CREDIT SERVICERS AND CREDIT PURCHASERS ACT (PASSPORTING) REGULATIONS (passporting)

(PASSPORTING)

SUBSIDIARY LEGISLATION 645.01

CREDIT SERVICERS AND CREDIT PURCHASERS

ACT (PASSPORTING) REGULATIONS

30th July, 2024

LEGAL NOTICE 172 of 2024.

(1)

The title of these regulations is the Credit

Servicers and Credit Purchasers Act (Passporting) Regulations.

(2)

The scope of these regulations is to transpose Articles 13

and 14 of 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, and

they shall be interpreted and applied accordingly.

(1)

In these regulations, unless the context otherwise

requires:-

"the Act" means the Credit Servicers and Credit

Purchasers Act;

"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 the Act;

"credit agreement" means an agreement as originally

issued, modified or replaced, whereby a credit institution grants

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

similar financial accommodation;

"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 carries out at least one or more

credit servicing activities;

"credit servicing activities" means one or more of the

following activities

(PASSPORTING)

(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 Rules" means Rules, other than

Conduct of Business Rules, which may be issued by the

competent authority under various articles of the Act;

"Directive (EU) 2015/849" means Directive (EU) 2015/

849 of the European Parliament and of the Council of 20 May

2015 on the prevention of the use of the financial system for the

purposes of money laundering or terrorist financing, amending

Regulation (EU) No 648/2012 of the European Parliament and

of the Council, and repealing Directive 2005/60/EC of the

European Parliament and of the Council and Commission

Directive 2006/70/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;

"European credit servicer" means a credit servicer

authorised as such in a Member State other than Malta, under

the national law of such Member State transposing the NPL

Directive;

"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 provided for under the NPL Directive;

"home Member State" means the Member State in which

the registered office of a credit servicer is situated or, if under

(PASSPORTING)

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;

"Maltese credit servicer" means a credit servicer

authorised as such by the competent authority under the Act;

"Member State" means a Member State of the European

Union and includes an EEA State;

"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;

"Tribunal" means the Financial Services Tribunal

established in terms of the Malta Financial Services Authority

Act.

(2)

Words and expressions used in these regulations which

are also used in the Act but which are not defined herein shall have the

same meaning as assigned to them in the Act.

(1)

A European credit servicer may, subject to the

applicable provisions of the Act, and any regulations made thereunder,

and Credit Servicing Rules and Conduct of Business Rules issued

thereunder, act as a credit servicer in Malta.

(2)

Where a European credit servicer intends to act as such

in Malta, it shall submit the following information to the European

regulatory authority of the home Member State

(a)

notice of its intention to act as a credit servicer in

Malta and, if already known to the European credit servicer, the

Member State where the credit was granted, when such

Member States is a Member State other than Malta or the home

Member State;

(b)

where applicable, the address of its branch

established in Malta;

(PASSPORTING)

(c)

where applicable, the identity and address of the

credit service provider in Malta;

(d)

the identity of the persons responsible for

managing the provision of credit servicing activities in Malta;

(e)

where applicable, the details of the measures

taken to adapt its internal procedures, governance arrangements

and internal control mechanisms in order to ensure compliance

with the laws applicable to a creditor’s rights under a credit

agreement or the credit agreement itself;

(f)

a description of the procedure established in order

to comply with the applicable provisions of the Prevention of

Money Laundering Act, and any regulations made thereunder

where credit servicers are designated as subject persons under

the said Act or any regulations made thereunder;

(g)

confirmation that it has appropriate means to

communicate in Malta’s official languages or in the language of

the credit agreement; and

(h)

confirmation as to whether or not it is authorised

in its home Member State to receive and hold funds from

borrowers.

(3)

Within forty-five (45) days of receipt of the information

referred to in sub-regulation (2), the said information shall be

communicated to the competent authority by the European regulatory

authority of the home Member State, and the competent authority shall

acknowledge receipt of such information without delay.

(4)

The European credit servicer shall, following

communication by the European regulatory authority of the home

Member State of the information referred to in sub-article (2) to the

competent authority, be informed by the European regulatory authority

of the home Member State of the date on which the said information

was communicated to the competent authority and the date on which

the competent authority acknowledged receipt of that information.

(5)

The European credit servicer shall be able to act as a

credit servicer in Malta from the earlier date of the following

occurrences

(a)

receipt by the European regulatory authority of

the home Member State of the communication from the

competent authority acknowledging receipt of the information

referred to in sub-regulation (2);

(b)

in the absence of receipt of the communication

(PASSPORTING)

referred to in paragraph (a), after the expiry of two (2) months

from the date of submission by the European regulatory

authority of the home Member State of all information referred

to in sub-regulation (2) to the competent authority.

(6)

The European regulatory authority of the home Member

State shall be informed by the European credit servicer of any

subsequent change to the information referred to in sub-regulation (2)

and, in any such case, the provisions of sub-regulations (3) to (5) shall

apply.

(7)

The competent authority shall record in the list referred

to in article 7(10) of the Act, the European credit servicers which are

authorised to act as credit servicers in Malta in terms of these

regulations and the details of the home Member State.

