persons that control any

person referred to in paragraph (a) or are controlled by such

person, both in the past and present, as well as past and present

directors, managers, auditors, officers and other employees of

such person, and any third party providing a service to such

person; and, or

(c) any other person who appears to be in possession of

any relevant information.

(3) A natural or legal person making information available to the

competent authority in accordance with this article shall not be

considered to be infringing any restriction on disclosure of information

imposed by contract or by any legislative, regulatory or administrative

provision, and shall not be subject to liability of any kind related to the

provision of such information and, or documentation.

(4) The competent authority may make and retain copies of any

document furnished, provided or to which it has access in accordance

with this article.

(5)

Where the person required to provide information and, or

documentation under this article does not have the relevant

information and, or documentation, such person shall disclose to the

competent authority where, to the best of his knowledge, that

information and, or documentation may be available, and the

competent authority may require any person, whether indicated as

aforesaid or otherwise, who appears to the said authority to be in

possession of such information and, or documentation to provide it as

requested.

(6) A declaration and documentation provided in accordance with

any requirement under this article may be used in evidence against the

person making the declaration or providing the documentation as well

as against any person to whom they relate.

(7) The provisions of this article shall not apply to information

and, or documentation which is privileged in accordance with the

provisions of article 642 of the Criminal Code.

(8) Where the competent authority has appointed a representative

in accordance with sub-article (1)(c), such person shall, for the

purposes of carrying out his functions under his appointment, have all

the powers and functions conferred on the competent authority by this

article and a requirement imposed by such person shall be deemed to

have the same force and effect as a requirement imposed by the

competent authority.

(1) The competent authority may, whenever it deems it

necessary or expedient, appoint an inspector to investigate and report

on the affairs of any persons referred to in article 22(2).

(2)

An inspector appointed under sub-article (1)

(a) may, if he deems it necessary or expedient for the

purposes of an investigation, investigate the affairs of any person

mentioned in sub-article (1);

(b) shall have and may exercise all the powers conferred

on the competent authority by article 22, and any requirement

imposed by the said inspector shall be deemed to be and have the

same force and effect as a requirement imposed by the competent

authority; and

(c) may, and if so directed by the competent authority

shall, prepare and submit interim reports and, on the conclusion

of his investigation, a final report to the competent authority.

(3) In appointing an inspector under sub-article (1), the

competent authority may direct that the investigation shall be carried

out within such time and shall be limited to such specific or general

matters as the competent authority may deem fit.

(4) For the purposes of this article, the inspectors may include an

advocate, a person authorised to carry out the profession of accountant

or auditor in accordance with the Accountancy Profession Act, or a Cap. 281.

person considered by the competent authority as possessing suitable

expertise to exercise such function.

(5) The competent authority shall have the power to order that all

expenses of, and incidental to, an investigation carried out in

accordance with this article shall be paid by the persons referred to in

sub-article (1).

(1) Any officer, employee or agent of the competent Right of entry.

authority, on producing proof of his authority, if required, shall have

the power to enter any premises occupied by a person on whom a

notice has been served in terms of article 22 or whose affairs are being

investigated in terms of article 23, for the purpose of obtaining

therefrom the information or documents required by that notice, or for

the purpose of carrying out on-site inspections or investigations, and of

exercising any of the powers conferred by the said articles.

(2) Where any officer, employee or agent of the competent

authority has cause to believe that if the notice referred to in article 22

were to be served, it would not be complied with, or that any

documents to which it may relate would be removed, tampered with or

destroyed, such officer, employee or agent shall have the power on

producing proof of his authority, if required, to enter any premises

referred to in sub-article (1) for the purpose of obtaining therefrom any

information or documents specified in the authority, being information

or documents that may have been required in accordance to such

notice as referred to in article 22.

(3) For the purposes of any action taken in accordance with the

provisions of this article, the competent authority may request the

assistance of the Commissioner of Police, who may for such purpose

exercise such powers as are vested in him by law.

