News and developments
Changing the terms of a credit agreement and forbearance policies and measures new obligations on lenders in consumer and residential property credit agreements
S.L. 378.10 (the “Residential Property Credit Agreements Regulations”) have come into force on the 30 December 2023. These were published in the Government Gazette by Legal Notice 17 and Legal Notice 18 of 2024 respectively on the 2 February 2024 (the “Amendments”).
The Amendments transpose Article 27 of Directive (EU) 2021/2167 of the European Parliament and of the Council of 24 November 2021 on credit servicers and credit purchasers (what is commonly referred to as the “NPL Directive”). It is pertinent to note that the Amendments been reproduced and reincluded in the new Consumer Credit Directive (“CCDII”) which was published on the 9 October 2023[1] and therefore these provisions will feature in any eventual new local set of consumer credit regulations which will be required to transpose CCDII.
By way of background, the Consumer Credit Regulations apply to an array of consumer lending products such as personal loans and overdrafts, credit cards and short-term credit products, subject to certain limits and exceptions. On the other hand, the Residential Property Credit Agreement Regulations are concerned primarily with lending which is secured by a hypothec or privilege on residential immovable property (such as a home loan).
The Amendments address the following obligations on creditors:
Author: Catherine Formosa
Footnotes [1] CCDII was published in the Official Journal of the European Union on the 30 October 2023 and came into force on the 19 November 2023. Member States have until 20 November 2025 to transpose CCD II, with the relative national measures to apply from 20 November 2026. https://ganado.com/insights/publications/the-consumer-credit-directive-revamped/ [2] The list of forbearance measures is without prejudice to Banking Rule 9 of the MFSA on measures addressing non-performing and forborne exposures and the European Central Bank Guidance to banks on non-performing loans. [3] The Residential Property Credit Agreements Regulations already contained some provisions relating to forbearance including the Fourth Schedule to the said Regulations which incorporates guidelines issued by the Director General (Consumer Affairs) in relation to arrears and foreclosures (enforcement). As a matter of fact, the Fourth Schedule already included examples of forbearance measures as well as the obligation of creditors to exercise reasonable forbearance and the communication which should take place between creditors and borrowers experiencing payment difficulties. However, it can be said that the Amendments introduced by Legal Notice 18 of 2024 specifies more clearly that this is obligation of creditors.
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- the modification of the terms and conditions of a credit agreement;
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- forbearance policies and types of forbearance measures
Author: Catherine Formosa
Footnotes [1] CCDII was published in the Official Journal of the European Union on the 30 October 2023 and came into force on the 19 November 2023. Member States have until 20 November 2025 to transpose CCD II, with the relative national measures to apply from 20 November 2026. https://ganado.com/insights/publications/the-consumer-credit-directive-revamped/ [2] The list of forbearance measures is without prejudice to Banking Rule 9 of the MFSA on measures addressing non-performing and forborne exposures and the European Central Bank Guidance to banks on non-performing loans. [3] The Residential Property Credit Agreements Regulations already contained some provisions relating to forbearance including the Fourth Schedule to the said Regulations which incorporates guidelines issued by the Director General (Consumer Affairs) in relation to arrears and foreclosures (enforcement). As a matter of fact, the Fourth Schedule already included examples of forbearance measures as well as the obligation of creditors to exercise reasonable forbearance and the communication which should take place between creditors and borrowers experiencing payment difficulties. However, it can be said that the Amendments introduced by Legal Notice 18 of 2024 specifies more clearly that this is obligation of creditors.