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Credit Servicers and Credit Purchasers Act¹

Passed 12.06.2024
RT I, 04.07.2024, 2
Entry into force 14.07.2024

Amended by the following legal instruments (show)

Chapter 1 General Provisions 

§ 1.  Scope of regulation of Act

 (1) This Act regulates credit servicing activities, including the provision of credit servicing services, the activities of credit servicers and credit purchasers, the supervision of those persons and the liability of those persons.

 (2) The provisions of the Administrative Procedure Act apply to administrative proceedings prescribed in this Act, taking account of the specifications provided for in this Act and the Financial Supervision Authority Act.

§ 2.  Application of Act

 (1) This Act applies to credit servicers and credit purchasers established in Estonia and operating in Estonia or having their place of residence in Estonia, as well as to credit servicing activities and to branches of credit servicers established in Estonia in foreign country and to the activities of credit servicers and credit purchasers established abroad in Estonia.

 (2) Subject to the provisions of this Act, this Act applies to credit servicing activities carried out by a credit institution or by a creditor or mortgage creditor as provided for in the Creditors and Mortgage Intermediaries Act (hereinafter the creditor) and by a credit intermediary or mortgage credit intermediary (hereinafter the credit intermediary). In the case referred to in the first sentence of this paragraph, a credit institution, creditor or credit intermediary established in a Contracting Party to the Agreement on the European Economic Area (hereinafter the contracting state) is not be considered a credit servicer.

 (3) Subject to the provisions of this Act, this Act does not apply to the credit servicing activities of a management company provided for in the Investment Funds Act.

 (4) This Act does not apply to:
 1) credit servicing activities where the credit agreement is concluded with a credit institution or creditor established in a third country, unless the credit agreement or the resulting claim is assigned to a credit institution or creditor established in a contracting state;
 2) the acquisition of a credit agreement or a claim arising therefrom by a credit institution established in a contracting state;
 3) the acquisition of a credit agreement or of a claim arising therefrom, or credit servicing activities, where the credit agreement has been concluded by a person other than the credit institution and the debtor is a person other than the consumer;
 4) notaries, enforcement agents, trustees in bankruptcy and lawyers, if their professional activities include the activities specified in subsection 2 of § 3 of this Act.

§ 3.  Credit servicer, credit servicing activity and the credit purchaser

 (1) For the purposes of this Act, a credit servicer is a company whose main and continuous business activity includes credit servicing activities, by which they themselves manage a credit agreement with a credit institution or creditor, the performance of which is delayed, or they do so on behalf of a credit purchaser, inter alia, by arranging the performance of contracts or claims arising from contracts.

 (2) For the purposes of subsection 1 of this section, a credit servicing activity is one or more of the following activities in relation to a non-performing credit agreement by a credit institution or creditor:
 1) the collection of financial obligations relating to a credit agreement or a claim arising therefrom or the collection of payments due from the debtor;
 2) negotiating with the debtor the credit institution's or creditor's claims arising under the credit agreement or the terms of the credit agreement, on the basis, inter alia, of the instructions of the credit purchaser;
 3) management of claims of the credit institution or creditor provided for in the credit agreement or complaints related to the credit agreement;
 4) notification of the debtor of changes in the claims of the credit institution or creditor provided for in the credit agreement or in interest rates, fees or payments related to the credit agreement.

 (3) Credit servicer may engage in one or more of the credit servicing activities referred to in subsection 2 of this section and acquire or manage claims arising from contracts other than credit agreements. In order to better fulfil their obligations, the credit servicer has the right to partially outsource one or more credit servicing activities to a third party (hereinafter the provider of credit servicing service). Credit servicer may only operate as a public limited company or private limited company.

 (4) For the purposes of this Act, a person is not be deemed to be a credit servicer if, as their main or secondary activity, they exchange data relating to the breach of a debt relationship as provided for in § 10 of the Personal Data Protection Act (hereinafter the information on payment default) or transmit the information on payment default to a third party and do not engage in any other activity specified in subsection 2 of § 3 of this Act.

 (5) For the purposes of this Act, a credit purchaser is a legal person or natural person who, in the course of their economic or professional activity, acquires a non-performing credit agreement or a claim arising therefrom from a credit institution or creditor. For the purposes of this Act, a credit institution, creditor and credit intermediary who acquires a non-performing credit agreement or a claim arising therefrom is not be considered a credit purchaser.

 (6) If a credit servicer themselves acquires a non-performing credit agreement or a claim arising therefrom, they will be subject to the rights of a credit purchaser under this Act and to the obligations of a credit purchaser under this Act, except as provided in subsection 7 of this section and in subsections 1–4 and 6 of § 47 of this Act.

 (7) A credit purchaser of a contracting state appoints a credit servicer, credit institution or creditor who engages in the activities specified in subsection 2 of this section for the management of a non-performing credit agreement entered into with a consumer or a claim arising therefrom (hereinafter the credit servicer). The third country credit purchaser must designate the credit servicer, credit institution or creditor as the credit servicer in the case of a non-performing credit agreement is concluded:
 1) with self-employed person or consumer;
 2) a micro, small or medium-sized enterprise.

 (8) If a credit purchaser acquires an non-performing agreement or a claim arising therefrom other than those referred to in subsection 7 of this section, they are not required to appoint a credit servicer to manage it, but in that case they are subject to the provisions of § 44 of this Act relating to the keeping and maintenance of a file relating to the management of a credit agreement.

 (9) Where an obligation arising under a consumer credit agreement has become enforceable and the claim arising therefrom has been acquired or administered by a credit servicer, the latter may only restructure the agreement with the debtor or the claim arising therefrom if this does not make the situation of the debtor worse and the debtor is likely to be able to meet their obligations as a result. In the context of the foregoing, credit servicer may propose:
 1) to extend the term of the credit agreement or to defer repayment in whole or in part for a certain period;
 2) partially waive the debt and aggregate the debts arising from different consumer credit contracts;
 3) to change the interest rate, but not in such a way as to increase the aggregate liability of the debtor to an unreasonable extent.

 (10) For the purposes of this Act, the acquisition of rights and obligations under a credit agreement as provided for in the Law of Obligations Act is deemed to include, inter alia, the acquisition of a credit agreement.

 (11) For the purposes of this Act, a client of a credit servicer is a credit purchaser, credit institution, creditor or any other person who has concluded a contract with a credit servicer for credit servicing activities.

 (12) The determination of the consolidation group of credit servicer must be based on § 9 of the Creditors and Intermediaries Act.

 (13) The word "credit servicer" may not be used in the name, designation or business name of any person, institution or association other than a credit servicer, whether in Estonian or in any other language.