(1)

Without prejudice to regulation 2, where a

European credit servicer performs credit servicing activities in Malta,

the European regulatory authority of the home Member State, the

competent authority and, where appropriate, the competent authority

of the Member State where the credit was granted, when different from

the European regulatory authority of the home Member State and the

competent authority, shall cooperate closely in the performance of

their functions and duties, in particular when carrying out checks,

investigations and on-site inspections.

(2)

The competent authority may be requested, by the

European regulatory authority of the home Member State, to assist the

said European regulatory authority in carrying out an on-site

inspection of a branch set up, or of a credit service provider appointed,

in Malta

Provided that an inspection as referred to in this sub-

regulation shall be conducted in accordance with Maltese law.

(3)

The competent authority shall be entitled to decide on the

most appropriate measures to be taken in each individual case in order

to meet the request for assistance made by the European regulatory

authority of the home Member State, as referred to in sub-regulation

(2).

(4)

Where the competent authority decides to conduct on-

site inspections on behalf of the European regulatory authority of the

home Member State, it shall inform the said European regulatory

authority of the results thereof without delay.

(5)

The competent authority may, on its own initiative,

conduct verifications, inspections, and investigations in respect of

credit servicing activities provided in Malta by a European credit

servicer

(PASSPORTING)

Provided that the competent authority shall provide the

results of those verifications, inspections and investigations to the

European regulatory authority of the home Member State without

delay.

(6)

Where the competent authority has evidence that a

European credit servicer performing credit servicing activities in

Malta, in accordance with the national law of the Member State of

such European credit servicer transposing Article 13 of the NPL

Directive, infringes any applicable provision of the law, including

national law transposing the NPL Directive, they shall transmit that

evidence to the European regulatory authority of the home Member

State and request that it takes appropriate measures.

(7)

The provisions of sub-regulation (6) shall be without

prejudice to the supervisory, investigatory and sanctioning powers of

the competent authority in relation to the European credit servicer

under Maltese legislation, namely those applicable to the credit or the

credit agreement.

(8)

Where a credit servicer continues to infringe any

applicable provision of the law, including national law transposing the

NPL Directive, and after the competent authority has informed the

European regulatory authority of the home Member State thereof, the

competent authority may impose appropriate administrative penalties

and remedial measures in order to ensure compliance with the

provisions of the Act, and any regulations made, and Credit Servicing

Rules and Conduct of Business Rules issued, thereunder, when either

of the following apply

(a)

no adequate and effective steps were taken by the

European credit servicer to rectify the infringement in a

reasonable time; or

(b)

in an urgent case, where immediate action is

necessary in order to address a serious threat to the collective

interests of the borrowers

Provided that the competent authority may impose

administrative penalties and remedial measures as referred to in this

sub-regulation notwithstanding any administrative penalties and

remedial measures already imposed by the European regulatory

authority of the home Member State.

(9)

Without prejudice to sub-regulation (8), the competent

authority may prohibit further activities of a European credit servicer

that infringes any applicable provision of the law, including national

law transposing the NPL Directive, until such time as an adequate

decision is taken by the European regulatory authority of the home

Member State or the credit servicer takes steps to remedy the

(PASSPORTING)

infringement.

(1)

A Maltese credit servicer may act as a credit

servicer in a Member State other than Malta.

(2)

The provisions of sub-regulation (1) shall be without

prejudice to any restrictions or requirements established in the national

law of the host Member State in accordance with the NPL Directive,

including, where applicable, a prohibition on receiving and holding

funds from borrowers, that are not related to other authorisation

requirements of credit servicers, or to those established for the

renegotiation of the terms and conditions related to a creditor’s rights

under a credit agreement or of the credit agreement itself.

(3)

Where a Maltese credit servicer intends to act as such in

a Member State other than Malta, it shall submit the following

information to the competent authority

(a)

the host Member State in which it intends to act as

a credit servicer and, if already known to the Maltese credit

servicer, the Member State where the credit was granted, when

such Member State is a Member State other than Malta or the

host Member State;

(b)

where applicable, the address of its branch

established in the host Member State;

(c)

where applicable, the identity and address of the

credit service provider in the host Member State;

(d)

the identity of the persons responsible for

managing the provision of credit servicing activities in the host

Member State;

(e)

where applicable, details of the measures taken to

adapt its internal procedures, governance arrangements and

internal control mechanisms in order to ensure compliance with

the laws applicable to a creditor’s rights under a credit

agreement or the credit agreement itself;

(f)

a description of the procedure established in order

to comply with the national law of the host Member State on

anti-money laundering and counter terrorist financing where

credit servicers are designated as obliged entities under the said

law transposing Directive (EU) 2015/849;

(g)

confirmation that it has appropriate means to

communicate in the language of the host Member State or in the

language of the credit agreement; and

(h)

confirmation as to whether or not it is authorised

(PASSPORTING)

in Malta to receive and hold funds from borrowers.

(4)

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

days of receipt of the information referred to in sub-regulation (3),

communicate that information to the European regulatory authority of

the host Member State, and receipt of such information shall be

acknowledged by the said European regulatory authority without

delay.

