Opinion of the European Central Bank of 21 January 2019 on the Central Bank of Malta’s supervision of credit reference agencies and its oversight of payment services (CON/2019/2)
Date: 2019-01-21
Institutions: European Central Bank
Subjects: Malta, banking supervision, central bank, credit institution, financial services, money, national law, payment system, statistics

EN 

ECB-PUBLIC 

OPINION OF THE EUROPEAN CENTRAL BANK 

of 21 January 2019  

on the Central Bank of Malta’s supervision of credit reference agencies  

and its oversight of payment services  

(CON/2019/2) 

Introduction and legal basis  

On  7  November  2018  the  European  Central  Bank  (ECB)  received  a  request  from  the  Central  Bank  of 

Malta  (CBM)  for  an  opinion  on  a  draft  law  amending  the  Central  Bank  of  Malta  Act  (the  ‘draft  law 

amending the CBM  Act’) and on a draft directive No  15 on the supervision of credit reference agencies 

(the  ‘draft  directive  on  credit  reference  agencies’).  The  CBM  also  informed  the  ECB  that  it  intends  to 

amend  Directive  No  14  on  the  Central  Credit  Register  (the  ‘draft  amendments  to  the  Directive  on  the 

Central  Credit  Register’),  together  with  the  draft  law  amending  the  CBM  Act  and  the  draft  directive  on 

credit  reference  agencies,  collectively  referred  to  as  the  ‘draft  law’.  On  23  November  2018,  the  ECB 

received a revised version of the draft law. 

The ECB’s competence to deliver this opinion is based on Articles 127(4) and 282(5) of the Treaty on the 

Functioning  of  the  European  Union  and  the  second,  third  and  fourth  indents  of  Article 2(1)  of  Council 
Decision 98/415/EC1, as the draft law relates to means of payment, the CBM, the collection, compilation 

and  distribution  of  financial  and  balance  of  payment  statistics  and  the  ECB’s  tasks  concerning  the 

prudential supervision of credit institutions pursuant to Article 127(6) of the Treaty. 

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  draft  law  has  three  main  purposes.  First,  it  extends  the  oversight  powers  of  the  CBM  with 
regard to the provision of payment services by credit institutions and financial institutions 2. Second, 

it confers on the CBM new supervisory powers with respect to credit reference agencies. Third, it 

extends  access  to  the  Central  Credit  Register  operated  by  the  CBM  to  credit  reference  agencies 

1  

2  

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). 
The CBM Act defines the term ‘financial institution’ as having the same meaning as that assigned to it by Article 2 of 
the Financial Institutions Act (Act XXII of 1994, Chapter 376 of the Laws of Malta), and including any branch in Malta 
of an institution not incorporated in Malta. A ‘financial institution’ as defined in the Financial Institutions Act means 
any person who regularly or habitually acquires holdings or undertakes the carrying out of any activity listed in First 
Schedule to the said Act, for the account and at the risk of the person carrying out the activity, and includes payment 
institutions within the meaning of Directive (EU) 2015/2366 of the European Parliament and of the Council, as well 
as electronic money institutions within the meaning of Directive 2009/110/EC of the European Parliament and of the 
Council. 

 
 
 
 
                                                 
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and to other institutions to which the CBM decides to grant access. 

1.2  Oversight of payment services  

1.2.1  The CBM Act currently authorises the CBM to issue, amend or revoke directives on the provision of 

payment  services  in  order  to  promote  the  stable  and  sustainable  development  and  provision  of 
payment  instruments3.  The  draft  law  amending  the  CBM  Act  extends  (i)  the  scope  of  the  CBM’s 

activity  to cover the provision of payment services, payment applications, payment card schemes 

and  payment  transactions  by  credit  and  financial  institutions;  and  (ii)  the  CBM’s  oversight  and 

regulatory powers in this regard (see paragraph 1.2.2 below). For this purpose, a payment service 

is  defined  in  accordance  with  Directive  (EU) 2015/2366  of  the  European  Parliament  and  of  the 
Council4. A payment application is defined as computer software or equivalent, loaded on a device 

enabling  payment  transactions  to  be  initiated  and  allowing  the  payer  to  issue  payment  orders.  A 

payment  card  scheme  is  defined  as  a  single  set  of  rules,  practices,  standards  and/or 

implementation  guidelines  for  the  execution  of  card-based  payment  transactions.  Finally,  a 

payment transaction is defined as an act, initiated by the payer or on his behalf or by the payee, of 

placing,  transferring  or  withdrawing  funds,  irrespective  of  any  underlying  obligations  between  the 

payer and the payee. 