§ 4.  Credit institution, creditor, debtor and credit agreement

 (1) For the purposes of this Act, a credit institution is a credit institution provided for in point (1) of Article 4 (1) of Regulation (EU) No 575/2013 of the European Parliament and of the Council on prudential requirements for credit institutions and investment firms and amending Regulation (EU) No 648/2012 (OJ L 176, 27.06.2013, pp. 1-337).

 (2) For the purposes of this Act, a creditor is a creditor or mortgage creditor provided for in the Creditors and Credit Intermediaries Act and a credit intermediary or mortgage credit intermediary.

 (3) For the purposes of this Act, a debtor is a natural or legal person who has entered into a credit agreement with a credit institution or creditor.

 (4) For the purposes of this Act, a credit agreement is an agreement concluded with a credit institution, a creditor or through a creditor pursuant to § 401 of the Law of Obligations Act.

 (5) For the purposes of this Act, a non-performing credit agreement of a credit institution is any credit agreement classified as a non-performing exposure in accordance with Article 47a of Regulation (EU) No 575/2013 of the European Parliament and of the Council.

 (6) For the purposes of this Act, a non-performing credit agreement of the creditor is a consumer credit agreement, the obligation arising from which has become partly or wholly enforceable in accordance with subsection 7 of § 82 of the Law of Obligations Act.

§ 5.  Country of origin, country of destination, foreign country and third country

 (1) For the purposes of this Act, the country of origin of a credit servicer is the contracting state in which they have their registered office or, in the absence of a registered office under the law of their contracting state, the contracting state in which their head office is situated.

 (2) For the purposes of this Act, the country of destination of a credit servicer is a country which is not the country of origin of the credit servicer and in which their branch is located or where they engage in credit servicing activities, or a contracting state where the residence or registered office of the debtor is located or, in the absence of a registered office pursuant to the law of their contracting state, the contracting state where their head office is located.

 (3) For the purposes of this Act, the country of origin of a credit servicer is the contracting state where the residence or registered office of the credit purchaser or a representative appointed by the latter is located or, in the absence of a registered office under the law of their contracting state, the contracting state in which their head office is situated.

 (4) For the purposes of this Act, a third country credit purchaser is a credit purchaser whose place of residence or registered office is not in a contracting state or, in the absence of a registered office pursuant to the law of their country, the head office is not in a contracting state.

 (5) For the purposes of this Act, a third country is a country other than a contracting state. For the purposes of this Act, a foreign country is both a contracting state and a third country.

Chapter 2 Activity licence of credit servicer  

§ 6.  Activity licence

 (1) To operate as a credit servicer, an activity licence is required.

 (2) The activity licence to operate as a credit servicer will be valid for an unlimited period.

 (3) Activity licence does not apply to a subsidiary and is not transferable.

 (4) The Financial Supervision Authority will grant and revoke the activity licence by their decision.

§ 7.  Application for activity licence

 (1) To apply for an activity licence, the members of the management board of an operating company (hereinafter the applicant) entered in the commercial register must submit a written application and the following documents and particulars (hereinafter the application, documents and particulars together are jointly referred to in this Chapter as the application):
 1) a copy of the articles of association or a resolution of the general meeting of shareholders or the meeting of partners concerning amendment of the articles of association and the amended text of the articles of association;
 2) a business plan meeting the requirements set out in § 8 of this Act;
 3) the amount of share capital and documents certifying the payment thereof;
 4) the address of the applicant's head office or registered office;
 5) particulars of the applicant's management board and, if there is a supervisory board, of the members of the supervisory board (management board or member of the supervisory board is hereinafter referred to as the manager) as provided for in subsections 1 and 5 of § 39 of this Act;
 6) in the case of managers and persons who have a qualifying holding in the applicant, an extract from the criminal records database, in the case of a citizen of the foreign country, an extract from the criminal records database of their home country or an equivalent document issued by a competent court or administrative authority, the extract may not be older than three months;
 7) the particulars specified in § 29 of this Act concerning the persons who have a qualifying holding in the applicant;
 8) internal rules complying with the requirements set out in §§ 41 and 42 of this Act, including the accounting policies and procedures and the procedure for the operation of the internal control system;
 9) internal procedures for registration and resolution of complaints by the debtor in accordance with the requirements provided for in § 60 of this Act;
 10) where applicable, an outsourcing agreement with the provider of credit servicing service;
 11) particulars concerning the audit firm and internal auditor of the applicant, which includes the name, residence or registered office, personal identification code or, in the absence thereof, the date and place of birth or registry code of each of them;
 12) a description of the organisational structure including, where appropriate, a description of the procedure for outsourcing of the credit servicer’s activities;
 13) a description of the information systems and other technological means needed for the provision of the intended services;
 14) information on whether the applicant wishes to receive and hold funds from the debtor;
 15) a certificate of payment of the procedural fee provided for in subsection 2 of § 45 of the Financial Supervision Authority Act.

 (2) If the applicant wishes to receive and hold funds of the debtor, the applicant must submit the particulars of a payment account meeting the requirements set out in § 47 of this Act.

§ 8.  Business plan

 (1) The business plan must include:
 1) a description of the nature of the proposed business, its organisation and management structure and its internal control system;
 2) a description and analysis of the business strategy, the services envisaged, the expected customers and competitors, the envisaged market share and, where relevant, the envisaged activities in foreign countries;
 3) a description of the rights, obligations and responsibilities of the persons involved in the provision of the planned services;
 4) the size of the assets and share capital and the plans of the annual balance sheets and financial indicators, which set out, inter alia, the income, expenses, profit and cash flows and the assumptions on which they are based;
 5) a description of the obligations relating to the provision of the service, including information on how the protection of the interests of the debtors will be ensured and, where appropriate, a description of the arrangements for the acceptance of funds;
 6) any other relevant facts.

 (2) A business plan must be submitted for at least three years.

 (3) The Financial Supervision Authority has the right to demand amendment of a business plan if in the opinion of the Financial Supervision Authority:
 1) the financial indicators or other data set out in the business plan are unreliable;
 2) it is not possible to verify, on the basis of the business plan, the ability of the applicant for an activity licence to implement appropriate and proportionate systems, tools and procedures for reliable operation;
 3) the protection of the interests of the debtors is insufficient.

§ 9.  Review of applications for activity licences

 (1) Within 45 days of receipt of an application for an activity licence, the Financial Supervision Authority must assess whether the application contains all the information and documents required.

 (2) If an applicant has failed to submit all of the information and documents specified in § 7 of this Act or if they have not been prepared in accordance with the requirements, the Financial Supervision Authority may refuse to review the application or demand the elimination of the deficiencies by the applicant.