(5)

The competent authority shall, following communication

of the information referred to in sub-regulation (3) to the European

regulatory authority of the host Member State, inform the Maltese

credit servicer of the date on which the said information was

communicated to the European regulatory authority of the host

Member State and the date on which the said European regulatory

authority acknowledged receipt of that information.

(6)

The competent authority shall also communicate all the

information referred to in sub-regulation (3) to the competent authority

of the Member state where the credit was granted, when such Member

State is a Member State other than Malta and the host Member State.

(7)

The Maltese credit servicer shall have the right to appeal

before the Tribunal where the competent authority fails to

communicate the information referred to in sub-regulation (3) in

accordance with sub-regulations (4) and (6).

(8)

The Maltese credit servicer shall be able to act as a credit

servicer in the host Member State from the earlier of the following

(a)

receipt by the competent authority of the

communication from the European regulatory authority of the

host Member State acknowledging receipt of the information

referred to in sub-regulation (3);

(b)

in the absence of receipt of the communication

referred to in paragraph (a), after the expiry of two (2) months

from the date of communication by the competent authority of

all information referred to in sub-regulation (3) to the European

regulatory authority of the host Member State.

(9)

The Maltese credit servicer shall inform the competent

authority of any subsequent change to the information referred to in

sub-regulation (3) and, in any such case, the provisions of sub-

regulations (4) to (8) shall apply.

(1)

The competent authority shall review and evaluate

the ongoing compliance, by a Maltese credit servicer which performs

credit servicing activities in a host Member State, with the provisions

of the Act and any regulations made, and Credit Servicing Rules and

(PASSPORTING)

Conduct of Business Rules issued, thereunder.

(2)

The competent authority shall be empowered to supervise,

investigate and impose administrative penalties and remedial measures

on Maltese credit servicers in respect of the provisions of the Act and

any regulations made, and Credit Servicing Rules and Conduct of

Business Rules issued, thereunder when performing credit servicing

activities in a host Member State.

(3)

The competent authority shall communicate any

measures taken in respect of Maltese credit servicers to the European

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

the competent authority of the Member State where the credit was

granted, where such Member State is a Member State other than Malta

and the host Member State.

(4)

Without prejudice to regulation 5, where a Maltese credit

servicer performs credit servicing activities in a Member state other

than Malta, the competent authority, the European regulatory authority

of the host Member State, and, where appropriate, the competent

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

different from the competent authority and the European regulatory

authority of the host Member State, shall cooperate closely in the

performance of their functions and duties, in particular when carrying

out checks, investigations and on-site inspections.

(5)

The competent authority may, in the exercise of its

function and duties provided for in the Act and any regulations made,

and Credit Servicing Rules and Conduct of Business Rules issued,

thereunder, request the European regulatory authority of the host

Member State for its assistance in carrying out an on-site inspection of

a branch set up, or of a credit service provider appointed, in the host

Member State

Provided that an inspection as referred to in this sub-

regulation shall be conducted in accordance with the national law of

the host Member State where the inspection is carried out.

(6)

The European regulatory authority of the host Member

State shall be entitled to decide on the most appropriate measures to be

taken in each individual case in order to meet the request for assistance

made by the competent authority as referred to in sub-regulation (5).

(7)

Where the European regulatory authority of the host

Member State has evidence that a Maltese credit servicer performing

credit servicing activities in the host Member State, in accordance with

national law transposing Article 13 of the NPL Directive, infringes any

applicable provision of the law, including national law transposing the

NPL Directive, such evidence shall be transmitted to the competent

authority by the European regulatory authority of the host Member

(PASSPORTING)

State, and the competent authority shall be requested to take

appropriate measures.

(8)

The provisions of sub-regulation (7) shall be without

prejudice to the supervisory, investigatory and sanctioning powers of

the European regulatory authority of the host Member State in relation

to the European credit servicer under national law, namely those

applicable to the credit or the credit agreement.

(9)

The competent authority shall communicate details of

any administrative or other procedure initiated in respect of the

evidence provided by the European regulatory authority of the host

Member State in terms of sub-regulation (7), or of any administrative

penalties and remedial measures taken against the Maltese credit

servicer, or of a reasoned decision why no measures were taken, to the

European regulatory authority of the host Member State that

transmitted the said evidence by no later than two (2) months from the

date of the request referred to in sub-regulation (7)

Provided that where a procedure as referred to in this

sub-regulation is initiated, the competent authority shall regularly

inform the European regulatory authority of the host Member State

about the status of such procedure.

(1)

Where Malta is the Member State where the credit

was granted, and the host Member State and the home Member State

are Member States other than Malta, the competent authority shall,

where it has evidence that a credit servicer authorised as such by a

European regulatory authority has infringed any applicable provision

of national law transposing the NPL Directive or any national law

applicable to the credit or the credit agreement, transmit that evidence

to the European regulatory authority of the home Member State and

request that it takes appropriate measures.

(2)

The provisions of sub-regulation (1) shall be without

prejudice to the supervisory, investigatory and sanctioning powers of

the competent authority.