1.2.2  Pursuant  to  the  draft  law  amending  the  CBM  Act,  no  credit  or  financial  institution  may  provide  a 

payment service in Malta unless it notifies the CBM. The CBM would have the power to review the 

rules  and  procedures  of  any  payment  service,  payment  application,  payment  card  scheme  and 

payment  transaction  in  Malta.  It  would  be  authorised  to  make  an  order  restraining  a  credit  or 

financial  institution  from  engaging  in  activities  which  it  deems  to  go  against  the  stable  and 

sustainable development of the payments landscape in Malta. The CBM would also be authorised 

to  suspend  the  provision  of  any  payment  service,  payment  application,  payment  card  scheme  or 

payment  transaction  where  the  credit  or  financial  institution  fails  to  comply  with  a  lawful  order  or 

requirement of the CBM. Finally, it would be empowered to publicise non-compliance with its order 

or requirements and to impose administrative penalties. 

1.2.3  Pursuant to the draft law amending the CBM Act, the CBM would be required to discuss with 

the competent authority the promotion of the stable and sustainable development of the payments 

landscape in Malta. A competent authority  is defined  as any  authority or authorities nominated to 

regulate  the  business  of  credit  institutions,  financial  institutions  or  financial  services  institutions 

under  any  law  listed  in  the  Schedule  to  the  CBM  Act.  In  the  context  of  the  provision  of  payment 
services by credit or financial institutions, the competent authority under the Banking Act5 and the 

Financial Institutions Act is the Malta Financial Services Authority (MFSA). 

1.3  Supervision of credit reference agencies  

1.3.1  Under the draft law amending the CBM Act, the CBM is designated as the supervisory authority of 

3  
4  

5  

See Article 34A(1) of the CBM Act. 
Directive (EU) 2015/2366 of the European Parliament and of the Council of 25 November 2015 on payment services 
in  the  internal  market,  amending  Directives  2002/65/EC,  2009/110/EC  and  2013/36/EU  and  Regulation  (EU)  No 
1093/2010,  and  repealing  Directive  2007/64/EC  (OJ  L  337,  23.12.2015,  p.35).  In  particular,  a  payment  service  is 
defined as any business activity set out in Annex I thereof. 
Banking Act, Act XV of 1994, Chapter 371 of the Laws of Malta.   

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credit reference agencies solely for the purpose of overseeing and regulating the task of issuing a 

credit score, defined as a measure of creditworthiness derived from credit information which must, 

under pain of nullity, include data derived from the Central Credit Register operated by the CBM. A 

credit  reference  agency  is  defined  for  this  purpose  as  an  undertaking  licenced  by  the  Trade 
Licensing Unit 6 the main business of which is to prepare, assemble and evaluate credit information 

and related credit and risk management services on legal and natural persons for the purpose  of 

issuing credit scores to be furnished to third parties, provided that a credit reference agency is not 

precluded from carrying out other related tasks.  

1.3.2  Under Legal Notice 213 of 2018 7, on which the ECB was not consulted, further provision is made 

for  the  application  for  a  trading  licence  to  the  Trade  Licensing  Unit  in  order  to  carry  out  the 

business of a credit reference agency. The assessment and determination of such applications is 

made by the Trade Licensing Unit  in consultation  with the CBM,  whereby the CBM  is required to 

give its recommendation for the issue of such a licence to the Trade Licensing Unit. Such a licence 

may be suspended or cancelled by the Trade Licensing Unit on the recommendation of the CBM. 

Any director, manager, administrator, trustee or principal officer of a credit reference agency may 

be removed by the Trade Licencing Unit on the recommendation of the CBM. Any other restrictions 

may  be  imposed  on  a  credit  reference  agency  by  the  Trade  Licensing  Unit  as  the  CBM,  as  the 

supervisory authority, may stipulate.  

1.3.3  Under the draft law amending the CBM Act, the CBM is entrusted with levying supervision fees on 

licensed credit reference agencies. As part of its supervisory duties, the CBM may conduct on-site 

and off-site inspections. 