Without prejudice to any other power conferred upon it by Powers of the

this Act or any other law, the competent authority shall have the competent

authority.

following powers

(a) to grant or refuse an authorisation in accordance with

articles 7 and 8;

(b) to withdraw or

suspend

an

authorisation

in

accordance with article 9;

(c)

to prohibit any of the credit servicing activities;

(d)

to conduct on-site and off-site inspections;

(e) to impose administrative

penalties

and

other

measures in accordance with article 26;

(f) to review outsourcing agreements concluded between

credit servicers and credit service providers in accordance with

article 13;

(g) to require credit servicers to remove any members of

their management or administrative body when they fail to

comply with the requirements set out in article 8(b);

(h) to require credit servicers to modify or update their

internal governance arrangements and internal control

mechanisms in order to effectively ensure respect for borrowers’

rights in accordance with the laws governing the credit

agreement;

(i) to require credit servicers to modify or update their

policies, plans and procedures adopted to ensure the fair and

diligent treatment of borrowers, and the recording and handling

of complaints from borrowers;

(j) to request further information pertaining to the

transfer of a creditor’s rights under the non-performing credit

agreement, or of the non-performing credit agreement itself; and

(k) to require a credit servicer, credit service provider or

credit purchaser or its designated representative that does not

meet any of the requirements set out in this Act or in any

regulations made thereunder, or Credit Servicing Rules or

Conduct of Business Rules issued thereunder to take, at an early

stage, all necessary actions or steps in order to comply with those

requirements.

(1) The competent authority may impose administrative

penalties and other administrative measures as referred to in sub-

article (3) where it deems that

(a) a person’s conduct amounts to an infringement of any

of the provisions of this Act or in any regulations made

thereunder, or Credit Servicing Rules or Conduct of Business

Rules issued thereunder;

(b)

a person has contravened or failed to comply with

any condition, obligation, requirement or directive made or

issued by the competent authority in accordance with any of the

provisions of this Act or any regulations made thereunder, or

Credit Servicing Rules or Conduct of Business Rules issued

thereunder, including failure to co-operate with an investigation

or an inspection or any request made by the competent authority

in accordance with this Act.

(2) Without prejudice to the generality of sub-article (1), the

competent authority may impose administrative penalties and other

administrative measures as referred to in sub-article (3) where it deems

that

(a) a credit servicer enters into an outsourcing agreement

infringing the provisions of article 13 or the credit service

provider to whom the credit servicing activities were outsourced

commits a serious infringement of the applicable legal

provisions, including the provisions of this Act or any regulations

made thereunder, or Credit Servicing Rules or Conduct of

Business Rules issued thereunder;

(b) a credit servicer’s governance arrangements and

internal control mechanisms as set out in article 8(e) fail to

ensure respect for borrower rights and compliance with personal

data protection rules;

(c) a credit servicer’s policy is inadequate for the proper

treatment of borrowers as set out in article 8(f);

(d) a credit servicer’s internal procedures as set out in

article 8(g) fail to provide for the recording and handling of

complaints from borrowers according to the obligations set out

in this Act or in any regulations made thereunder, or Credit

Servicing Rules or Conduct of Business Rules issued thereunder;

(e) a credit purchaser, or where applicable, its designated

representative fails to communicate the information set out in

articles 16 and 18;

(f) a credit purchaser or, where applicable, its designated

representative fails to comply with the requirement of article 15;

(g) a credit purchaser fails to comply with the

requirements of the provisions of article 17;

(h) a credit institution fails to communicate the

information set out in article 14;

(i) a credit servicer allows one or more persons not

complying with the requirements set out in article 8(b) to

become or remain a member of its management or administrative

organ;

(j) a credit servicer receives and holds funds from

borrowers when it is not authorised to do so in accordance with

this Act; and, or

(k) a credit servicer fails

to

comply

with

the

requirements set out in article 12.

(3) Without prejudice to any other powers conferred to it by this

Act or by any other law, the competent authority shall have the power

to impose the following administrative penalties and measures for the

infringements referred to in sub-articles (1) and (2)

(a) to withdraw or

suspend

an

authorisation

in

accordance with article 9;

(b) to issue an order requiring the credit servicer or credit

purchaser, or where applicable, its designated representative to

remedy the infringement, and to cease such conduct and to desist

from a repetition of said conduct; and, or

(c) to impose an administrative penalty which may not

exceed one hundred and fifty thousand (€150,000) euro for each

infringement or failure to comply, as the case may be.

