Opinion of the European Central Bank of 28 June 2016 on credit agreements for consumers relating to residential immovable property (CON/2016/34)
Date: 2016-06-28
Institutions: European Central Bank
Subjects: Greece, central bank, consumer credit, consumer protection, financial stability, financial supervision, national law, real estate credit

EN 

ECB-PUBLIC 

OPINION OF THE EUROPEAN CENTRAL BANK 

of 28 June 2016 

on credit agreements for consumers relating to residential immovable property 

(CON/2016/34) 

Introduction and legal basis 

On  31  May  2016  the  European  Central  Bank  (ECB)  received  a  request  from  the  Greek  Ministry  of 

Finance  for  an  opinion  on  a  draft  law  on  the  implementation  of  Directive  2014/17/EU  of  the  European 
Parliament and of the Council1 (hereinafter the ‘draft law’). 

The ECB’s competence to deliver an opinion is based on Articles 127(4) and 282(5) of the Treaty on the 
Functioning of the European Union and the third indent of Article 2(1) of Council Decision 98/415/EC 2, as 

the  draft  law  relates  to  the  Bank  of  Greece.  In  accordance  with  the  first  sentence  of  Article 17.5  of  the 

Rules of Procedure of the European Central Bank, the Governing Council has adopted this opinion. 

1.  

Purpose of the draft law 

1.1.  The purpose of the draft law is to implement  Directive 2014/17/EU into Greek law,  with a view to 

addressing  problems  uncovered  by  the  financial  crisis  in  the  area  of  credit  agreements  for 

consumers  relating  to  residential  immovable  property.  The  draft  law  aims  at  developing  a  more 

transparent and efficient market in this area which contributes to financial stability and provides a 

higher level of consumer protection, taking into account that much of the debt held by consumers 

within the Union is concentrated in credits related to residential immovable property. 

1.2.  The draft law designates the Bank of Greece as the competent authority responsible for ensuring 

the  application  and  enforcement  of  certain  requirements  applicable  to  creditors  and  credit 

intermediaries  when  providing  credit  to  consumers,  and  for  the  adoption  of  secondary  legislation 

further  specifying  these  requirements.  The  requirements  to  be  monitored  by  the  Bank  of  Greece 

include 

the 

following:  (a)  business  conduct  obligations;  (b)  knowledge  and  competence 

requirements;  (c)  minimum  standards  for  the  provision  of  advisory  services  to  consumers;  (d) 

requirements concerning the use of tying and bundling practices; (e) requirements on the provision 

of  general  information  and  adequate  explanations  to  consumers  on  credit  agreements;  (f)  the 

calculation of the annual percentage rate of charge (APRC); and (g) the assessment of consumers’ 

creditworthiness. The draft law also imposes obligations on creditors in relation to payment default 

1  

2  

Directive  2014/17/EU  of  the  European  Parliament  and  the  Council  of  4  February  2014  on  credit  agreements  for 
consumers  relating  to  residential  immovable  property  and  amending  Directives  2008/48/EC  and  2013/36/EU  and 
Regulation (EU) No 1093/2010 (OJ L 60, 28.2.2014, p. 34). 
Council  Decision  98/415/EC  of  29 June  1998  on  the  consultation  of  the  European  Central  Bank  by  national 
authorities regarding draft legislative provisions (OJ L 189, 3.7.1998, p. 42). 

 
 
 
 
 
                                                 
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by  consumers,  such  as  exercising  reasonable  forbearance  and  making  reasonable  attempts  to 

resolve the situation through alternative means before foreclosure proceedings are initiated.  

1.3  Furthermore,  the  draft  law  designates  the  Bank  of  Greece  as  the  competent  authority  for  the 

licensing  and  supervision  of  credit  intermediaries.  In  particular,  the  Bank  of  Greece  will  be 

responsible 

for:  (a) 

licensing  credit 

intermediaries;  (b)  ensuring 

that  all 

licensed  credit 

intermediaries  comply  with  the  professional  requirements  set  out  in  the  draft  law;  (c)  withdrawing 

the  license  of  credit  intermediaries;  (d)  imposing  sanctions  in  case  of  infringements;  and  (e) 

carrying  out  notification  procedures  which  allow  licensed  credit  intermediaries  to  operate 

throughout  the  Union.  Finally,  the  draft  law  stipulates  that  the  Ministry  of  Economy  and 

Development should cooperate with the Bank of Greece and other relevant Greek authorities with a 

view to educating consumers on responsible borrowing and debt management and providing clear 

information  on  the  debt-granting  process  especially  in  respect  of  consumers  taking  out  mortgage 

credit for the first time. 

