Seven new bills to pave the way for next tranche of EU recovery funds

The House Finance Committee on Monday examined a package of seven bills submitted by the Finance Ministry aimed at establishing a unified credit data exchange framework and introducing a credit scoring system for both individuals and businesses.

The proposed legislative package forms part of a broader reform to create a digital system for data exchange and creditworthiness assessment, which is a prerequisite for the disbursement of the seventh tranche under the Recovery and Resilience Plan.

The bills cover amendments to key laws governing the financial system. These include the law on the operations of credit institutions, legislation on the sale of credit facilities, the framework for consumer credit agreements, housing loan legislation, as well as laws regulating credit purchasers and servicers, securitisation and financial leasing.

According to a Finance Ministry representative who addressed the committee, the objective is to streamline and harmonise existing provisions, while eliminating overlaps between different legislative frameworks.

At the core of the reform is the upgrade of the existing credit data exchange mechanism, enabling it to generate a single credit score for each borrower.

The score will be based primarily on data from the previous 24 to 36 months and will be used as a tool to assess the likelihood of default over the following 12 months.

The proposed changes also grant expanded powers to the Central Bank, which will oversee the system, issue operational guidelines, impose penalties in cases of non-compliance and determine usage fees.

At the same time, the framework introduces an explicit obligation to maintain banking confidentiality, applying to all individuals and entities with access to the data.

“A comprehensive consultation process took place on this matter,” a representative for the Data Protection Commissioner said.

The legislation also clearly defines for the first time which organisations are required to submit data and which are entitled to access it, introducing a tiered access system depending on the needs of each entity.

Entities expected to submit data include banks, credit acquiring and servicing companies, as well as financial leasing providers, while these same categories will, under certain conditions, be allowed to access data for credit assessment purposes.

According to the Finance Ministry, the reform aims to improve the quality of lending, reduce credit risk and contribute to the gradual decline of non-performing loans through more accurate assessments of borrower solvency.

The committee proceeded with an article-by-article review of the bills, with the aim of securing approval by the plenary session before the dissolution of parliament ahead of the upcoming legislative elections.