The European Commission calls on Cyprus and another 11 member states to to complete the transposition into national law of the Directive on credit servicers and credit purchasers, noting that if the countries don’t take the necessary measures it could refer the cases to the Court of Justice of the European Union. The case is included in the European Commission’s July package of infringement decisions.

Cyprus is also one of nine member states that received letters of formal notice asking them to complete the transposition into national law of amendments to the Bank Recovery and Resolution Directive.

Also, all 27 member states, including Cyprus, received letters of formal notice from the Commission for their failure  to meet waste collection and recycling targets.

A letter of formal notice is the first stage of an infringement procedure regarding cases of non compliance of member states with EU law. If member states do not address the shortcomings in time, the Commission can send a reasoned opinion. If once again the response is not satisfactory, the Commission can appeal to the Court of Justice which can impose fines on member states.

Most cases are closed without ending up at the Court of Justice. For example, this package includes 72 cases which have been closed by the Commission since the issues identified were addressed. Five of these cases are related to Cyprus, and deal with internal market, health and food safety, environment, mobility and transport and communications and technology.

Credit servicers and credit purchasers

The European Commission decided to send reasoned opinions to Cyprus (INFR(2024)001), Belgium, Bulgaria, Spain, Italy, Lithuania, Hungary, the Netherlands, Austria, Poland, Portugal and Finland for the incomplete transposition of the Directive on credit servicers and credit purchasers.

The main objective of Directive 2021/2167 is to enable credit servicers and credit purchasers to operate on European Union wide scale, whilst firmly safeguarding borrowers' rights. The directive requires, for example, that credit purchasers and credit servicers act in good faith, fairly and professionally with borrowers and communicate with them in a way that does not constitute harassment, coercion or undue influence.

The 12 member states that received a reasoned opinion now have two months to reply and take the necessary measures. Otherwise, the Commission may decide to refer the cases to the Court of Justice of the European Union.

Amendments to the Bank Recovery and Resolution Directive

The Commission also decided to open an infringement procedure by sending letters of formal notice to Cyprus (INFR(2024)2176), Bulgaria, Spain, Italy, Lithuania, Austria, Poland, Portugal and Slovakia for failing to transpose completely the amendments to the Bank Recovery and Resolution Directive (Directive 2014/59/EU, ‘BRRD') introduced by Regulation (EU) 2022/2036, which concern the prudential treatment of global systemically important institutions and the loss absorbing and recapitalisation capacity of banking groups.

The changes brought about by Regulation (EU) 2022/2036 to BRRD are important for ensuring full alignment in the EU with the Financial Stability Board's standards on Total Loss Absorbing Capacity (TLAC) for global systemically important institutions (G-SIIs). In particular, the changes are necessary for properly reflecting the exposure of EU G-SIIs to their subsidiaries located in third countries and for further improving the ability of the largest EU banking groups to withstand financial shocks. In addition, the changes should achieve full harmonisation of the prudential treatment of internal resources for loss absorption and recapitalisation of intermediate entities in a banking group, which is important for the resolvability of banks.

In the absence of transposition of these technical but important measures, it will not be possible to achieve the necessary level of harmonisation in the EU's unified framework for the banking sector. The Commission is therefore letters of formal notice to the nine member states which now have two months to respond and address the shortcomings raised by the Commission. In the absence of a satisfactory response, the Commission may decide to issue a reasoned opinion.