Government Emergency Ordinance on Credit Administrators and Credit Purchasers

Government Emergency Ordinance on Credit Administrators and Credit Purchasers

Status: During the session of the Government of Romania on 28 February 2024, the Government of Romania adopted the government emergency ordinance concerning credit administrators and credit purchasers (”GEO”).

The GEO will come into effect only after its publication in the Official Gazette of Romania.

Purpose: The GEO establishes a common framework and specific requirements for:

– both (i) credit purchasers which acquire creditor rights arising from a non-performing credit agreement issued by a credit institution located in the European Union, or (ii) those purchasing the non-performing credit agreement itself;

– and for credit administrators acting on behalf of a credit purchaser.

Furthermore, through this GEO, the Government of Romania transposed into Romanian legislation the Directive (EU) 2021/2167 of the European Parliament and of the Council of 24 November 2021 on credit servicers and credit purchasers, amending Directives 2008/48/EC and 2014/17/EU.

The main provisions of the GEO can be summarized as follows:

– the activity of Romanian credit administrators requires their prior authorization by the National Authority for Consumer Protection (”NACP”);

– the activity of credit administrators from other European Union member states in Romania is conditional upon their prior authorization in the member state of origin;

– the procedure for obtaining and renewing a license to operate as a credit administrator requires that members of the board of directors or administrative body of administrators have not committed crimes such as those against property, financial crimes, money laundering, fraud, or crimes against bodily integrity; moreover, administrators should not be involved in insolvency proceedings or should not have been declared bankrupt in the past, except where they have been rehabilitated according to their national legislation;

– credit purchasers and administrators must adhere to specific rules during their interactions with debtors, aimed at ensuring the proper information of debtors, protecting their privacy and preventing any harassing, unprofessional or bad-faith behavior;

– creditors are required to adopt policies and procedures that encourage viable restructuring solutions in cases of financial difficulty for debtors, before resorting to foreclosure, including:

• complete or partial loan refinancing;

• Modification of the loan agreement terms (e.g., extending the loan period, changing the type of loan, deferring payments or adjusting the interest rate);

• granting grace periods, reduced payments, currency conversions, partial debt forgiveness or debt consolidations.

– credit administrators must have appropriate procedures in order to combat money laundering and terrorism financing;

– the number and identity of authorized credit administrators will be made public by the NACP through its website.

These measures also aim to enhance consumer protection (i.e., the protection of debtors) in the context of non-performing credit agreements.