1.3.4  The draft law amending the CBM  Act empowers the CBM to issue directives for the carrying into 

effect  of  its  supervisory  duties  in  relation  to  credit  reference  agencies.  In  this  context,  the  draft 

directive  on  credit  reference  agencies  lays  down  detailed  rules  concerning  the  supervision  of 

licensed  credit  reference  agencies.  In  particular,  it  establishes  specific  obligations  of  credit 

reference  agencies  with  regard  to  the  issue  of  credit  scores,  notification  requirements,  the 

obligation to establish a complaints resolution unit, maximum periods of retention of central credit 

register  data  and  credit  scores,  and  obligations  with  regard  to  conflicts  of  interest  and 

confidentiality. The rules set out in the draft directive on credit reference agencies also relate to the 

powers  of  the  CBM  as  supervisor  of  credit  reference  agencies.  In  particular,  they  provide  for  the 

imposition  of  an  annual  supervisory  fee,  powers  relating  to  the  CBM’s  on-site  and  off-site 

inspections,  powers  in  relation  to  accessing  documentation  held  by  the  agencies,  powers  with 

respect to the governance of the agencies and the power to impose penalties on agencies.  

1.4  Access to Central Credit Register  

1.4.1  The draft amendments to the Directive on the Central Credit Register predominantly cater for the 

modalities  of  access  to  the  Central  Credit  Register  by  the  main  parties  involved,  notably  credit 

institutions, natural or legal persons whose credit is being rated and credit reference agencies. The 

6  
7  

See Part VIIA, Regulations 47A to 47H of the Trading Licences Regulations, Legal Notice 420 of 2016.  
Trading Licences (Amendment) Regulations, 2018, which added Part VIIA to the Trading Licences Regulations. 

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draft amendments also regulate the modalities of access to the Register by the Malta Development 

Bank and by other institutions to which the CBM grants access. 

1.4.2  The  existing  provisions  of  the  CBM  Act  provide  that  the  CBM  may  grant  access  to  the  Central 

Credit Register on the basis of reciprocity arrangements to central banks and other institutions of 
Member  States  of  the  European  Union  that  create  databases  comparable  to  the  Register 8.  The 

draft law amending the CBM Act amends this provision by laying down that access to the Register 

will  be  extended  to:  (i)  Union  institutions  that  create  databases  comparable  to  the  Register  and 

which  conclude  reciprocity  arrangements  with  the  CBM;  (ii) the  Listing  Authority;  (iii)  the  Malta 

Stock Exchange; and (iv) any other institution as the CBM may consider necessary. 

1.4.3  Furthermore, the draft law amending the CBM Act introduces a new provision to cater for instances 

where  the  carrying  out  of  the  CBM’s  statistical  functions  under  the  CBM  Act  necessitates  the 

transfer of statistical and other information by the CBM to any person in general or any entity which 

is licensed, authorised or registered by a competent authority.  

2. 

Scope of the opinion 

This  opinion  focuses  on  the  following  areas  of  the  draft  law  of  interest  to  the  ECB:  the  oversight  of 

payment  services  by  the  CBM  (Section  3);  the  CBM’s  new  supervisory  powers  with  respect  to  credit 

reference agencies (Section 4); and access to the Central Credit Register (Section 5). Finally the opinion 

examines the new tasks conferred on the CBM against the prohibition of monetary financing (Section 6). 

This  opinion  does  not  address  the  question  of  whether  the  draft  law,  if  adopted  as  proposed,  would 

represent an effective means of implementing Directive (EU) 2015/2366 or other relevant Union legal acts 

in Malta. 

3. 

Oversight of payment services provided by credit and financial institutions 

3.1  The oversight of payment services provided by credit and financial institutions is already carried out 

by the CBM under the provisions of the CBM Act 9.  

3.2 

In Malta, the CBM and the MFSA are both competent authorities under Directive (EU) 2015/2366. 

The  MFSA  is,  with  a  few  exceptions,  largely  responsible  for  Title  II  (Payment  service  providers) 

thereof, whereas the CBM is, with a few exceptions, largely responsible for Titles III (Transparency 

of conditions and information requirements for payment services) and IV (Rights and obligations in 

relation to the provision and use of payment services). Furthermore, some provisions of Directive 

(EU)  2015/2366,  such  as  those  relating  to  incident  reporting,  as  well  as  more  general  provisions 

such as those on, inter alia, data protection and penalties, fall within the remit of both the CBM and 

the  MFSA.  In  practical  terms,  the  MFSA  is,  under  the  Directive,  responsible  for  the  granting  and 

withdrawal  of  authorisation  of  payment  institutions,    the  supervision  of  payment  institutions  and 

issues  relating 

to, 

inter  alia,  shareholding,  own 

funds,  safeguarding  requirements  and 

8  
9  

See Article 24(4) of the CBM Act. 
See Article 34A of the CBM Act. 