(4) The administrative penalties and other administrative

measures taken by the competent authority in terms of this article shall

be effectively implemented.

(5) The provisions of article 16(4) of the Malta Financial Services

Authority Act shall apply, mutatis mutandis, with respect to any

administrative penalty imposed by the competent authority in terms of

this article.

(6) In the case of administrative penalties or other administrative

measures imposed by the competent authority in accordance with the

provisions of this Act or in any regulations made thereunder, or Credit

Servicing Rules or Conduct of Business Rules issued thereunder, the

competent authority shall take into account relevant circumstances,

including where appropriate

(a)

the gravity and the duration of the infringement;

(b)

the degree of responsibility of the credit servicer or

credit purchaser, or where applicable, its

designated

representative responsible for the infringement;

(c) the financial strength of the credit servicer or credit

purchaser responsible for the infringement, including by

reference to the total turnover of a legal person or the annual

income of a natural person;

(d) the importance of profits gained or losses avoided

because of the infringement by the credit servicer or credit

purchaser or, where applicable, its designated representative

responsible for the infringement, insofar as those profits or

losses can be determined;

(e) the losses caused to third parties by the infringement,

insofar as those losses can be determined;

(f) the level of cooperation by the credit servicer or

credit purchaser responsible for the infringement with the

competent authority;

(g) previous infringements by the credit servicer or

credit purchaser or, where applicable, its designated

representative responsible for the infringement;

(h) any actual or potential systemic consequences of the

infringement.

(7) Without prejudice to the provisions of this article, where

obligations imposed in terms of this Act or any regulations made

thereunder, or Credit Servicing Rules or Conduct of Business Rules

issued thereunder apply to a legal person, in the event of an

infringement of any provision thereof, administrative penalties and

other measures may also be imposed, subject to the conditions laid

down in national law, on the members of the management or

administrative body of the legal entity concerned, and on other

individuals who are responsible for the infringement under national

law.

(8) The imposition by the competent authority of an

administrative penalty or any other administrative measure in terms of

this article shall be without prejudice to any other consequence

emanating from the act or omission of the offender in terms of civil or

criminal law

Provided that in all cases where the competent authority

imposes an administrative penalty or any other administrative measure

in respect of anything done or omitted to be done by any person, and

such act or omission also constitutes a criminal offence, no

proceedings may be taken or continued against the said person in

respect of such criminal offence.

(1) If the competent authority proposes to impose an

administrative penalty or any other measure on any person in

accordance with article 26, it shall give a notice in writing of its

intention to do so, specifying the reasons for the decision it proposes to

take.

(2) Every notice given under sub-article (1) shall specify that the

recipient of the notice may, within such reasonable period after the

service thereof as may be stated in the notice, make representations in

writing to the competent authority specifying the reasons why the

proposed decision should not be taken, and the competent authority

shall consider any representation so made before reaching a final

decision.

(3) The competent authority shall as soon as practicable notify its

final decision in writing to any person to whom notice is to be given in

accordance with sub-article (1).

(1) The competent authority shall publish any decision

imposing an administrative penalty or any other measure, in

accordance with the provisions of this Act or any regulations made

thereunder, or Credit Servicing Rules or Conduct of Business Rules

issued thereunder, on its website immediately after the person subject

to that decision has been informed of that decision.

(2) The information published in accordance with sub-article (1)

shall specify the type and nature of the breach, the identity of the

person subject to the decision and any other information which the

competent authority deems relevant.

(3) The provisions of sub-articles (1) and (2) shall not apply to

decisions of the competent authority imposing measures that are of an

investigatory nature.