2. 

General observations 

2.1  This opinion does  not  address whether the  draft law  effectively implements Directive 2014/17/EU 

into Greek law. The ECB will only assess those provisions of the draft law that may impact on the 

role and tasks of the Bank of Greece as a central bank, national supervisory authority and member 

of the Eurosystem and the European System of Central Banks (ESCB).  

2.2  The  draft  law  broadens  the  Bank  of  Greece’s  current  supervisory  functions  by  assigning  to  it 

responsibility  for  the  supervision  and  regulation  of  the  market  for  credit  agreements  relating  to 

residential  immovable  property.  To  this  end,  the  draft  law  expands  the  categories  of  entities  over 

which the Bank of Greece exercises prudential supervision to include credit intermediaries, which 

arrange  credit  by  presenting  credit  agreements  to  consumers  or  concluding  such  agreements  on 

behalf  of  creditors.  Furthermore,  the  draft  law  expands  the  supervisory  functions  of  the  Bank  of 

Greece  in  order  to  ensure  proper  market  conduct  of  any  natural  or  legal  person  granting  credit 

relating to residential immovable property in the course of his trade, business or profession.  

2.3  The ECB underlines that, in the context of a proposed conferral of new tasks on an ESCB member, 

it  is  necessary  to  assess  whether  such  new  tasks  are  in  line  with  the  prohibition  of  monetary 

financing  under  Article  123  of  the  Treaty.  The  ECB  has  developed  the  guidance  set  out  in 

paragraphs  3.1  to  3.3  on  the  basis  of  which  it  may  decide  whether  a  new  task  conferred  on  a 

national central bank (NCB) is to be considered a central banking task or a government task for the 
purposes of assessing such conferral of tasks against the prohibition of monetary financing 3. 

3. 

Conferral of new tasks on national central banks 

3.1  General considerations 

3  

See,  for  example,  paragraph  3.1  of  Opinion  CON/2015/21  paragraphs  2.2.1  to  2.2.3  of  Opinion  CON/2015/54  and 
paragraphs  2.2.1  to  2.2.3  of  Opinion  CON/2016/31.  All  ECB  opinions  are  published  on  the  ECB’s  website  at 
www.ecb.europa.eu. 

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First,  the  systematic  categorisation  of  tasks  assigned  to  NCBs  as  central  banking  or  government 

tasks applies to genuinely new tasks that did not exist in the past or did not form an integral part of 

the  central  banking  tasks already  assigned  to  the  NCB  in  the  past.  In  recognition  of  the  different 

Member  States’  legal  frameworks,  central  banking  traditions  and  national  set-ups,  the  tasks 

currently discharged by an NCB as central banking tasks are not reviewed and re-categorised, but 

may be reassessed if their substance is amended. 

Second, it needs to be emphasised that when Member States decide to confer new tasks on their 

NCBs,  due  regard  must  be  given  to  the  role  of  the  NCB  as  part  of  the  ESCB  or  Eurosystem,  as 

applicable,  and  to  the  requirement  of  central  bank  independence.  The  principle  of  financial 

independence, which is a key aspect of the principle of central bank independence as laid down in 

Article  130  of  the  Treaty,  requires  that  the  Member  States  may  not  put  their  NCBs  in  a  position 

where  they  have  insufficient  financial  resources  to  carry  out  their  ESCB-  or  Eurosystem-related 

tasks, as applicable. Accordingly, an NCB must have sufficient financial means not only to perform 

its ESCB- or Eurosystem-related tasks but also its national tasks (e.g. financing its administration 
and own operations)4. Where an NCB considers that the allocation of a new task would impinge on 

its  financial  independence,  because  it  would  not  have  sufficient  means  to  focus  primarily  on  its 

ESCB-  or  Eurosystem-related  tasks,  or  that  the  discharge  of  the  new  task  would  impose  a 

disproportionate burden on it, the NCB should be able to object to the new task being allocated to 

it.  

Third, central banking tasks comprise in particular those tasks that are related to the tasks listed in 

Article 127(2), (5) and (6) of the Treaty. 

Fourth,  new  tasks  conferred  on  an  NCB  which  are  atypical  of  NCBs’  tasks,  or  which  are  clearly 

discharged on behalf of and in the exclusive interest of the government or of other public entities, 

should be considered as government tasks. 