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governance10. On the other hand, the CBM, as the overseer and regulator of the operation of, and 

participation in, domestic payment systems, is responsible for, inter alia, the Directive’s provisions 

on  the  authorisation  and  execution  of  payment  transactions,  authentication,  framework  contracts, 

information  requirements  and  applicable  charges  in  relation  to,  inter  alia,  credit  institutions  and 
payment institutions 11.  

3.3  The  ECB  notes  that  the  draft  law  proposes  to  extend  the  CBM’s  existing  oversight  and  regulatory 

powers in relation to payment services providers, including credit and financial institutions. Under the 

draft  law  the  CBM  is  required  to  discuss  with  the  ‘competent  authority’  the  promotion  of  the  stable 

and  sustainable  development  of  the  payments  landscape  in  Malta.  The  definition  of  ‘competent 

authority’ under the CBM Act does not, however, include the ECB. Furthermore, it should be noted 

that, with regard to the oversight of international payment card schemes that provide services on the 

Maltese market, there is no reference in the draft law to the distribution of oversight responsibilities 

within the Eurosystem. 

3.4  Pursuant to relevant Union law12 the ECB is competent to carry out specific tasks for the purpose of 

prudential  supervision  of  credit  institutions  established  in  the  Member  States.  In  view  of  its 

competence  in  this  area,  the  ECB  considers  that  the  CBM  should  inform  the  ECB  and  the  MFSA, 

within their respective fields of competence for the prudential supervision of credit institutions, on an 

ex  ante  basis,  whenever  the  exercise  of  the  CBM’s  oversight  and  regulatory  powers  in  relation  to 

payment  service  providers  which  are  credit  institutions  could  risk  pre-empting  the  powers  that  the 

ECB  and  the  MFSA  may  have  for  the  purposes  of  carrying  out  the  prudential  supervision  of  credit 

institutions,  including  the  power  to  restrict  or  limit  their  business  and  operations.  Furthermore,  the 

ECB understands that any powers exercised by the CBM in this regard are without prejudice to such 
powers of the ECB and the MFSA13. Similarly, the ECB wishes to recall the pre-agreed distribution of 
oversight  responsibilities  within  the  Eurosystem  with  regard  to  payment  schemes14,  and  that  the 

extended  powers  of  the  CBM  should  not  affect  in  any  way  the  powers  that  the  ECB  or  the  other 

Eurosystem central banks have as overseers of payment card schemes. 

4. 

Supervisory powers with respect to credit reference agencies 

4.1  The  definition  of  credit  reference  agencies  pursuant  to  the  draft  law  falls  outside  the  scope  of 
Regulation  (EC)  No  1060/2009  of  the  European  Parliament  and  of  the  Council15  particularly 

because  this  regulation  does  not  apply  to  credit  scores,  credit  scoring  systems  or  similar 
assessments related to obligations arising from consumer, commercial or industrial relationships 16.  

10  
11  

12  

13  
14  
15  

16  

See the Financial Institutions Act. 
See  Central  Bank  of  Malta  Directive  No  1  on  the  provision  and  use  of  payment  services,  available  at: 
www.centralbankmalta.org.  
In particular, Article 127(6) of the Treaty concerning policies relating to the prudential supervision of credit institutions 
and  Council  Regulation  (EU)  No  1024/2013  of  15 October  2013  conferring  specific tasks  on  the  European  Central 
Bank concerning policies relating to the prudential supervision of credit institutions (OJ L 287, 29.10.2013, p. 63). 
See Regulation (EU) No 1024/2013. 
See Eurosystem oversight policy framework, July 2016, section 5.2 ‘Allocation of roles within the Eurosystem’. 
Regulation (EC) No 1060/2009 of the European Parliament and of the Council of 16 September 2009 on credit rating 
agencies (OJ L 302, 17.11.2009, p.1).  
Article 2(2)(b) of Regulation (EC) No 1060/2009. 

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As credit reference agencies fall outside the scope of this regulation, the European Securities and 

Markets Authority would not have supervisory powers over such entities. 

4.2 

In  the  vast  majority  of  Member  States,  credit  reference  agencies  remain  unregulated  except  for 
data  protection  aspects 17.  As  the  subjects  of  data  protection  are  normally  only  natural,  and  not 
legal, persons 18, this implies that in most Member States credit reference agencies remain entirely 

unregulated so far as the credit scoring of legal persons is concerned. Moreover, it seems that it is 

only  in  a  few  Member  States  that  credit  reference  agencies  are  regulated  with  regard  to  the  way 
their credit scoring is made19.  