(4) Where the competent authority deems, following a case by

case assessment, that the publication of the identity of the legal person

subject to the decision, or the identity or personal data of a natural

person would be disproportionate, or where such publication may

jeopardise an ongoing investigation, the competent authority shall

(a) defer the publication of the decision to impose a

penalty or a measure until the moment where the reasons for

non-publication cease to exist;

(b) publish the decision to impose a penalty or a measure

on an anonymous basis in a manner which is in conformity with

national law, where such anonymous publication ensures an

effective protection of the personal data concerned

Provided that in this case, the publication of the

relevant data may be deferred for a reasonable period where it is

foreseen that within that period the reasons for anonymous

publication shall cease to exist;

(c) not publish the decision to impose a penalty or

measure in the event that the options laid down in paragraphs (a)

and (b) are considered to be insufficient to ensure the

proportionality of the publication of such a decision with regard

to measures which are deemed to be of a minor nature.

(5) Where the decision is subject to an appeal before a national

judicial, administrative or other authority, the competent authority

shall also publish immediately on its website such information and any

subsequent information on the outcome of such an appeal. Any

decision annulling a decision subject to appeal shall also be published.

(6) Any decision that is published in accordance with this article

shall remain accessible on the website of the competent authority for a

period of at least five (5) years after its publication

Provided that personal data contained in any such decision

shall only be retained on the website of the competent authority for as

long as is necessary for the purposes of public interest and

transparency.

PART IV

APPEALS, OFFENCES AND CONFIDENTIALITY

(1) For the purposes of this article, the Financial Services Appeals.

Tribunal means the Tribunal established by article 21 of the Malta Cap. 330.

Financial Services Authority Act.

(2) Any person who feels aggrieved by a decision of the

competent authority in terms of this Act or any regulations made

thereunder, or Credit Servicing Rules or Conduct of Business Rules

issued, thereunder may appeal against such decision to the Tribunal

within such period and under such conditions as are laid down in

article 21 of the Malta Financial Services Authority Act.

(3) Without prejudice to the provisions of sub-article (2), any

person who feels aggrieved by the competent authority’s failure to take

a decision in respect of an application for authorisation which contains

all the information required in accordance with this Act within the

time limit provided for in article 7(4), may appeal against such failure

to decide to the Tribunal within such period and under such conditions

as laid down in article 21 of the Malta Financial Services Authority

Act.

(4) An appeal against a decision of the competent authority shall

not suspend the operation of that decision

Provided that a decision of the competent authority to

withdraw the authorisation of a credit servicer shall not become

effective until the expiration of the period within which an appeal is

filed under this article and, in the case that an appeal is filed within

such period, the decision shall become effective on the date of the

decision of the Tribunal dismissing the appeal, or on the date on which

the appeal is abandoned, whichever is the earliest.

(5) Subject to the provisions of this article, the provisions of

article 21 of the Malta Financial Services Authority Act shall apply,

mutatis mutandis, to appeals that may be brought before the Tribunal

in accordance with this article.

(1)

Any person who

(a) contravenes or fails to comply with any of the

provisions of articles 6(1) or (2), 21(1), 22(1), 22(5) or 31(1), or

of article 22(1) or 22(5) as applied in terms of article 23; or

(b) contravenes or fails to comply with any condition,

obligation, requirement, directive or order made or given in

accordance with any of the provisions of this Act or in any

regulations made thereunder, or Credit Servicing Rules or

Conduct of Business Rules issued thereunder; or

(c) for the purposes of, or in accordance with, any of the

provisions of this Act or any regulations made thereunder, or

Credit Servicing Rules or Conduct of Business Rules issued

thereunder, or any condition, obligation, requirement, directive

or order made or given as aforesaid, furnishes information or

makes a declaration which he knows to be inaccurate, false or

misleading in any material respect, or recklessly furnishes

information or makes a declaration which is inaccurate, false or

misleading in any material respect; or

(d)

with intent to avoid detection of the commission of

an offence in accordance with this Act, removes, destroys,

conceals or fraudulently alters any book, document or other

paper; or

(e) intentionally obstructs a person exercising rights or

powers conferred by this Act or any regulations made thereunder,

or Credit Servicing Rules or Conduct of Business Rules issued

thereunder,

shall, on conviction, be liable to the punishment of imprisonment

for a term not exceeding one (1) year, or to a fine (multa) not

exceeding one hundred and fifty thousand euro (€150,000), or to both

such fine and imprisonment, unless such fine or term of imprisonment

is otherwise imposed in regulations made under the Act.

