Pursuant to Belgian law, Belgian consumer credit receivables may only be purchased by the following regulated entities: (1) registered consumer credit lenders; (2) the National Bank of Belgium; (3) the Belgian Deposit and Financial Instrument Protection Fund; (4) credit insurers; (5) registered debt collectors; and (6) certain undertakings for collective investments.

Where the assignment of such consumer credit receivables is carried out with a non-eligible purchaser, the consequences are severe: the purchaser forfeits its right of claim in respect of the assigned receivables against the debtor, whereas the latter is given the right to pay back its outstanding debt to the seller for an amount capped at the borrowed amount.

In light of the above, the following question was raised with the regulator (Belgian Economic Affairs Ministry): can a foreign securitization vehicle be regarded as an eligible purchaser of Belgian consumer credit receivables under Belgian consumer credit law?

The regulator recently replied in the negative. The actual wording of the Belgian law on consumer credit only includes so-called Belgian “institutional securitization vehicles” as regulated under related Belgian law of 3 August 2012 and duly registered with the Belgian Finance Ministry.

As a result, this precludes the recognition of eligibility of any foreign securitization vehicles with similar status or under similar prudential supervision in their home country. Such vehicles are therefore excluded from the entire securitization market of Belgian consumer credit receivables. 

Even though there is no actual securitization market organized at EU level (yet), placing barriers on the secondary market for Belgian consumer credit receivables does not seem well thought out. This restrictive stance obviously draws our attention to the fundamental EU free movement of capital.