Credit Servicing Firms / Credit Servicers

Regulatory Regime for Credit Servicing Firms

Part V of the Central Bank Act, 1997 (as amended) (“the 1997 Act”) was amended by the Consumer Protection (Regulation of Credit Servicing Firms) Act 2015 (“the 2015 Act”) to introduce a regulatory regime in respect of Credit Servicing Firms, bringing such firms within the Central Bank’s regulatory remit, and the activity of credit servicing became a regulated activity in Ireland. The Consumer Protection (Regulation of Credit Servicing Firms) Act 2018 (“the 2018 Act”) amended Part V of the Act to expand the activity of credit servicing, as defined in the Act, to include holding the legal title to credit granted under a credit agreement and associated ownership activities. The Act was further amended by the Consumer Protection (Regulation of Retail Credit and Credit Servicing Firms) Act 2022 (the 2022 Act), effective 16 May 2022, meaning that credit servicing now includes other activities such as consumer-hire and hire-purchase. Persons carrying out certain “specified credit matters” or “specified hire matters” may avail of transitional provisions provided for in the 2022 Act, as explained further below.

The definitions of a ‘Credit Servicing Firm’ and ‘credit servicing’ as set out in the Act are set out below. 

These legislative amendments ensure that relevant borrowers whose loans are sold maintain the regulatory protections they had prior to the sale including the protections provided by the Central Bank’s statutory Codes of Conduct. Under the 1997 Act a person who meets the definition of a Credit Servicing Firm is required to obtain authorisation from the Central Bank in order to engage in the activity of credit servicing. As a result, all firms who intend to operate in this area should ascertain if they fall within the scope of the definition of a Credit Servicing Firm and require authorisation by the Central Bank. Firms are advised to seek legal advice if in any doubt regarding whether their activities fall within the scope of the legislation. If, having received and considered such advice, firms have any doubt about their status; they are advised to submit an application for authorisation. 

Credit Servicers

Directive (EU) 2021/2167 on credit servicers and credit purchasers (“the Directive”) was enacted by the European Parliament and EU Council on 24 November 2021 and was transposed into Irish law via 2023 Regulations effective from 30 December 2023.

The 2023 Regulations does not impose a direct obligation on the part of a purchasers to obtain authorisation; rather, the 2023 Regulations require the relevant servicers to be authorised.

Additionally, the 2023 Regulations stipulate that a credit servicers who is authorisation in one EU Member State will be permitted to exercise passport rights and provide those services on a cross-border basis into another EU Member State.

Firms should seek legal advice to ascertain whether they meet the definition of a ‘Credit Servicing Firm’ or a ‘Credit Servicer’, or both.

Authorisation Requirements and Standards for Credit Servicing Firms under the 1997 Act

The Central Bank has published its Authorisation Requirements and Standards for Credit Servicing Firms.

All firms seeking authorisation as a Credit Servicing Firm will be required to demonstrate to the Central Bank that they are in a position to meet each of the Authorisation Requirements and Standards prior to an authorisation being granted.  The Authorisation Requirements and Standards are imposed on all Credit Servicing Firms as a condition of authorisation and must be complied with on an on-going basis. 
 
View details in relation to the authorisation process. 

New Applicants

Persons who intend to engage in such activities are required to complete and submit an application for authorisation to the Central Bank and will not be able to engage in such activities until the Central Bank has granted authorisation to the person.  The Central Bank may also refuse to grant authorisation.

It is an offence for such persons to commence engaging in credit servicing until authorisation as a Credit Servicing Firm has been obtained.