 (3) If it is not possible to verify on the basis of the information and documents specified in § 7 of this Act whether the applicant for an activity licence has sufficient opportunities to provide the service and whether the applicant complies with the requirements provided for in this Act or legislation issued on the basis thereof, or if other circumstances related to the applicant for an activity licence need to be verified, the Financial Supervision Authority may request the submission of additional information and documents.

 (4) The information and documents specified in subsections 2 and 3 of this section must be submitted to the Financial Supervision Authority within a reasonable term determined by the Financial Supervision Authority.

 (5) If amendments are made to the information or documents specified in § 7 of this Act during the processing of an application for an activity licence, the applicant for the activity licence must immediately submit such information and documents to the Financial Supervision Authority in an updated form. If the change is significant, the Financial Supervision Authority may deem the time of becoming aware of the change to be the beginning of the term of proceedings. In this case, the Financial Supervision Authority must notify the applicant of activity licence of the new term of proceedings.

 (6) In order to verify the information submitted by an applicant, the Financial Supervision Authority may, inter alia, carry out on-site inspections, order expert assessments and special audits, make inquiries from state databases, obtain oral explanations from the managers and auditors of the applicant, their representatives and, if necessary, third parties concerning the content of the documents submitted and the facts relevant for deciding on the issue of an activity licence.

 (7) The Financial Supervision Authority may refuse to review an application for an activity licence if:
 1) the application has been submitted with significant deficiencies;
 2) the applicant does not eliminate the deficiencies during the term determined by the Financial Supervision Authority; or
 3) the applicant has not submitted additional data and documents at the request of the Financial Supervision Authority.

§ 10.  Decision on grant of activity licence

 (1) The Financial Supervision Authority must make a decision to grant or refuse to grant an activity licence within three months after receipt of all the necessary conforming information and documents and compliance with the requirements, but not later than within six months after receipt of the application for an activity licence.

 (2) Authorisation will be granted if the submitted information and documents are in compliance with the requirements and it can be verified on the basis of the submitted information that the applicant for the activity licence has the knowledge and organisational capacity necessary for the provision of the credit servicing service specified in the application and the protection of the interests of the debtors is sufficiently ensured.

 (3) The Financial Supervision Authority may issue an activity licence together with a secondary condition. If the set secondary condition is not duly fulfilled, the Financial Supervision Authority may revoke the activity licence.

 (4) A decision regarding an activity licence must at least set out:
 1) the business name and registry code of the person with regard to whom the decision is made;
 2) the type of service for which the decision is being taken;
 3) the date on which the decision is made and the date on which it enters into force.

§ 11.  Bases for refusal to grant activity licence

 (1) The Financial Supervision Authority may refuse to grant authorisation if:
 1) the applicant does not comply with the requirements provided for in this Act or legislation issued on the basis thereof with regard to the credit servicer;
 2) the applicant's share capital has not been fully paid up;
 3) the manager of the applicant, an audit firm, an internal auditor, a person holding a qualifying holding in the applicant, a shareholder or a partner do not comply with the requirements provided for in this Act or legislation issued on the basis thereof;
 4) close links between the applicant and another person prevent sufficient supervision over the applicant or this is hindered due to claims arising from the legislation of another state where the person with whom the applicant has close links is established or due to the implementation thereof;
 5) the applicant for the activity licence does not have sufficient resources or experience necessary for continuous operation as a credit servicer;
 6) it becomes evident from the information submitted by the applicant for the activity licence that the place of their planned permanent and permanent economic activity is not in Estonia;
 7) the internal rules provided for in § 41 of this Act or other appropriate rules of procedure are not sufficient, proportional and unambiguous taking into account the nature, extent and level of complexity of the applicant's activities or are contrary to current law;
 8) the organisational level and the IT systems or other technological means of the applicant are not sufficient for the provision of the service;
 9) the risks related to the services planned in the business plan of the applicant for an activity licence are not sufficiently covered, including the structure and management structure of the applicant's organisation are not sufficient for consistent activities as a credit servicer and their internal procedures and control do not ensure adequate risk management;
 10) in accordance with the application for an activity licence, the applicant wishes to receive and hold the funds of the debtor but the applicant for the activity licence has not been opened or the payment account of the applicant for the activity licence has been closed in accordance with § 47 of this Act.

 (2) Upon assessment of the provisions of clause 3 of subsection 1 of this section, the activities, financial situation, reputation and experience of the applicant, their parent undertaking and other persons belonging to the same consolidation group as the applicant must be, inter alia, taken into account.

 (3) Upon assessment of the provisions of clause 5 of subsection 1 of this section, the following must be, inter alia, taken into account, if relevant:
 1) the level of the organisational and technical administration of the activities of the applicant for activity licence;
 2) the education, work experience, business ties, reliability and reputation of the members of the managing bodies of the applicant for an activity licence;
 3) the adequacy and sufficiency of the business plan provided for in § 8 of this Act;
 4) the activities, financial situation, reputation and experience of the applicant, their parent company and persons belonging to the same consolidation group as the applicant for activity licence.

 (4) An applicant is not allowed not submit a new application for an activity licence within six months as of the entry into force of the decision of the Financial Supervision Authority to refuse to grant the activity licence. If the Financial Supervision Authority refuses to review an application for an activity licence on the basis of the provisions of subsection 7 of § 9 of this Act, the applicant for an activity licence may not submit a new application for an activity licence before three months have passed from the refusal to review the application for an activity licence.

§ 12.  Termination of activity licence

 (1) The validity of an activity licence expires:
 1) upon making a decision to terminate a credit servicer, if the Financial Supervision Authority has granted permission therefor;
 2) upon revocation of an activity licence, inter alia, upon merger of a credit servicer in the case of which the authorisation terminates for the person being acquired or upon foundation of a new credit servicer by merger in the case of which the authorisation terminates for the merging persons or, in the case of division of a credit servicer, by division pursuant to the provisions of subsection 2 of § 434 of the Commercial Code;
 3) upon declaration of bankruptcy of a credit servicer or termination of bankruptcy proceedings by a court ruling due to abatement.

 (2) Upon expiry of an activity licence, the credit servicer loses the right to provide the service for which the activity licence was issued to the credit servicer.