3.2  Specific considerations 

Consumer  protection  tasks  related  to  financial  services  are  central  bank  tasks  to  the  extent  that 

these  complement  existing  supervisory  powers  of  a  central  bank  and  thus  contribute  to  the 

soundness of the financial markets and the preservation of confidence in the marketplace.  

An  important  criterion  for  qualifying  a  new  task  as  a  government  task  is  its  impact  on  the 

institutional, financial and personal independence of the NCB. In particular, the following should be 

taken into account. 

First,  it  should  be  assessed  whether  the  performance  of  the  new  task  creates  (inadequately 

addressed)  conflicts  of 

interest  with  existing  central  banking 

tasks,  without  necessarily 

complementing  the  NCB’s  existing  central  banking  tasks.  If  a  conflict  of  interest  arises  between 

existing  and  new  tasks,  there  should  be  sufficient  mitigation  measures  in  place  to  adequately 

address  that  conflict.  Complementarity  between  the  new  task  and  existing  central  banking  tasks 

should not, however, be interpreted broadly, as this could lead to the creation of an indefinite chain 

of  ancillary  tasks.  The  assessment  of  the  complementarity  of  the  new  task  should  also  take  into 

4  

See paragraph 2.2.3 of the ECB’s 2014 Convergence Report. 

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account  the  financing  of  that  task.  In  the  event  of  a  conflict  of  interest  between  supervision  and 
consumer protection, supervisory considerations must prevail5. 

Second,  it  should  be  assessed  whether  without  new  financial  resources  the  performance  of  the 

new task places a disproportionate burden  on the financial or  organisational capacity of the NCB 

and may negatively impact on its capacity to properly perform its existing central banking tasks. 

Third,  it  should  be  assessed  whether  the  performance  of  the  new  task  is  aligned  with  the 

institutional  set-up  of  the  NCB,  in  particular  as  regards  central  bank  independence  and 

accountability considerations. 

Fourth, it should be assessed whether the performance of the new task entails substantial financial 

risks. 

Fifth, it should be assessed whether the performance of the new task exposes the members of the 

NCB’s decision-making bodies to political risks that are disproportionate and could also impact on 

their personal independence and, in particular, the guarantee of the Governor’s term of office under 

Article 14.2 of the Statute of the European System of Central Banks and of the European Central 

Bank. 

3.3  The final assessment of the qualification of a task given to an NCB as either falling within the scope 

of  a  central  banking  task  or  a  government  task  will  be  guided  by  the  objective  of  ensuring  the 

consistent  application  of  the  prohibition  of  monetary  financing  within  the  Eurosystem  and  the 

ESCB. 

4. 

Specific observations 

4.1  Conferral of new tasks on the Bank of Greece 

In the light of the guidance set out in paragraphs 3.1 to 3.3, it is further assessed whether the new 

tasks that the draft law confers on the Bank of Greece could constitute a breach of the monetary 

financing prohibition. 

4.2  Principle of financial independence  

The  principle  of  financial  independence  requires  NCBs  to  have  sufficient  means  to  carry  out  not 

only their ESCB-related tasks but also their national tasks, both from an operational and financial 
perspective6. In this regard the ECB notes that the draft law does not specify how the costs related 

to  the  supervision  of  credit  intermediaries  by  the  Bank  of  Greece  are  to  be  financed.  The  ECB 

therefore  invites  the  consulting  authority  to  consider  establishing  a  cost  recovery  regime,  which 

would require credit intermediaries to pay to the Bank of Greece an authorisation fee or an annual 

fee to cover the actual costs incurred by the Bank of Greece in the performance of its supervisory 

tasks. 

4.3 

Links to tasks listed in Article 127(5) of the Treaty  

The authorisation and supervision of credit intermediaries, as well as the oversight and regulation 

of the market for credit agreements relating to residential immovable property, can be considered 

5  
6  

See paragraph 3.1 of Opinion CON/2015/21. 

See paragraph 2.2.3 of ECB’s 2014 Convergence Report. 