4.3  Credit  reference  agencies  are  currently  one  of  the  four  accepted  credit  assessment  sources  on 

which  the  Eurosystem  bases  its  eligibility  assessment  of  assets  eligible  as  collateral  for 

Eurosystem credit  operations.  Credit  reference  agencies  accepted  as  credit  assessment  systems 

are referred to as third-party rating tool providers and their acceptance and monitoring follows the 
applicable  provisions  of  Guideline  (EU)  2015/510  (ECB/2014/60) 20.  The  use  of  third-party  rating 

tools’  credit  assessments  in  Eurosystem  monetary  policy  operations  is  however  very  limited, 

particularly when compared to the other three accepted credit assessment sources. 

5. 

Access to the Central Credit Register and to other information held by the CBM 

5.1  The ECB welcomes the provisions of the draft law extending access to the Central Credit Register 

to  (i)  Union  institutions  that  create  databases  comparable  to  the  Register  and  which  conclude 

reciprocity  arrangements  with  the  CBM;  and  (ii)  any  other  institution  as  the  CBM  may  consider 

necessary.  

5.2  As  previously  noted  by  the  ECB21,  as  the  ECB  does  not  currently  have  a  comparable  register,  it 

cannot be provided with information in the Register on the basis of reciprocity. The draft law does 

not  contain  an  explicit  provision  allowing  the  information  on  the  Register  to  be  accessed  by  the 

ECB or the MFSA, even though the ECB has previously identified channels through which it or the 
MFSA could obtain access to data contained in the Central Credit Register 22.  

5.3  The ECB welcomes that the draft law provides that the CBM may provide access to the information 

held in the Central Credit  Register to  any  other  institutions as the CBM may consider  necessary. 

17  

18  

19   

20  

21  
22  

A  January  2011  report  of  the  European  Credit  Research  Institute  indicates  that  the  principal  national  regulators  of 
credit  bureaus  in  many  Union  Member  States  are  the  national  data  protection  offices.  See  M.  Rothemund  and  M. 
Gerhardt, European Credit Research Institute, The European Credit Information Landscape: An analysis of a survey 
of credit bureaus in Europe, January 2011, p. 7. 
See the definition of ‘personal data’ in Regulation (EU) 2016/679 of the European Parliament and of the Council of 
27  April  2016  on  the  protection  of  natural  persons  with  regard  to  the  processing  of  personal  data  and  on  the  free 
movement of such data, and repealing Directive 95/46/EC (OJ L 119, 4.5. 2016, p. 1), which is confined to natural 
persons.  
In  the  UK  the  Financial  Conduct  Authority  is  designated  as  the  competent  authority  in  this  respect.  See  Briefing 
Paper  Number  04070,  House  of  Commons  Library,  of  17  March  2014  on  credit  reference  agencies,  pp.  5-6.  In 
Hungary, the Magyar Nemzeti Bank is designated as the competent national authority for the supervision of financial 
institutions, inter alia credit reference agencies. See Act CXXII of 2011 on the Central Credit Information System. 
Guideline  (EU)  2015/510  of  the  European  Central  bank  of  19  December  2014  on  the  implementation  of  the 
Eurosystem monetary policy framework (ECB/2014/60) (OJ L 91 2.4.2015, p. 3). 
See paragraph 3.1 of Opinion CON/2015/20. 
See paragraphs 3.1 to 3.2 of Opinion CON/2015/20. 

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The  ECB  considers  that,  if  necessary  for  the  fulfilment  of  its  tasks,  this  provision  could  give  the 

ECB an additional legal basis for accessing the Register. 

6. 

New tasks conferred on the CBM  

6.1 

In relation to the oversight of the provision of payment services by credit and financial institutions, 

the  ECB  notes  that  the  draft  law  does  not  confer  genuinely  new  tasks  on  the  CBM,  but  rather 

extends the CBM’s powers to facilitate the exercise of a task already assigned to it. By contrast, the 

supervision  of  credit  reference  agencies  is  a  new  task  entrusted  to  the  CBM  by  the  draft  law  as 

currently  the  CBM  does  not  perform  the  function  of  supervisory  authority  for  the  purpose  of 

overseeing and regulating the issuing of credit scores by credit reference agencies. 

