Baker & McKenzie Alert Client Alert 13 November 2015 New licensing regime for consumer and mortgage credit lenders and intermediaries entered into force on 1 November 2015 - New requirements for existing lenders and intermediaries Pierre Berger and Olivier Van den broeke, Baker & McKenzie Introduction The Act of 19 April 2014 on the introduction of Book VII “Payment Services and Credit” introduced the statuses of lender and of intermediary in mortgage credit and consumer credit into Book VII of the Belgian Economic Law Code (“Wetboek van economisch recht” / “Code du droit economique”, hereinafter ELC). A large part of Book VII already entered into force on 1 April 2015. Title 4, Chapter 4 of Book VII, however, which mainly regulates the prudential requirements for access to the activity of lender or credit intermediary, entered into force on 1 November 2015. As of that date, all licensing and registration applications for consumer and mortgage lenders and intermediaries will need to be filed with the Belgian Financial Services and Markets Authority (hereinafter FSMA). Under the old regime, the Federal Public Service Economy (hereinafter FPS Economy) was competent for consumer credit and the FSMA was competent for mortgage credit. The Royal Decree of 29 October 2015 executing Title 4, Chapter 4 of Book VII ELC lays down all registration and authorization requirements that must be fulfilled by consumer and mortgage credit lenders and intermediaries. This Royal Decree requires, among other things, that persons who serve as credit intermediaries must meet certain fit and proper requirements and demonstrate the requisite professional knowledge to perform their functions. They will have to submit a certificate of senior secondary education and they must demonstrate their professional knowledge by passing an exam. For some persons who are already active in the banking or insurance industry, a transitional regime may apply. New lenders and credit intermediaries will have to take these new prudential rules duly into account, and existing lenders and credit intermediaries will have to take the necessary steps in order to maintain their authorization. The FSMA has put up an informational website (mcc-info.fsma.be) to enable all lenders and intermediaries to prepare for the transition to the new regime. This website provides more information on the conditions and procedures for registration and authorization by using videos and thematically arranged Q&A's. Standard form documents that applicants for registration or authorization must fill out are also provided on this website. New lenders and credit intermediaries Every consumer credit or mortgage credit lender must be registered with or authorized by the FSMA prior to commencing its activities in Belgium. Certain lenders governed by the laws of another member state and that are authorized to provide consumer or mortgage credit in their home country may, through the freedom of establishment or the free provision of services, exercise the activity of a lender in Belgium without prior authorization or registration with the FSMA. As a result, these foreign financial institutions are allowed to "passport" their home country license into Belgium. When providing their services in Belgium, they will have to comply with certain mandatory Belgian rules in the interest of the general good, and they will be required to submit their standard form contracts to the FPS Economy for prior approval. Every intermediary in consumer or mortgage credit must be registered with the FSMA prior to commencing its activities in Belgium. Intermediaries in mortgage credit governed by the laws of another member state and that are authorized to provide their services in their home country may, through the freedom of establishment or the free provision of services, exercise their activities in Belgium without prior registration with the FSMA. Accordingly, intermediaries in mortgage credit are also allowed to "passport" their home country authorization into Belgium. When providing their services in Belgium, they will have to comply with certain mandatory Belgian rules in the interest of the general good. However, the same passporting regime is not available to consumer credit intermediaries. All new lenders and credit intermediaries will have to apply for a registration or a license with the FSMA. This procedure is available online at the FSMA's website and has only been made accessible as of 2 November 2015. The online application is the only valid way to submit the application. Existing lenders and credit intermediaries Mortgage credit and consumer credit lenders that were already licensed as such by the FSMA and the FPS Economy, respectively, will receive by operation of law a temporary license that allows them to continue their activities on a temporary basis. Consumer credit and mortgage credit intermediaries that were already registered with the FPS Economy for at least a year prior to 1 November 2015, will also be authorized to continue their activities on a temporary basis. These grandfathering clauses will terminate after 18 months, meaning that all credit providers and credit intermediaries will have to obtain a new "updated" license or registration with the FSMA on or before 30 April 2017, at the latest. Credit intermediaries that were registered with the FPS Economy for less than a year will only benefit from a twomonth grace period, meaning that they will have to be registered with the FSMA before 31 December 2015. If a lender or a credit intermediary fails to renew its license or registration with the FSMA in time, its temporary license or authorization will expire and it will have to cease its activities. The FPS Economy has published on its website a list of all existing intermediaries in consumer credit, stating the date of their registration. With this list, it is possible to determine which intermediaries are eligible for the transitional regime. For mortgage credit, the obligation to register is new and therefore no list is published. The FSMA publishes on its website the lists of lenders in mortgage and in consumer credit that have received provisional authorization. The FSMA will update on its website each week the list of the credit intermediaries registered and the lenders authorized under the new legislation. Follow us For more information Pierre Berger Partner [email protected] Olivier Van den broeke Associate [email protected] ©2015 Baker & McKenzie. All rights reserved. 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