Credit Purchasers

On 8 July 2025, the Malta Financial Services Authority (“MFSA”) issued a circular outlining the notification requirements for credit purchasers under the Credit Servicers and Credit Purchasers Act (the “Act”). The Act transposes Directive (EU) 2021/2167 (the “NPL Directive”).

A credit purchaser is defined as any natural or legal person, other than a credit institution, that acquires a creditor’s rights under a non-performing credit agreement, or the agreement itself, in the course of its trade, business, or profession.

The main objective of the NPL Directive is to enable credit institutions to manage their non-performing loans (“NPLs”) more effectively by facilitating their transfer to third parties and fostering a secondary market. The Directive seeks to remove legal barriers across the EU while ensuring adequate borrower protection through obligations imposed on credit servicers and credit purchasers.

Accordingly, the Act does not apply:

• When credit is granted on an occasional basis;
• When credit is granted on a non-commercial basis; or
• To transactions that fall outside the scope of the Act.

The notification obligations set out in the circular apply to any person or entity acquiring a credit agreement where the borrower is located in Malta, regardless of the purchaser’s place of establishment. Under these requirements, a credit purchaser or its designated representative must notify the MFSA upon acquiring credit and include the following information:

• The purchaser’s name, registered address, and contact details;
• A declaration indicating whether the purchaser will service the credit directly or appoint a credit servicer;
• The details of the credit servicer, if appointed;
• Information on relevant European competent authorities, including:
  • The Member State in which the servicer operates or provides credit servicing activities, and where the borrower is domiciled;
  • The Member State where the credit was granted; and
  • The Home Member State of the credit servicer, if applicable.

The circular also highlights ongoing notification obligations. Credit purchasers must notify the MFSA of any material changes, including:

• A change in the servicer or servicing arrangements;
• A transfer of credit to a different purchaser; or
• Updates to the purchaser’s legal or contact information.

Additionally, the Act requires credit purchasers to submit a semi-annual written notification to the MFSA following the transfer of creditor rights or non-performing credit agreements. This obligation extends to both the credit purchaser and, where applicable, their representative. The notification must include:

• The Legal Entity Identifier (LEI) of the new purchaser or, if unavailable, full identity, address, and ownership/management details;
• The date of transfer;
• The aggregate outstanding balance of all transferred credit;
• The number of agreements transferred and the balance of each;
• Confirmation on whether consumer agreements were included and the type of collateral, if any, and regulatory details such as:
  • The Home Member State of the new credit purchaser and the Host Member State of the credit servicer, including the borrower’s location.

These semi-annual submissions are a crucial part of the MFSA’s oversight framework, designed to enhance transparency in the transfer of non-performing credit portfolios within Malta and across the EU.

For any additional information or assistance, please contact us at info@gtg.com.mt

Author: Dr Neil Gauci