§ 13.  Revocation of activity licence

 (1) The Financial Supervision Authority may revoke activity licence if:
 1) the credit servicer has not commenced their activities within 12 months as of the issue of the activity licence or their activities have been suspended for more than 12 consecutive months;
 2) the credit servicer has submitted false information upon application for an activity licence or false information has been submitted to the Financial Supervision Authority on behalf of the credit servicer which had a significant meaning upon deciding on the issue of the activity licence;
 3) the credit servicer has disclosed incorrect or misleading information or advertising concerning their activities or members of the managing body to a significant extent;
 4) the credit servicer does not comply with the valid conditions for the issue of an activity licence, including the conditions for the acceptance and storage of the funds of the debtor;
 5) the credit servicer has materially infringed the legal provisions applicable to their activities in Estonia, the country of destination or another country where the credit was granted, including those relating to the protection of debtors or to due diligence in the credit field or the principle of good faith in this field;
 6) the credit servicer belongs to a consolidation group the structure of which does not allow to obtain the information necessary for consolidated supervision, or a company belonging to the same consolidation group as the credit servicer operates on the basis of the legislation of a foreign country and therefore the exercise of sufficient supervision is hindered;
 7) the close connection between the credit servicer and another person hinders the exercise of adequate supervision;
 8) the credit servicer or their manager has violated international sanctions or violates the procedure established by legislation for the prevention of money laundering and terrorist financing;
 9) according to the information submitted to the Financial Supervision Authority from the competent supervisory authority of a foreign country, the credit servicer has materially violated the conditions provided for in legislation of a contracting state or a third country or submitted by the competent supervisory authorities of such states;
 10) the credit servicer has failed to comply with the precept of the Financial Supervision Authority by the prescribed due date or to the prescribed extent;
 11) the credit servicer fails to perform the obligations provided for in this Act with regard to internal rules or internal control and resolution of the complaint of the debtor;
 12) it becomes evident that the credit servicer has chosen Estonia as the place of application for and registration of the activity licence with the aim of evading compliance with the requirements applicable in the foreign country where they mainly operate;
 13) the managers of credit servicer, persons with qualifying holdings, audit firms or internal auditors do not comply with the requirements provided for and prescribed for in this Act or legislation issued on the basis thereof.

 (2) Revocation of an activity licence means deprivation of the right granted by the activity licence, among other things, the right or authorisation to found a branch and the right to provide cross-border services are also invalidated by revocation of the activity licence. Before deciding on revocation of an activity licence on the basis specified in subsection 1 of this section, the Financial Supervision Authority may issue a precept to the credit servicer, setting a term for elimination of the deficiencies which are the reason for revocation.

 (3) An activity licence must be revoked on the basis of an application of the credit servicer if, pursuant to the decision of the general meeting of shareholders or the meeting of partners of the credit servicer, the company no longer engages in the provision of the services specified in subsection 2 of § 3 of this Act. If a credit servicer merges and the acquiring company continues their activities, the activity licence of the company being acquired must be revoked. If a credit institution merges with the foundation of a new company, the activity licences of the merging credit servicers must be revoked. An activity licence must also be revoked in the case of division by division. The provisions of the first sentence of this subsection also apply where the credit servicer no longer wishes to provide the services covered by the activity licence and submits an application to that effect.

 (4) In order to revoke an activity licence on the basis of an application of the credit servicer, a confirmation and evidence and documents must be submitted to the Financial Supervision Authority concerning the fact that all client relationships and client contracts have been terminated or assigned to another credit servicer holding an activity licence.

 (5) The Financial Supervision Authority may refuse to revoke an activity licence on the basis of an application specified in subsection 3 of this section if there is reason to believe that revocation of the activity licence may damage the legitimate interests of the debtors.

 (6) The Financial Supervision Authority must review the application specified in subsection 3 of this section and make a decision to revoke or refuse to revoke the activity licence within two months as of the receipt of the application.

 (7) Where appropriate, the Financial Supervision Authority must notify the competent supervisory authority of the country of destination of the credit servicer and the competent supervisory authority of the contracting state where the credit was issued of the revocation of the authorisation if it is not the country of destination of the credit servicer.

§ 14.  Informing the public

  The Financial Supervision Authority must make public information concerning the issue, amendment and revocation of an activity licence on their website not later than on the working day following the entry into force of the decision. The Financial Supervision Authority may also make a decision containing such information publicly available in full if it is important for the stability or transparency of the clients or debtors of the credit servicer or the financial sector.

§ 15.  Disclosure of data of credit servicer

 (1) On the basis of subsection 4 of § 53 of the Financial Supervision Authority Act, a credit servicer which has been granted an authorisation will be entered in the list of credit servicers on the website of the Financial Supervision Authority.

 (2) A credit servicer whose activity licence has expired or has been revoked must be immediately deleted from the list of credit servicers on the website of the Financial Supervision Authority.

§ 16.  Changes in information and circumstances which were the basis for the grant of activity licence

 (1) A credit servicer is required to immediately notify the Financial Supervision Authority of any changes in the information and circumstances in a form reproducible in writing and which constituted the basis for deciding on the grant of an activity licence to the credit servicer and, where appropriate, submit the following information and documents:
 1) in the event of a change in the business name, address of the registered office or contact details of the credit servicer, a new business name, address of the registered office or contact details;
 2) upon changes in the articles of association, the amendments to and the amended text of the articles of association;
 3) upon changes in the procedure or rules determined by the internal rules, the amended internal rules;
 4) in the case of a change of managers, information pursuant to the provisions of subsections 1 and 5 of § 39 of this Act;
 5) in the event of a change of internal auditor and audit firm, the information specified in subsections 2 and 3 of § 39 of this Act;
 6) circumstances which affect or may materially affect the financial situation of the credit servicer;
 7) other relevant information pursuant to the provisions of § 7 of this Act.

 (2) At the request of the Financial Supervision Authority, a credit servicer must promptly disclose the information and documents specified in clauses 1, 2, 4, 5 and 7 of subsection 1 of this section.

Chapter 3 Activities of credit servicer in foreign country and activities of foreign credit servicer in Estonia  

§ 17.  Activities of credit servicer in foreign country

 (1) A credit servicer founded in Estonia and holding an activity licence may engage in credit servicing activities in a foreign country by establishing a branch in a foreign country or providing cross-border services there.

 (2) A cross-border service is a credit servicer’s service which they provide in a foreign country in which neither the credit servicer nor their branch is registered. If a credit servicer engages in credit servicing activities which concern persons staying or registered in a foreign country, but the credit is issued by a credit institution or creditor established in Estonia, these activities are not considered as the establishment of a branch abroad or the cross-border provision of services.

 (3) When providing a service in a foreign country, the credit servicer must comply with the requirements for credit servicing activities and related activities prescribed in this Act and the legislation issued on the basis thereof and in the legislation of the foreign country.