(2) The provisions of this Act or in any regulations made

thereunder, or Credit Servicing Rules or Conduct of Business Rules

issued thereunder, shall be without prejudice to any criminal

proceedings that may be competent under any other law.

(1) Information obtained by the competent authority or by Confidentiality.

its officers, employees or agents, whether current or former, or by

inspectors, auditors and experts formerly or currently engaged by the

competent authority for the purposes of, or in accordance with, any of

the provisions of this Act or any regulations made thereunder, or Credit

Servicing Rules or Conduct of Business Rules issued thereunder, or in

the discharge of any functions under any of the said provisions, or by

any other person who works, or has worked for the competent

authority, or for any third party to whom the competent authority has

delegated any of its functions or powers, shall be treated as

confidential and protected by the duty of professional secrecy, and

shall not be disclosed to any other person, except in the following

cases

(a) where the authority, body or person communicating

the information to the competent authority consents thereto;

(b) where the disclosure of the information is necessary

for any legal proceedings;

(c) where the information is provided to such other local

or European or overseas regulatory, judicial or enforcement

authorities in the pursuance of serious concerns of a regulatory

or criminal nature; and, or

(d) where the disclosure of the information is permitted

or required by law or European Union legislation.

(2) The information referred to in sub-article (1) shall include all

information exchanged between the competent authority and European

regulatory authorities in accordance with this Act or any regulations

made thereunder, or Credit Servicing Rules or Conduct of Business

Rules issued thereunder that concerns business or operational

conditions and other economic or personal affairs.

The processing of personal data for the purposes of this Act,

or in any regulations made thereunder, or Credit Servicing Rules or

Conduct of Business Rules issued thereunder shall be carried out in

accordance with the Data Protection Act, GDPR and Regulation (EU)

2018/1725.

PART V

COOPERATION WITH OTHER AUTHORITIES

(1) The competent authority shall cooperate with European

regulatory authorities whenever necessary for the purpose of carrying

out the functions and duties or of exercising the powers assigned to the

competent authority and the said European regulatory authorities

under the NPL Directive, as transposed in national law.

(2) The competent authority shall, on request and without undue

delay, provide the European regulatory authorities referred to in sub-

article (1) with the information required for the purpose of carrying out

their functions and duties under the NPL Directive, as transposed in

national law.

(3) When the competent authority receives any confidential

information in the exercise of its functions and duties in accordance

with this Act or any regulations made thereunder, or Credit Servicing

Rules or Conduct of Business Rules issued thereunder, the competent

authority shall only use that information in the course of the said

functions and duties. The exchange of information between the

competent authority and the other European regulatory authorities as

referred to in sub-article (1) shall be subject to the obligation of

professional secrecy referred to in Article 76 of MiFID.

(4) The competent authority shall implement the necessary

administrative and organisational measures to facilitate the

cooperation referred to in sub-article (1).

PART VI

AMENDMENTS TO THE INSURANCE BUSINESS ACT

(1) This Part amends the Insurance Business Act and shall be

read and construed as one with the Insurance Business Act, hereinafter

in this Part referred to as the "principal Act".

(2) This Part shall come into force on such date or dates as the

Minister responsible for the regulation of financial services may by

notice in the Gazette establish, and different dates may be so

established for different provisions and, or purposes of this Part.

In sub-article (1) of article 2 of the principal Act, Amendment of

immediately after the definition "motor vehicle", there shall be added article

principal Act.

the following new definition

" "motor vehicle liability insurance business" means the

business of insurance in class 10 as specified in Part I of the

Third Schedule;".

Article 49 of the principal Act shall be substituted by the Substitution of

article 49 of the

following new article

principal Act.

" Establishment of

(1) There shall be established a fund, as may

the Protection and

be prescribed, which shall be known as the "Protection

Compensation

and Compensation Fund"

Fund.

