Among others, the SCMA provides for a licensing process for credit servicers, governs obligations vis-à-vis borrowers and the access of European providers (European Passport):

• Credit purchasers require a licence or are obliged to appoint a credit servicer for the provision of credit servicing activities.
• Credit servicers require a licence.
• Credit institutions are subject to new information requirements in their capacity as sellers of non-performing credit agreements.
• Violations of the SCMA may lead to administrative fines or criminal proceedings!

First guidance – licensable credit servicing activity

A credit servicing activity implies that the object of the service is a non-performing credit agreement or the creditor’s rights under such agreement (initial acquisition/assignment after 29 December 2023).

A non-performing credit agreement exists where the credit is past due by more than 90 days (cf. Art. 47a CRR). From BaFin's point of view, termination by the credit institution is also required.

What you need to do now

Existing credit servicers must notify BaFin and Deutsche Bundesbank by 16 February 2024 at the latest of their intention to carry out credit servicing activities also beyond 29 June 2024.

The information and documents required for the granting of a license must then be submitted by 5 April 2024 at the latest.

The duration and success of a licensing process depend to a great extent on the documents submitted being complete and of the required quality!

Authorisation requirements

• Legal form: legal person or commercial partnership.
• Registered office or head office: Germany.
• Appropriate organisational arrangements, in particular proper business organisation.
• Suitability of members of the management body (incl. knowledge as referred to in the German Legal Services Act - RDG) and, where applicable, of the supervisory organs, also as a whole.
• Suitability of holders of significant holdings, i.e., in general, (in)direct holding in the undertaking of at least 10 %.
• Where applicable, separate escrow account if there is intention to receive funds from borrowers.

We are here to help!

Providing advice on the new obligations, inter alia ongoing notification requirements to competent authorities, information obligations or rules of conduct towards borrowers.

Review of your business activities regarding licensing requirements (incl. “gap analysis”).

Support with notification of business continuation and application for authorisation, inter alia

• drawing up a viable business plan incl. budgeted balance sheets for 3 years;
• preparation of “Fit & Proper” documents;
• credit servicing agreements;
• outsourcing agreements; and
• development of internal principles (such as manuals), procedures and controls.