§ 18.  Activities of credit servicer in other contracting state

 (1) A credit servicer wishing to register a branch in another contracting state or to provide cross-border services in another contracting state must notify the Financial Supervision Authority thereof. The following data and documents must be submitted to the Financial Supervision Authority (hereinafter in this section the information):
 1) the name of the country of destination and, if possible, the name of the contracting state where the credit was granted, if it is neither the country of destination nor Estonia;
 2) where applicable, the address of the branch in the country of destination;
 3) where applicable, the business name and address of the credit servicer in the country of destination;
 4) the names of the persons responsible for the management of the services in the country of destination, including information on how they comply with the requirements set out in § 37 of this Act;
 5) where applicable, information on the measures taken to adapt the internal rules, management procedures and internal control system of the credit servicer to ensure compliance with the rights of the credit institution or creditor provided for in the credit agreement or the legal provisions applicable to the credit agreement;
 6) where applicable, a description of the procedures for complying with the anti-money laundering and anti-terrorist financing legislation transposing Directive (EU) 2015/849 of the European Parliament and of the Council on the prevention of the use of the financial system for the purpose of money laundering or terrorist financing, amending Regulation (EU) No 648/2012 of the European Parliament and of the Council and repealing Directive 2005/60/EC of the European Parliament and of the Council and Commission Directive 2006/70/EC (OJ L 141, 05.06.2015, pp. 73-117);
 7) confirmation that the credit servicer has appropriate facilities for communication in the language of the contracting state or in the language provided for in the credit agreement;
 8) information on whether the credit servicer is authorised to receive and hold funds of the debtor in Estonia.

 (2) Where a credit servicer manages non-performing credit agreement of a credit institution, the Financial Supervision Authority must forward the information to the competent supervisory authorities of the country of destination within 45 days of receiving the information referred to in subsection 1 of this section. At the request of the Financial Supervision Authority, the above information must be submitted together with a translation made by a sworn translator or notarially certified into the official language or one of the official languages of the country of destination where the credit servicer wishes to establish a branch.

 (3) The Financial Supervision Authority must inform the credit servicer of the date on which the information was transmitted to the competent supervisory authorities of the country of destination as provided for in subsection 2 of this section and the date on which the competent supervisory authorities of the country of destination acknowledged receipt of the information.

 (4) The Financial Supervision Authority must also forward the information referred to in subsection 1 of this section to the competent supervisory authority of the contracting state in which the credit institution granted the credit, if that country is neither the country of destination nor Estonia.

 (5) The credit servicer must notify the Financial Supervision Authority if the information specified in subsection 1 of this section changes. Upon receipt of the notification, the Financial Supervision Authority must perform the acts specified in subsections 2–4 of this section.

§ 19.  Branch of credit servicer and cross-border provision of services in a third country

 (1) A credit servicer wishing to establish a branch or provide a cross-border service in a third country must apply to the Financial Supervision Authority for an authorisation (hereinafter referred to in this Chapter as the authorisation to operate in a third country).

 (2) To apply for an authorisation to operate in a third country, a credit servicer must submit to the Financial Supervision Authority a written application together with the following information and documents (application, information and documents are hereinafter in this Chapter jointly referred to as the application):
 1) the name of the third country in which the credit servicer wishes to establish a branch or provide a cross-border service;
 2) in the case of establishment of a branch, the address of the registered office of the branch in a third country, a description of the organisational structure and particulars of the persons responsible for the management in accordance with the provisions of subsections 1 and 5 of § 39 of this Act and particulars of how the persons responsible for the management meet the requirements provided for in § 37 of this Act;

 (3) an action plan containing information on all services and activities provided in the third country, including information on whether, in connection with the establishment of a branch or the cross-border provision of a service, activities or functions are outsourced to a third party in that country.

§ 20.  Processing of an application for an authorisation to operate in a third country and decision on the granting of the authorisation

 (1) The provisions of § 9 of this Act apply to the processing of applications for an authorisation for the establishment of a branch and verification of the submitted information and the financial situation, organisational structure and technical systems of the applicant and existence of sufficient resources for the establishment of a branch.

 (2) The Financial Supervision Authority must make a decision on the granting or refusal of the authorisation within two months from the receipt of all necessary data and documents, but not later than three months from the receipt of the application.

 (3) The Financial Supervision Authority must promptly notify the credit servicer of a decision to grant or refuse to grant authorisation.

§ 21.  Grounds for refusing authorisation to operate in a third country

  The Financial Supervision Authority may refuse to grant authorisation to operate in a third country if:
 1) the manager or managers of the branch do not meet the requirements for credit servicer managers laid down in this Act;
 2) the information or documents submitted upon application for the authorisation do not meet the requirements provided for in this Act or legislation established on the basis thereof, or are inaccurate, misleading or incomplete;
 3) the organisation of the credit servicer or the funds of the credit servicer are insufficient for the provision of the services specified in the action plan in a third country;
 4) the foundation of a branch in a third country or implementation of an action plan submitted by a credit servicer may damage the interests of the clients of the credit servicer or the reliability of the activities in Estonia or a third country;
 5) the competent supervisory authority of the third country has no legal basis or possibilities to co-operate with the Financial Supervision Authority due to which the Financial Supervision Authority is unable to exercise sufficient supervision over a branch established in the third country or over the services provided there.

§ 22.  Commencement of activities in third countries and notifying the Financial Supervision Authority thereof

  A credit servicer may commence the provision of services through a branch or cross-border pursuant to the provisions of the legislation of a third country concerning credit servicing activities and related activities. Before commencing activities in a third country through a branch or cross-border, the credit servicer must notify the Financial Supervision Authority of the date on which the provision of services in the third country commences.

§ 23.  Revocation of authorisation to operate in a third country

 (1) The Financial Supervision Authority may revoke an authorisation to operate in a third country if:
 1) the credit servicer has submitted false information upon application for the authorisation or false information has been submitted to the Financial Supervision Authority on behalf of the credit servicer;
 2) the credit servicer has materially violated the requirements provided by legislation concerning the credit servicing activities of the relevant foreign country and related activities;
 3) the credit servicer or their branch does not comply with the valid conditions for obtaining the authorisation;
 4) the credit servicer fails to submit reports concerning the branch or services provided in a third country to the Financial Supervision Authority in compliance with the requirements;
 5) the manager of the credit servicer or their branch does not comply with the requirements provided for in this Act or legislation issued on the basis thereof;
 6) the credit servicer has failed to comply with the precept of the Financial Supervision Authority by the prescribed due date or to the prescribed extent;
 7) the circumstances provided for in § 21 of this Act become evident.

 (2) The Financial Supervision Authority must promptly notify the credit servicer and the competent supervisory authority of the third country of a decision to revoke an authorisation to operate in a third country.