(a) for the payment of any claims in

respect of

(i) risks and commitments against

an insurance undertaking carrying on

business of insurance in Malta, as may be

prescribed under the Insurance Business

(Protection and Compensation Fund)

Regulations, remaining unpaid by reason of

the insolvency of such undertaking, subject

to such limitations, restrictions and

exclusions as may be prescribed by the said

regulations; and

(ii) risks related to motor vehicle

liability insurance business against an

insurance undertaking carrying on motor

vehicle liability insurance business from

Malta, as may be prescribed in accordance

with the Insurance Business (Protection and

Compensation Fund) Regulations, remaining

unpaid by reason of the insolvency of such

undertaking, subject to such limitations,

restrictions and exclusions as may be

prescribed by the said regulations; and

(b)

for the payment of compensation to

victims of road traffic accidents as may be

prescribed subject to such limitations and

restrictions as may be prescribed.

(2) Without prejudice to the provisions of this Act

and of any regulations issued thereunder, the Protection

and Compensation Fund shall be a body corporate

having a distinct legal personality and shall be capable

of entering into contracts, whether of borrowing or if

otherwise incurring indebtedness for the purposes of its

functions, acquiring, holding and disposing of any kind

of property for the purposes of its functions; of suing or

being sued, doing all such matters and entering into all

such negotiations, transactions and agreements as are

incidental or conducive to the exercise or performance

of its functions. Without prejudice to the generality of

the foregoing, the Protection and Compensation Fund

shall for this purpose have the power to enter into such

reasonable administrative, management or other

arrangements as may be necessary to enable it to fulfil

its objectives and functions under this Act and under

the Insurance Business (Protection and Compensation

Fund) Regulations, including to become a party to the

agreement referred to in regulation 10A of the

Insurance Business (General Provisions of Supervision)

Regulations, and to delegate to any body or person any

of its functions as the Management Committee

appointed in accordance with the Insurance Business

(Protection and Compensation Fund) Regulations

deems necessary.".

Article 50 of the principal Act shall be amended as follows

37. (a) the marginal note thereof shall be substituted by the

following new marginal note

"Contributions to the Protection and Compensation Fund.";

(b) sub-article (1) thereof shall be substituted by the

following new sub-article

"(1) The Protection and Compensation Fund shall

comprise of different funds as may be prescribed by the

Insurance Business (Protection and Compensation

Fund) Regulations, of all contributions made thereto in

accordance with this Act and any regulations made

thereunder, and of all other assets and revenues

pertaining to it. The assets of every fund shall be kept

separate and separately identifiable from the assets of

the other Funds, as may be prescribed in the said

regulations.";

(c) in sub-article (2) thereof the words "the Fund" shall

be substituted by the words "the Protection and Compensation

Fund"; and

(d) immediately after sub-article (2) thereof, as amended,

there shall be added the following new sub-article

"(3) Insurance undertakings which carry on

motor vehicle liability insurance business from Malta,

as may prescribed by the Insurance Business

(Protection and Compensation Fund) Regulations,

shall contribute to the Protection and Compensation

Fund in such amounts and to such limitations, as may

be prescribed by the Insurance Business (Protection

and Compensation Fund) Regulations, and different

amounts and limitations may so apply as may be

prescribed in the said regulations.".

Article 51 of the principal Act shall be amended as follows

38. Amendment of

article 51 of the

principal Act.

(a) the marginal note thereof shall be substituted by the

following new marginal note

"Management of the Protection and Compensation

Fund.";

(b)

article 51 shall be renumbered as article 51(1);

(c) the provisos thereof shall be substituted by the

following new proviso

"Provided that such regulations shall ensure

that

(a) payments made into the Protection and

Compensation Fund by undertakings to carry on long

term business in Malta shall be utilised for

compensation with respect to long term business, and

shall be treated separately and utilised exclusively for

compensation of claims relating to long term

business;