6.2  The ECB underlines that a proposed conferral of new tasks on a national central bank (NCB) of the 

European System of Central Banks (ESCB) must be assessed against the criteria for determining 

what constitutes a government task from the perspective of the monetary financing prohibition laid 

down in Article 123 of the Treaty.  

6.3  For  the  purposes  of  that  prohibition,  Article  1(1)(b)(ii)  of  Council  Regulation  (EC)  No  3603/9323 

defines ‘other type of credit facility’, inter alia, as ‘any financing of the public sector’s obligations vis-

à-vis third parties’. To determine what might be assimilated with the financing of the public sector’s 

obligations  vis-à-vis  third  parties,  which  can  be  interpreted  as  the  financing  provided  by  an  NCB 

outside  the  scope  of  central  bank  tasks,  it  is  necessary  to  assess  whether  the  new  task  to  be 

undertaken  by  that  NCB  is  a  government  task,  i.e.  a  task  within  the  responsibility  of  the  public 

sector  of  Member  States,  rather  than  a  central  bank  task.  In  other  words,  adequate  safeguards 

against circumventions of the objective of the monetary financing prohibition of maintaining a sound 

budgetary policy of Member States must be put in place.  

6.4  As part of its discretion in the exercise of its duty, on the basis of Article 271(d) of the Treaty and 

Article 35.6 of the Statute of the European System of Central Banks and of the European Central 

Bank  (the  ‘Statute  of  the  ESCB’),  to  ensure  that  NCBs  honour  the  obligations  laid  down  by  the 

Treaty,  the  Governing  Council  has  endorsed  safeguards  of  that  kind  in  the  form  of  criteria  for 

determining what may be seen as falling within the scope of a public sector’s obligation within the 

meaning of Article 1(1)(b)(ii) of Regulation (EC) No 3603/93 or, in other words, what constitutes a 

government task as follows:  

First, central bank tasks are in particular those tasks that are related to  the tasks that have been 

conferred on the ECB and the NCBs by the Treaty and the Statute of the ESCB. These tasks are 

mainly defined in Article 127(2), (5) and (6) and 128(1) of the Treaty, as well as Article 22 and 25.1 

of the Statute of the ESCB.  

Second, as Article 14.4 of the Statute of the ESCB allows NCBs to perform ‘other functions’, new 

tasks  that  are  not  related  to  tasks  that  have  been  conferred  on  the  ECB  and  the  NCBs  are  not 

precluded  per  se.  However,  new  tasks  which  are  atypical  of  NCB  tasks  or  which  are  clearly 

23  

Council  Regulation  (EC)  No  3603/93  of  13  December  1993  specifying  definitions  for  the  application  of  the 
prohibitions referred to in Articles 104 and 104b(1) of the Treaty (OJ L 332, 31.12.1993, p. 1). 

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

entities should be considered government tasks.  

Third, an important criterion for qualifying a new task as atypical of an NCB task or as being clearly 

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

entities  is  the  impact  of  the  task  on  the  institutional,  financial  and  personal  independence  of  that 

NCB.  

In particular, the following aspects should be taken into account:  

(i) 

whether  the  performance  of  the  new  task  would  create  conflicts  of  interest  with  existing 

central  bank  tasks  which  are  not  adequately  addressed  and  does  not  necessarily 

complement those existing central bank tasks. If a conflict of interest arises between existing 

and  new  tasks,  sufficient  safeguards  to  mitigate  that  conflict  should  be  in  place.  The 

complementarity  between  a  new  task  and  the  existing  central  bank  tasks  should  be 

interpreted narrowly, so as to avoid leading to the creation of an indefinite chain of ancillary 

tasks.  Such  complementarity  should  be  examined  also  in  relation  to  the  financing  of  those 

tasks; 

(ii) 

whether without new financial resources the performance of the new task is disproportionate 

to  the  NCB’s  financial  or  organisational  capacity  and  may  have  a  negative  impact  on  the 

capacity to perform properly the existing central bank tasks; 

(iii)  whether  the  performance  of  the  new  task  fits  into  the  institutional  set-up  of  the  NCB  in  the 

light of central bank independence and accountability considerations; 

(iv)  whether the performance of the new task harbours substantial financial risks; 

(v)  whether the performance of the new task exposes the members of the NCB decision-making 

bodies  to  political  risks  which  are  disproportionate  and  may  also  have  an  impact  on  their 

personal  independence  and,  in  particular,  on  the  guarantee  of  term  of  office  set  out  in 

Article 14.2 of the Statute of the ESCB.  