 (3) After becoming aware of the revocation of an authorisation for the foundation of a branch, a credit servicer is required to terminate the provision of services through a branch founded in that third country by the due date determined by the Financial Supervision Authority.

§ 24.  Activities in Estonia of a person established in another contracting state

 (1) A person established in another contracting state (hereinafter referred to in this section as the person), who may engage in credit servicing activities under the legislation of their country of origin, may, on the basis of an activity licence issued by the competent supervisory authority of their country of origin, engage in credit servicing activities in Estonia by establishing a branch or providing cross-border services in Estonia. The person informs the Financial Supervision Authority via the competent supervisory authority in their home country. The following data and documents must be submitted to the Financial Supervision Authority (hereinafter in this section the information):
 1) if the country of granting of credit is known to the person, the country of granting of credit, if it is neither Estonia nor the country of origin of the person;
 2) the address of the branch established in Estonia, if applicable;
 3) where applicable, the business name and address used for credit servicer in Estonia;
 4) the name of the person responsible for the management of credit servicing in Estonia;
 5) where applicable, information on the measures taken to adapt the internal rules, governance and internal control system of that person to ensure compliance with the rights of the credit institution or creditor under the credit agreement or with the Estonian legal and regulatory provisions applicable to the credit agreement;
 6) confirmation that the person has appropriate means of communication in Estonian or in the language provided for in the credit agreement;
 7) information on whether the person is authorised to receive and hold funds of the debtor in the country of origin.

 (2) The Financial Supervision Authority must notify the competent supervisory authority of the country of origin of the person concerned of the receipt of the information pursuant to subsection 1 of this section.

 (3) A person may commence the provision of services in Estonia as of the following date, whichever is earlier:
 1) after receiving the notification in accordance with subsection 2 of this section from the competent supervisory authority of their country of origin;
 2) if the Financial Supervision Authority has not forwarded the notification pursuant to subsection 2 of this section to the competent supervisory authority of another contracting state, two months after the submission of the information pursuant to subsection 1 to the Financial Supervision Authority.

 (4) A person established in another contracting state shall, when establishing a branch in Estonia, comply with the requirements laid down in §§ 41, 44 and 58–60 of this Act concerning the general organisational structure, the resolution of complaints by the debtor, the mitigation and prevention of conflicts of interest and the reporting requirements laid down in §§ 48–50.

 (5) The Financial Supervision Authority must disclose information on credit servicer in the contracting state on their website in accordance with the provisions of § 15 of this Act.

§ 25.  Activities in Estonia of a person established in a third country

  A person established in a third country may not engage in credit servicing activities in Estonia on a cross-border basis or through a branch.

Chapter 4 Acquisition of a holding in a credit servicer  

§ 26.  Qualifying holding

 (1) For the purposes of this Act, a qualifying holding is a direct or indirect holding in the share capital of a credit servicer which represents at least 20 per cent of the share capital or voting rights of the company or which makes it possible to exercise a significant influence over their management.

 (2) The determination of a qualifying holding and a controlled company must be based on the provisions of subsections 2 and 3 of § 9, § 10 and subsection 1 of § 72¹ of the Securities Market Act.

§ 27.  Requirements for persons acquiring qualifying holding

  Any person (hereinafter referred to in this Chapter as the person) may acquire, hold and increase a qualifying holding in a credit servicer or obtain, hold and increase control of a credit servicer provided that this person:
 1) is of impeccable reputation and whose activities in connection with the acquisition comply with the principles of sound and prudent management of the credit servicer, including whose financial soundness enables to ensure the regular and reliable activities of the credit servicer taking into account the current and planned nature of the business activities of the credit servicer;
 2) after acquiring or increasing a holding, selects, appoints or designates as the manager of a credit servicer only a person who meets the requirements set out in § 37 of this Act;
 3) ensures that credit servicer complies with the capital requirements and the requirements for the holding of funds laid down in this Act and that the structure of the credit servicer’s organisation enables it to be supervised effectively and to exchange information and cooperate with the competent supervisory authorities;
 4) with regard to whom there is no reasonable doubt that the acquisition is related to money laundering or terrorist financing or an attempt thereof or that the acquisition of a qualifying holding increases such risks;
 5) is not subject to an international sanction within the meaning of the International Sanctions Act.

§ 28.  Notifying the Financial Supervision Authority of the acquisition of holding

 (1) A person who intends to acquire or increase a direct or indirect qualifying holding in a credit servicer by more than 20 or 50 per cent of the share capital or the number of votes represented by shares in the credit servicer or enter into a transaction as a result of which the credit servicer becomes a company controlled by the person (hereinafter the acquirer) must notify the Financial Supervision Authority of their intention and submit the information and documents specified in subsection 1 of § 29 of this Act and in the regulation established on the basis of subsection 6 of the same section.

 (2) The provisions of this Chapter also apply if a person acquires such holding in a credit servicer due to another event or as a result of another transaction, if the holding increases by more than 20 or 50 per cent of the share capital of the credit servicer or the number of votes represented by shares or if the credit servicer becomes a company controlled by the person due to such event or transaction. In this case, a person is required to immediately notify the Financial Supervision Authority thereof, after gaining control over the credit servicer or becoming aware of the acquisition or increase of a qualifying holding.

 (3) The Financial Supervision Authority must notify the acquirer in writing within five working days of receipt of the notification or the additional information and documents referred to in subsection 1 or 2 of this section and of the possible expiry of the term of proceedings.

§ 29.  Information to be submitted to Financial Supervision Authority upon notification of acquisition of holding