(b) payments made into the Protection and

Compensation Fund by undertakings to carry on

general business in Malta shall be treated separately,

and shall be utilised exclusively for compensation of

claims relating to general business

Provided that payments made into the

Protection and Compensation Fund by undertakings

carrying on motor vehicle liability insurance business

in Malta, on or after the initiation date as defined

herein, shall be treated separately from general

business, and shall be utilised exclusively for

compensation of claims relating to such motor

vehicle liability insurance business carried on in

Malta, on or after such date; and

(c) payments made into the Protection and

Compensation Fund by undertakings carrying on

motor vehicle liability insurance business from Malta

shall also be treated separately and shall be utilised

exclusively for compensation of claims relating

motor vehicle liability insurance business carried on

from Malta.";

(d) immediately after sub-article (1), as amended,

there shall be added the following new sub-article

"(2) For the purposes of this article, "initiation date"

means

(a) the date of the entry into force of the

agreement referred to in the first sub-paragraph of

Article 10a(13) and the first sub-paragraph of Article

25a(13) of Directive 2009/103/EC of the European

Parliament and of the Council of 16 September 2009

relating to insurance against civil liability in respect

of the use of motor vehicles and the enforcement of

the obligation to insure against such liability, as

amended from time to time; or

(b) the date of application of the Commission

delegated act referred to in the fourth sub-paragraph

of Article 10a(13) and the fourth sub-paragraph of

Article 25a(13) of the said Directive mentioned in

paragraph (a),

whichever is the earlier.".

Article 52 of the principal Act shall be amended as follows

39. (a) the words "the Fund" shall be substituted by the

words "the Protection and Compensation Fund";

(b)

paragraph (a) thereof shall be substituted by the

following new paragraph

"(a) with respect to a claim in accordance with

article 49(a)(i), within two years from the date that the

name of the undertaking is struck off the register

established in the Companies Act or such undertaking is

otherwise definitely wound up, in those circumstances

only where compensation would be due from Fund A;";

(c) immediately after paragraph (a) thereof, as

substituted, there shall be added the following new paragraph

"(aa) with respect to a claim in accordance with

article 49(a)(ii), within the period and in the manner

prescribed by the Insurance Business (Protection and

Compensation Fund) Regulations;"; and

(d) paragraph (b) thereof shall be substituted by the

following new paragraph

"(b) with respect a claim in accordance with article

49(b), within two years from the date of occurrence of

the accident relating to that claim

Provided that for the purposes of this article, the

words "Fund A" shall have the same meaning as assigned

to them under the Insurance Business (Protection and

Compensation Fund) Regulations.".

40. In article 53 of the principal Act the words "and any income Amendment of

of any funds belonging to the Fund shall be exempted" shall be article

principal Act.

substituted by the words "and any income and assets belonging to the

Protection and Compensation Fund shall be exempted".

PART VII

AMENDMENTS TO THE INVESTMENT SERVICES ACT

41. This Part amends the Investment Services Act and it shall be Amendments to

read and construed as one with the Investment Services Act, the

Services Act.

hereinafter in this Part referred to as the "principal Act".

Immediately after paragraph (o) of sub-article (1) of article 12 Amendment of

42. article 12 of the

principal Act.

of the principal Act there shall be added the following new paragraph

"(oa) establish and regulate limited partnerships not

having legal personality, and which the deed of

partnership thereof expressly limits their object either to

the collective investment of their funds in securities and

in other movable and immovable property, or in any of

them, with the aim of giving the partners the benefit of

the results of the management of their funds, and to

matters ancillary or incidental thereto, and which

qualifies as a collective investment scheme and is duly

licensed, recognised, exempted or otherwise regulated in

terms of this Act; and shall be distinct from limited

partnerships as set out within the provisions of the

Companies Act. Regulations made under this paragraph

may provide that any provision of this Act or of any

other law shall not apply to matters falling under the

regulations, and that insofar as any of the provisions of

the regulations are inconsistent with the provisions of

this Act or of any other law, such provisions in any such

regulations shall prevail;".

Passed by the House of Representatives at Sitting No. 258 of the

15th July, 2024.

ANĠLU FARRUGIA

Speaker

ELEANOR SCERRI

Clerk of the House of Representatives

€4.23