6.5  On the basis of the criteria set out above, the following paragraphs assess whether the new task 

conferred  upon  the  CBM  constitutes  a  government  task  in  the  context  of  the  monetary  financing 

prohibition. 

6.5.1  New  tasks  related  to  the  tasks  conferred  upon  the  ECB  and  the  NCBs  by  the  Treaty  and  the 

Statute of the ESCB 

The  supervision  of  credit  reference  agencies  is  not  among  the  basic  tasks  listed  in  Article 127(2) 

and  (5)  of  the  Treaty  or  otherwise  conferred  upon  the  NCBs  by  the  Statute  of  the  ESCB. 

Furthermore,  while  the  proper  operation  of  credit  reference  agencies  may  be  valuable  for  credit 

institutions  as  they  would  be  able  to  make  a  better  assessment  of  the  financial  situation  of  the 

natural or legal persons to whom they are lending, this new task is not related to the specific tasks 

conferred upon the ECB on the basis of Article 127(6) of the Treaty concerning policies relating to 

the  prudential  supervision  of  credit  institutions  within  the  context  of  the  single  supervisory 

mechanism.  

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6.5.2  Tasks which are atypical of NCB tasks 

The  ECB  notes  that  in  the  vast  majority  of  Member  States,  credit  reference  agencies  remain 
unregulated except for data protection aspects 24. However, there are also Member States in which 

either the NCB is designated as the competent national authority responsible for the supervision of 
credit  reference  agencies 25  or  in  which  the  systems  for  the  exchange  of  data  concerning 
creditworthiness is a matter regulated by the NCB 26. In addition, a number of NCBs have functions 

in relation to the collection and use of credit risk data, including in connection with the operation of 
central  credit  registers27.  Furthermore,  credit  reference  agencies  may  play  a  role  in  the 

Eurosystem’s credit operations, as they are one of the four sources which may be accepted for the 

eligibility assessment of assets eligible as collateral. Consequently, although the direct supervision 

of credit reference agencies by NCBs as such remains rare among Member States, it is common 

for  NCBs  to  be  involved  in  activities  relating  to  the  management  of  credit  risk.  It  follows  that  the 

new  task  proposed  to  be  conferred  on  the  CBM  in  relation  to  the  supervision  of  credit  reference 

agencies is not atypical for a central bank in those Member States which have chosen to regulate 

and supervise credit reference agencies with respect to their credit scoring.  

6.5.3  Tasks clearly discharged on behalf of and in the exclusive interest of the government 

The ECB understands that the supervision of credit reference agencies in Malta is being introduced 

on  the  one  hand  to  protect  the  interests  of  the  legal  and  natural  persons  being  scored  to  ensure 

that  their  credit  scoring  is  fair  and  transparent  and,  on  the  other,  to  ensure  that  credit  reference 

agencies rely on correct data, particularly data contained in the Central Credit Register, to ensure 

that  their  scoring  is  fair  and  reliable.  In  view  of  the  credit  risk-related  activities  of  central  banks, 

including in the operation of central credit registers, the new task proposed to be conferred on the 

CBM does not appear as a task clearly discharged on behalf of and in the exclusive interest of the 

government. 

24  

25   

26  

27  

A  January  2011  report  of  the  European  Credit  Research  Institute  indicated  that  the  principal  national  regulators  of 
credit  bureaus  in  many  EU  Member  States  are  the  national  data  protection  offices  See  M.  Rothemund  and  M. 
Gerhardt, European Credit Research Institute, The European Credit Information Landscape: An analysis of a survey 
of credit bureaus in Europe, January 2011, p. 7. 
In  Hungary  the  Magyar  Nemzeti  Bank  is  responsible  for  the  supervision  of  financial  institutions,  inter  alia  credit 
reference agencies under Act CXXII of 2011 on the Central Credit Information System as regards the authorisation 
for  the  setting  up  and  operation  of  a  financial  enterprise  operating  the  central  credit  information  system,  the 
supervision  and  withdrawal  of  authorisation,  the  obligation  of  confidentiality  concerning  trade  secrets,  banking  and 
payment  secrets  and  any  exemptions  from  the  obligation  of  confidentiality  imposed  by  Act  CCXXXVII  of  2013  on 
credit institutions.  
In Cyprus the Central Bank of  Cyprus (CBC) is assigned  with  the task of supervising such systems with a view to 
ensuring the proper management of the data they possess (section 28(E) of Law 66(I)/1997 on the business of credit 
institutions).The CBC is empowered to issue secondary legislation to regulate the conditions  and processes for the 
functioning of such systems, and may impose sanctions on the operators of such systems (sections 28(E), 41(6) and 
42(3) of Law 66(I)/1997). This concept is closer to the notion of a credit register than to that of credit bureaus, in the 
sense  that  it  presupposes  the  participation  of  credit  institutions  and  some  other  categories  of  institutions  (mainly 
credit providers) and no other persons are allowed to participate or  benefit from its services except for the CBC.  
See, e.g., Opinion CON/2011/20 (Belgium), Opinion CON/2011/47 (Latvia), Opinion CON/2012/74 (Ireland), Opinion 
CON/2013/29  (France),  Opinion  CON/2016/42  (Slovenia)  and  Opinion  CON/2016/57  (Bulgaria).  Central  credit 
registers are operated by NCBs in other Member States, including, e.g., Italy.  