 (1) Upon notification of acquisition of holding, the following information and documents must be submitted to the Financial Supervision Authority for the purpose of verifying compliance with the requirements set out in § 27 of this Act:
 1) the name of the company in which a qualifying holding is acquired or increased or which is to be controlled by the acquirer, and the size of the intended holding in that company;
 2) a description of the company being acquired which includes, inter alia, a list of shareholders indicating the number of shares held by each shareholder, or a list of partners indicating the nominal value of the share held by each partner, and information on the type and amount of shares acquired or previously held by the acquirer and the number of votes;
 3) a curriculum vitae of the acquirer who is a natural person, which includes the name, place of residence, current education, employment and service history of the acquirer and the date and place of birth of the personal identification code or, in the absence thereof, the date and place of birth, as well as documents certifying the reliability, experience, competence and impeccable reputation of the person and an extract from the criminal records database, and the extract may not be older than three months;
 4) a list of the partners or shareholders of the acquirer who is a legal person and information on the size of the shares belonging to each shareholder or member and the number of votes;
 5) the name, seat, registry code, certified copy of the registration certificate and, if the articles of association exist, a copy thereof of the acquirer who is a legal person;
 6) particulars of the members of the managing bodies of the acquirer who is a legal person, which includes the given name and surname, personal identification code or, in the absence thereof, the date and place of birth and the current course of education, employment and service, as well as documents certifying the trustworthiness, experience, competence and impeccable reputation of such persons and an extract from the criminal records database, and the extract must not be older than three months;
 7) confirmation that no international sanctions have been imposed on the acquirer of a qualifying holding who is a natural person or the acquirer of a qualifying holding which is a legal person or the members of the management bodies thereof;
 8) a description of the business activities of the acquirer and a description of the economic and other interests of the persons connected with the acquisition;
 9) a statement that in the case of the person referred to in clause 2 of § 27 of this Act, no circumstances have occurred or are occurring which, according to the law, exclude their right to be a manager of the credit servicer;
 10) the annual reports of the last three financial years of the acquirer who is a legal person, if the operating history exists to the extent specified;
 11) where possible, the credit ratings and public reports necessary for the assessment of the financial situation of the acquirer who is a natural person and the companies related to the acquirer, in the case of the acquirer who is a legal person, the credit ratings issued concerning the acquirer and, where applicable, the acquirer's consolidation group;
 12) in the case of an acquirer belonging to a consolidation group, a description of the structure of the consolidation group together with information on the size of the holding of the companies belonging to the consolidation group and the annual reports of the consolidation group and the reports of the sworn auditor;
 13) if the acquirer is a natural person, documents certifying the financial status of the person during the last three years;
 14) information and documentation on the origin of the financial and non-financial resources intended to be used to acquire or increase a qualifying holding or to obtain control of the company;
 15) the circumstances related to the acquisition of the holding pursuant to subsections 2 and 3 of § 9 and §§ 10 and 72¹ of the Securities Market Act;
 16) the size of the qualifying holding held after the acquisition of the holding and the circumstances related to the holding in accordance with subsections 2 and 3 of § 9 and §§ 10 and 72¹ of the Securities Market Act;
 17) in the event of the change of the credit servicer into a company controlled by the acquirer, the relevant action plan and other circumstances related to the exercise of control and the acquisition of a controlling interest;
 18) an overview of the strategy to be implemented in connection with the acquisition of a holding in the credit servicer if, as a result of the acquisition, the credit servicer does not become a company controlled by the acquirer.

 (2) A citizen of a foreign country must submit, instead of the extract from the criminal records database referred to in clauses 3 and 6 of subsection 1 of this section, an extract from the criminal records database of their country of origin or an equivalent document issued by a competent judicial or administrative authority, the issue of which must have taken place not more than three months after the date of issue.

 (3) The information and documents submitted to the Financial Supervision Authority must be in Estonian. With the consent of the Financial Supervision Authority, the specified information and documents may be submitted in another language.

 (4) The information and documents referred to in clauses 3 and 6 of subsection 1 of this section must be submitted to the Financial Supervision Authority on a form approved by their management board. The Financial Supervision Authority may request more data than is provided for in clauses 3 and 6 of subsection 1 of this section.

 (5) If, in the case of clause 10 of subsection 1 of this section, more than nine months have elapsed since the end of the last financial year, an audited interim report must be submitted for the first half of the financial year. A sworn auditor's report must be added to the reports if preparation of the report is prescribed by legislation.

 (6) The content of the data and documents to be submitted to the Financial Supervision Authority referred to in subsection 1 of this section may be specified by the minister in charge of the policy sector by an order.

§ 30.  Legislative proceeding and terms of proceedings

 (1) The Financial Supervision Authority must assess the acquirer's compliance with the requirements set out in § 27 of this Act and decide on the authorisation or prohibition of the acquisition of a holding within 60 working days (hereinafter the term of proceedings) of the submission of the notification referred to in subsection 3 of § 28 confirming the receipt of the data and documents necessary for the assessment.

 (2) The Financial Supervision Authority has the right to request additional information and documents within 50 working days as of the beginning of the term of proceedings.

 (3) The term of proceedings must be suspended for the period between the submission of the first request for additional information and documents specified in subsection 2 of this section by the Financial Supervision Authority and receipt of the additional information and documents requested from the acquirer, but the suspension must not last longer than 20 working days. If additional information and documents are requested, the term of proceedings must not be suspended.

 (4) If amendments are made to the information or documents specified in § 29 of this Act during the proceedings, the acquirer must immediately submit the relevant information and documents to the Financial Supervision Authority in an updated form. If the change is significant, the Financial Supervision Authority may deem the time of becoming aware of the change to be the beginning of the term of proceedings. In such case, the Financial Supervision Authority must notify the acquirer of a new term of proceedings.

 (5) If financial supervision is not exercised over an acquirer or supervision over an acquirer is exercised by a competent supervisory authority of a third country, the Financial Supervision Authority may extend the suspension of the term of proceedings specified in subsection 3 of this section to up to 30 working days.

 (6) The Financial Supervision Authority must co-operate with a competent supervisory authority of a foreign country upon assessment of the acquisition and increase of a qualifying holding or transformation of an acquirer of a credit servicer into a controlled company if this proves necessary in the opinion of the Financial Supervision Authority.

 (7) In the framework of the cooperation specified in subsection 6 of this section, the Financial Supervision Authority must consult other competent supervisory authorities. Unless otherwise provided for in this Act or the Financial Supervision Authority Act, the Financial Supervision Authority must immediately forward to another competent supervisory authority all information which is relevant for the assessment of the acquisition and increase of a qualifying holding or transformation of an acquirer into a controlled company.

 (8) The Financial Supervision Authority may refuse to review the notification specified in § 28 of this Act if the notification or the documents appended thereto contain material deficiencies, for example if the notification does not contain the information specified in subsection 1 of § 29 of this Act.

§ 31.  Requirements for acquisition of holding

 (1) The Financial Supervision Authority has the right to set a term for the acquirer during which the acquirer has the right to acquire, increase or transform a qualifying holding into a company controlled by the acquirer of the credit servicer. The Financial Supervision Authority may extend the term prescribed but the term must not exceed 12 months in total. Within the specified term, the acquirer is required to immediately notify the Financial Supervision Authority of the entry into or refusal to enter into a transaction for the acquisition or increase of a qualifying holding or for turning an acquirer of a credit servicer into a controlled company.

 (2) A qualifying holding may be acquired, increased or converted into a company controlled by the acquirer of the credit servicer, unless the Financial Supervision Authority prohibits this by their order.