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as tasks related to those referred to in Article 127(5) of the Treaty, based on the understanding that 

they  are  complementary  to  the  supervisory  tasks  exercised  by  an  NCB,  particularly  where,  as  in 
this  case,  the  Bank  of  Greece  already  exercises  tasks  of  a  similar  nature7.  More  specifically,  the 

ECB  notes  that  the  Bank  of  Greece  already  supervises  credit  institutions  and  other  financing 
institutions, such as credit companies granting consumer credit to natural persons8, with a view to 

enhancing  the  stability  and  effectiveness  of  the  credit  system  and  of  the  financial  sector  in 
general9. As part of this function,  the Bank of Greece establishes and monitors the application of 

requirements aimed at ensuring a  proper interaction  between market participants and consumers 

with respect to the provision of credit, at the pre-contractual stage as well as during the contractual 

relationship, including, for example, minimum disclosure requirements, and requirements relating to 

complaints, property valuation and creditworthiness assessments. Moreover, the Bank of Greece is 
also entrusted with the adoption and application of a code of conduct for the handling of arrears 10. 

Finally,  in  its  capacity  as  the  national  supervisory  authority,  the  Bank  of  Greece  acts  under  the 

auspices of the European  Banking Authority (EBA). Directive 2014/17/EU favours the designation 

of authorities acting under the auspices of the EBA as the competent authorities responsible for the 
admission of credit intermediaries 11. 

4.4  Atypical tasks 

A  number  of  Member  States  have  conferred  on  their  NCBs  supervisory  tasks  related  to  the 
provision  of  consumer  credit12.  The  ECB  has  generally  accepted  the  allocation  of  such  tasks  to 
NCBs provided they do not interfere with the performance of the NCB’s ESCB-related tasks13. The 

tasks  of  an  NCB  with  regard  to  the  supervision  of  credit  intermediaries  can  therefore,  if  this 

condition is met, be regarded as tasks not atypical of a central bank, particularly if, as in the case of 
the Bank of Greece, it has a statutory responsibility for banking supervision 14.  

4.5   Discharge of tasks on behalf of and in the exclusive interest of the Government or of other public 

entities 

The draft law designates the Bank of Greece as the sole authority responsible for supervising credit 

intermediaries,  in  its  own  name  and  not  on  behalf  of any  other  authority.  Under  the  draft  law  the 

Bank  of  Greece  is  also  the  sole  authority  responsible  for  enforcement  of  the  requirements 

applicable to creditors and credit intermediaries. The ECB notes that the draft law designates the 

Ministry of Economy as the authority responsible for the application of certain provisions of the draft 

7  

8  

9  

10   

11  
12  
13  

14  

See,  for  example,  paragraph  3.3  of  Opinion  CON/2015/54,  paragraph  3.1.2  of  Opinion  CON/2015/37,  paragraph 
3.1.2 of Opinion CON/2015/45 and paragraphs 3.2 and 3.3 of Opinion CON/2015/21.  

See  Article  153  of  Law  4261/2014  ‘Access  to  the  activity  of  credit  institutions  and  prudential  supervision  of  credit 
institutions  and  investment  firms  (transposition  of  Directive  2013/36/EU),  repeal  of  Law  3601/2007,  and  other 
provisions’, FEK A 107/ 5.5.2014. 

See Article 55A of the Statute of the Bank of Greece. 

See  Article  1(2)  of  Law  4224/2013  ‘Government  Council  for  Private  Debt  Management,  Institution  for  Growth  in 
Greece,  provisions  on  the  Hellenic  Republic  Asset  Development  Fund,  and  other  urgent  provisions’,  FEK  A 
228/31.12.2013. 

See recital 79 of Directive EU/2014/17. 

See paragraph 3.4 of Opinion CON/2015/54. 
See, for example, paragraphs 2.1 to 2.3 of Opinion CON/2006/38, paragraphs 2.1 and 2.2 of Opinion CON/2006/47, 
paragraphs 2.1 to 2.5 of Opinion CON/2007/29, and paragraph 2 of Opinion CON/2009/71. 

See Article 4 of Law 4261/2014. 

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law,  notably  those  relating  to  the  advertisement  and  marketing  of  credit  agreements  and  the 

provision of advisory services by consumer associations. Responsibility for the financial education 

of consumers lies with the  Ministry of Economy and  Development, which may cooperate  with the 

Bank of Greece and other relevant authorities on related matters. In view of the above, it appears 

that the allocation of the responsibilities under the draft law is clear and there is no indication that in 

carrying out its new tasks the Bank of Greece would act exclusively in the interest of another public 

entity.  

