ECHO · Harmonization of Regulation of Abusive Non-Judicial Debt Collection in the European Union: Models, Benefits and Challenges

Harmonization of Regulation of Abusive Non-Judicial Debt Collection in the European Union: Models, Benefits and Challenges

The overall aim of ECHO is to contribute to the improvement of the legal base and regulation of non-judicial debt collection practices (NJDC) across the European Union (EU). The project lays the foundation for a functional legal framework for NJDC, including a sufficient number of mechanisms and safeguards to monitor the activities of debt collectors to avoid abusive NJDC. NJDC designates all methods employed by a creditor for debt recovery that do not involve the judiciary or other state agents (bailiffs, sheriffs, or police officers). In other words, it is a form of private enforcement. NJDC methods are rampant in practice today in all 27 EU jurisdictions, yet they are regulated only by nine of them. Due to the absence of due process and other procedural guarantees generally offered by judicial enforcement, NJDC services are sometimes abusive. Abusive NJDC refers to debt collection practices infringing the consumer's rights to privacy, dignity, safety and health, and economic and other legal rights. In a business-to-consumer relationship, especially in an internal market setting, NJDC is problematic for several reasons. The first is the high likelihood of abuse posed by those practicing NJDC, stemming from the absence of due process and other procedural guarantees generally offered by judicial enforcement. The second is the market size, amounting to over 450 million consumers that may be subjected to potentially abusive NJDC. The third is the cross-border context because free movement of services enables a debt collection business from one member state (MS) to engage in operations in another MS. The fourth reason is the heterogeneity and the characteristic traits of legal systems and regulatory frameworks addressing NJDC across the EU. At the individual MS level, various models and approaches stretch from developed and updated legislation to the absence of any sector-specific legislation or regulation whatsoever. This may create disruptions in the collection process (thus affecting the performance of services). It also leads to unjustified different treatment of consumer debtors (thus creating a discriminatory treatment of consumers within the EU). Given all the above, the project is vital to society. The topic impacts not only the collection industry and consumers but also national and EU legislators or regulators, practitioners, NGOs, and policymakers, for it touches upon crucial EU prerogatives such as the proper functioning of the internal market, consumer welfare and fair competition. Moreover, the EU is currently preparing to implement the Directive on Credit Servicers, which will cause significant legislative changes at both EU and MS levels, as national legislatures will have to transpose and implement the Directive. Thus, the importance of the topic is only expected to grow in the near future.

Текст от CORDIS, на английски · Данни: CORDIS, © Европейски съюз