On Jan. 10, 2025, EST FSA stated debt collection companies coming under supervision will receive additional time to comply with the new required supervision requirements.
Follows EST GVT Feb. 2024 stated debt collection company supervision, see #200760.
On Jan. 1, 2025, amendments entered in force, extending transitional provisions for all companies engaged in so-called debt collection activities, so as to bring their activities into line with new legal requirements of the Credit Collection and Buyers Act (KIOS).
The aim of the amendments is to give companies engaged in debt collection activities six months more time to obtain a credit collection license in accordance with KIOS.
This means debt collection companies must apply for an activity license from EST FSA, as well as to bring their activities and documents into line with the provisions of KIOS by Jun. 30, 2025 at the latest, or they must terminate their activities by the said date.
If a company engaged in debt collection activities has not received an operating license by the deadline, it is no longer allowed to manage any consumer credit agreements.
Only the licensed credit collection companies may provide credit management services.
Details of how to apply for a credit collection license are now provided on a separate webpage, and companies with licenses can be found in FI market participants register.
On Oct. 27, EST GVT proposed law on credit bureaus and buyers.
EST GVT proposed draft law on credit bureaus and buyers for approval.
Summary
The purpose of the proposed law is to regulate the activities of debt collection companies and persons related to them (so-called debt buyout financiers).
The key changes proposed for debt bureaus companies are: obligation to apply for an activity license from the Financial Supervision Authority, which supervises such firms.
Reliability requirements for managers and owners of credit collections, for example, credit collection managers cannot be a person engaged in excessive usury in the past.
In addition, the law establishes the minimum capital requirement of 25k EUR and separate rules on how credit collection must collect from debtors keep received funds.
Also, operational and organizational requirements, including requirements for keeping credit files, credit collection and internal control as well as internal regulations.
Basis of operation of credit collection agencies established in Estonia in other countries and bases of operation of credit collection agencies established in other countries.
The law establishes requirements for communication with debtors, including obligations to provide information and how complaints can be submitted bureaus.
In addition to credit collections, the law also regulates other subjects and establishes requirements for persons who finance the purchase of debts and the obligations for banks and other lenders to consider restructuring loans from consumer to debtor.
Separately, additional requirements are provided for greater protection of consumer borrowers - under which conditions consumer credit agreements that have exceeded the payment term can be changed and the corresponding arrears rate can be reduced.
The proposed law also amends the Financial Crisis Prevention and Resolution Act (FELS) for calculation of minimum liability to cover crisis losses of banking groups.
This law also amends the Law on Pledged Bonds due to the fact that the current law is more precisely in line with the provisions of the relevant EU Directive 2019/2162.
In particular, the law concerns the use of the name of the mortgage deed in practice.
Effectiveness
The law will enter into force on Dec. 30, 2023 and companies operating as debt collectors on the credit market must obtain licenses between Jun. 29 - Dec. 31, 2024.
Jan. 2024 Final Bill
On Jan. 25, 2024, EST GVT issued the final draft law following the feedback it received.
Bill will implement Dir 2021/2167 requirements re debt collection companies activities that deal with the collection of debts arising from bank, business or consumer, loans.
However, the bill will also concern consumer loans issued by lenders other than banks.
When developing the draft, consideration was given to the corresponding default rate for consumer credit arrears setting a specific upper limit; further future consideration.
The law will enter into force on Apr. 1, 2024; companies currently operating as debt collectors must be licensed from the Financial Supervision Authority by Dec. 31, 2024.
Jan. 2025 Registration Timing
On Jan. 10, 2025, EST FSA stated debt collection companies coming under supervision will receive additional time to comply with the new required supervision requirements.
Follows EST GVT Feb. 2024 stated debt collection company supervision, see #200760.
On Jan. 1, 2025, amendments entered in force, extending transitional provisions for all companies engaged in so-called debt collection activities, so as to bring their activities into line with new legal requirements of the Credit Collection and Buyers Act (KIOS).
The aim of the amendments is to give companies engaged in debt collection activities six months more time to obtain a credit collection license in accordance with KIOS.
This means debt collection companies must apply for an activity license from EST FSA, as well as to bring their activities and documents into line with the provisions of KIOS by Jun. 30, 2025 at the latest, or they must terminate their activities by the said date.
If a company engaged in debt collection activities has not received an operating license by the deadline, it is no longer allowed to manage any consumer credit agreements.
Only the licensed credit collection companies may provide credit management services.
Details of how to apply for a credit collection license are now provided on a separate webpage, and companies with licenses can be found in FI market participants register.
Regulators
EST FSA; EST GVT
Entity Types
Bank; CNSM; CRB; CU
Reference
PR 1/10/2025; Bill 23-0861, Lt 1.1-10.1/4533-27, PR, 1/25/2024; Dir 2021/2167; Bill, 10/27/2023; CBD Dir 2019/2162; KIOS (EST)