4.6  Extent to which the performance of tasks is aligned with the Bank of Greece’s institutional set-up, in 

particular as regards accountability considerations 

Given the complementarity of the new tasks with the Bank of Greece’s existing supervisory powers, 

in  particular  in  the  field  of  supervision  of  credit  institutions  and  other  financial  institutions  and 

oversight  of  their  market  conduct,  the  new  tasks  appear  to  broadly  fit  into  the  Bank  of  Greece’s 

institutional set-up.  

4.7  Extent  to  which  the  performance  of  tasks  is  proportionate  to  the  Bank  of  Greece’s  financial  and 

operational capacity and its ability to perform its ESCB-related tasks 

As noted above, the draft law does not provide for a regime for the recovery of costs related to the 

supervision  of  credit  intermediaries.  Directive  2014/17/EU  requires  Member  States  to  ensure  that 

competent authorities have adequate resources for the efficient and effective performance of their 
duties 15.However,  the  draft  law  does  not  specify  the  resources  to  be  deployed  by  the  Bank  of 

Greece for the discharge of its new tasks, nor does it provide an estimate of the direct costs that 

the  Bank  of  Greece  is  likely  to  incur  in  the  performance  of  these  tasks.  The  ECB  notes  that  it  is 

important that appropriate resources are available to the Bank of Greece in order to ensure that it 

can  properly  perform  its  new  tasks,  while  maintaining,  at  all  times,  sufficient  financial  means  to 

carry  out  its  ESCB-  or  Eurosystem-related  tasks  and  other  national  tasks,  meet  its  international 

obligations and properly cover its administrative and operational expenses. 

4.8  Extent to which the performance of tasks entails substantial financial risks and conflicts of interests 

with existing tasks of the Bank of Greece are addressed 

The draft law does not contain any specific provisions on liability for the performance of supervisory 

tasks. The Bank of Greece’s potential liability for the performance of its new tasks under the draft 

law  will  be thus subject to  the general rules on the liability  of the Bank of Greece. These general 

rules  provide  that  the  governor,  the  deputy  governors,  all  members  of  collective  bodies  and  staff 

members of the Bank of Greece shall not be subject to civil liability towards third parties for actions 

or omissions in the performance of their duties related to any competence exercised by the Bank of 
Greece in its capacity as a public authority other than for wilful misconduct 16. As regards potential 

conflicts  of  interest  between  existing  and  new  tasks  of  the  Bank  of  Greece,  the  ECB  notes  that 

under the draft law the Bank of Greece will be responsible for supervising conduct of creditors and 

credit  intermediaries  towards  consumers,  including  their  policies  in  respect  of  arrears  and 

foreclosure.  While  these  tasks  seem  to  be  broadly  of  the  same  nature  as  the  supervisory  tasks 

15  
16  

See Article 5(1) of Directive EU/2014/17. 

See Article 62(4) of Law 4261/2014. 

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already performed by the Bank of Greece, the ECB notes that conflicts of interest may arise. As the 

authority responsible for supervising the financial markets, the Bank of Greece will be required to 

mitigate  any  potential  conflict  of  interest  between  its  new  consumer  protection  tasks  and  its 

supervision  and  financial  stability  mandates.  The  ECB  recommends  that  sufficient  mitigation 

measures are put in place.  

4.9  Conclusion  

The  ECB  considers  that  there  are  grounds  for  regarding  the  Bank  of  Greece’s  new  tasks  of 

supervising and regulating the market for consumer credit agreements as well as authorising and 

supervising credit intermediaries as central bank tasks, in the sense that they can be regarded as 

complementing  the  Bank  of  Greece’s  existing  supervisory  functions.  However,  it  is  essential  that 

the new role assigned to the Bank of Greece by the draft law does not adversely affect its capacity 

to carry out its ESCB- or Eurosystem-related tasks and to perform its other functions. To this end, it 

must be ensured that the  supervisory costs incurred  by  the  Bank of Greece in relation to  its new 

tasks  are  adequately  covered.  Furthermore,  it  is  important  to  ensure  that  sufficient  mitigation 

measures are in place to adequately address any potential conflict of interests between the Bank of 

Greece’s  new  consumer  protection  tasks  and  its  existing  supervision  and  financial  stability 

mandate.  The  ECB  invites  the  Greek  authorities  to  consider  in  more  depth  the  abovementioned 

aspects before the draft law is adopted. 

This opinion will be published on the ECB’s website. 

Done at Frankfurt am Main, 28 June 2016. 

[signed] 

The President of the ECB 

Mario DRAGHI 

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