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6.5.4  Extent to which performance of the new task creates conflicts of interest with existing central bank 

tasks 

The new task of supervising credit reference agencies does not create any conflicts of interest with 

existing  central  banking  tasks  performed  by  the  CBM.  On  the  contrary,  it  appears  to  be  rather 

complementary to the existing task of maintaining a central credit register.  

6.5.5  Extent  to  which  performance  of  the  new  task  is  disproportionate  to  the  financial  or  organisational 

capacity of the CBM 

With regard to the principle that  Member States may not put their NCBs  in a position  where they 

have insufficient financial resources to carry out not only their ESCB-related but also their national 

tasks,  the  ECB  understands  that  the  new  task  would  not  require  the  allocation  of  significant 

resources.  However,  as  the  ECB  understands  that  the  annual  supervisory  fees  to  be  levied  on 

credit reference agencies would not entirely cover the CBM’s expenditure for carrying out its new 

task,  the  CBM  should  take  the  necessary  measures  to  ensure  it  has  sufficient  resources  for  the 

performance of this task. 

6.5.6  Extent to which performance of the new task fits into the institutional set-up of the CBM, in the light 

of central bank independence and accountability considerations 

As already noted, the new task conferred on the CBM appears to be complementary to its task of 

maintaining a central credit register. The performance of this task would therefore appear to fit into 

the existing institutional set-up of the CBM. 

6.5.7  Extent to which the performance of tasks harbours substantial financial risks 

The ECB notes that the performance of this new task would not entail substantial financial risks for 

the CBM or its officials. Thus, pursuant to Article 15 of the CBM Act, the CBM, its directors, officers 

and  servants  may  not  be  liable  in  damages  for  anything  done  or  omitted  to  be  done  in  the 

discharge or purported discharge of its functions unless the act or omission is shown to have been 

done  or  omitted  to  be  done  in  bad  faith.  Furthermore,  in  relation  to  the  supervision  of  credit 

reference agencies, paragraph 4(1) of Directive No 14 on the Central Credit Register provides that 

the CBM is not responsible for the integrity and correctness of data that a credit institution provides 

to  the  Register.  Moreover,  credit  reference  agencies  are  fully  responsible  in  respect  of  the  public 

and non-public credit information that they possess, other than data in the Central Credit Register.  

6.5.8  Extent to which performance of the new task exposes members of the decision-making bodies of 

the CBM to disproportionate political risks and impacts on their personal independence 

The  new  supervisory  task  in  relation  to  credit  reference  agencies  does  not  appear  to  expose  the 

members  of  the  decision-making  bodies  of  the  CBM  to  disproportionate  political  risks,  or  to 

otherwise have an impact on their personal independence. 

6.6  Conclusion  

While the new task conferred on the CBM regarding the supervision of credit reference agencies is 

not  among  the  tasks  conferred  on  the  ECB  and  the  NCBs  by  the  Treaty  and  the  Statute  of  the 

ESCB,  this  task  is  not  atypical  of  NCB  tasks  in  those  Member  States  which  have  chosen  to 

regulate and supervise credit reference agencies with respect to their credit scoring. Moreover it is 

common  for  NCBs  to  be  involved  in  activities  relating  to  the  management  of  credit  risk.  As  the 

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CBM’s  new  task  is  furthermore  not  discharged  on  behalf  of  and  in  the  exclusive  interest  of  the 

government,  the  CBM’s  new  supervisory  task  in  relation  to  credit  reference  agencies  does  not 

constitute a government task. 

ECB-PUBLIC 

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

Done in Frankfurt am Main, 21 January 2019. 

[signed] 

The President of the ECB 

Mario DRAGHI 

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