§ 32.  Bases for prohibition on acquisition of holding and decision on acquisition

 (1) The Financial Supervision Authority may, by a precept, prohibit the acquisition or increase of a qualifying holding or the turning of the acquirer of a credit servicer into a controlled company if:
 1) the acquirer does not meet the requirements laid down in this Act;
 2) the acquirer fails to submit the information or documents provided for in this Act or requested pursuant to this Act to the Financial Supervision Authority;
 3) the information or documents submitted to the Financial Supervision Authority do not comply with the requirements provided for in this Act or other legislation or they are incorrect, misleading or incomplete or on the basis of the submitted information and documents the Financial Supervision Authority cannot eliminate reasonable doubt as to the unsuitability of the acquisition of the holding and the fact that the acquisition of the holding does not comply with the requirements provided for in this Act;
 4) the credit servicer would become a company controlled by a person residing or located in a third country and sufficient supervision is not exercised over the person in the country of residence or seat thereof or the competent supervisory authority of the third country has no legal basis or possibility to co-operate with the Financial Supervision Authority;
 5) the Financial Supervision Authority has reasonable grounds to suspect that the acquisition is being made in the interest of a third party or that the acquisition will result in the exercise of someone else's rights.

 (2) The Financial Supervision Authority must forward a decision to the acquirer concerning the authorisation to acquire the qualifying holding or a prohibiting precept within two working days after adoption of the decision but prior to the expiry of the term of proceedings. If supervision over an acquirer is exercised by a competent supervisory authority of another Contracting State, the decision must set out, inter alia, the assessment of the supervisory authority concerning the acquisition and increase of a qualifying holding or transformation of the acquirer into a controlled company.

 (3) If the circumstances specified in subsection 1 of this section become evident after the acquisition or increase of a qualifying holding or turning the acquirer of a credit servicer into a controlled company, the Financial Supervision Authority may issue a precept according to which the acquisition of a holding or turning the acquirer of a credit servicer into a controlled company is deemed to be in conflict with this Act.

 (4) The Financial Supervision Authority has the right, by a precept, to prohibit or restrict the exercise of voting rights or other rights enabling control in the credit servicer by an acquirer or a person who has a qualifying holding in the credit servicer or whose controlled company is the credit servicer at any time if the circumstances specified in subsections 1 or 3 of this section exist. The Financial Supervision Authority may issue a precept on the basis of this subsection regardless of the issue of the precept provided for in subsections 1 and 3. The Financial Supervision Authority must publish a precept or a part thereof on their website at the request of the acquirer or, if necessary, on their own initiative.

 (5) If the acquirer or a person who has a qualifying holding in a credit servicer or who controls the credit servicer is a credit institution, management company, investment fund, investment firm, insurance undertaking, payment institution, e-money institution, another person subject to financial supervision or a person belonging to the same consolidation group as the aforementioned person, the Financial Supervision Authority must notify the competent supervisory authority of the contracting state of issue of the precept specified in subsections 3 or 4 of this section.

 (6) Compliance with the precepts of the Financial Supervision Authority specified in subsections 1, 3 and 4 of this section is also mandatory for a credit servicer, the registrar of their share register and other persons who organise the exercise of voting rights.

§ 33.  Consequences of illegal acquisition of holding

 (1) As a result of a transaction involving the acquisition or increase of a qualifying holding, a person will not acquire the voting rights attaching to shares or otherwise, and the votes represented by the holding will not be counted in the quorum for a general meeting or a meeting of partners, if:
 1) the transaction is in conflict with an earlier precept of the Financial Supervision Authority;
 2) the Financial Supervision Authority has issued a precept pursuant to subsection 3 of § 32of this Act;
 3) the Financial Supervision Authority has not been notified of the transaction pursuant to the procedure provided for in § 28 of this Act;
 4) the transaction has been effected after the expiry of the time limit referred to in subsection 1 of § 31 of this Act or before the expiry of the time limit referred to in § 30 of this Act, or before the acquisition of a qualifying holding was authorised under this Act.
 2) As a result of such transaction in the case of which any of the circumstances specified in subsection 1 of this section exist, the person will not have any rights which would transform the credit servicer into a company controlled by the person.

 (3) If, as a result of such a transaction in the case of which any of the circumstances specified in subsection 1 of this section existed, votes representing qualifying holdings acquired or increased were included in the quorum of the general meeting or meeting of partners and affected the adoption of the resolution of the general meeting or meeting of partners, the resolution of the general meeting or meeting of partners is void. On the basis of an application of the Financial Supervision Authority, a shareholder or a partner of the managing body of a company, a court may declare a resolution of the general meeting or meeting of partners void if the application is submitted within six months as of the adoption of the resolution of the general meeting or meeting of partners.

 (4) If rights enabling control arising from a transaction by which a credit servicer was to become a company controlled by a person and in the case of which any of the circumstances specified in subsection 1 of this section exist, a court may declare the exercise of such rights invalid on the basis of an application of the Financial Supervision Authority, a shareholder or a partner of the managing body of a company if the application is submitted within three months as of the exercise of the rights.

§ 34.  Giving notification of changes in qualifying holding

 (1) If a person intends to dispose of shares or an interest to the extent that they would lose a qualifying holding in a credit servicer or reduce their holding below any of the amounts specified in subsection 1 of § 28 of this Act or relinquish control over a credit servicer, they must notify the Financial Supervision Authority of this intention without undue delay, indicating in the notification the number of shares or an interest held, to be disposed of and to be retained after the transaction.

 (2) The provisions of subsection 1 of this section also apply if a person loses control over a credit servicer or qualifying holding in a credit servicer due to another event or as a result of a transaction or if the person's holding decreases below one of the rates specified in subsection 1 of § 28 of this Act. In such case the person must notify the Financial Supervision Authority promptly after becoming aware of having lost the qualifying holding, having lost control or decrease of the qualifying holding thereof.

 (3) Upon becoming aware of the transactions specified in subsections 1 and 2 of § 28 of this Act and subsections 1 and 2 of this section, the credit servicer is required to immediately notify the Financial Supervision Authority thereof.

 (4) Within two weeks after the general meeting, but not later than six months after the end of the financial year, a credit servicer must submit to the Financial Supervision Authority information concerning persons who as at the end of the financial year held a qualifying holding in the credit servicer, indicating the size of the holding belonging to the person and the circumstances related to the holding thereof pursuant to the provisions of §§ 26 and 28 of this Act.

Chapter 5 Credit servicer management and organisation structure  

§ 35.  Registered office and head office

 (1) The registered office and the place of permanent and continuous economic activities of a credit servicer entered in the commercial register in Estonia and authorised by the Financial Supervision Authority must be in Estonia.

 (2) The articles of association of a credit servicer must determine that the registered office and head office of the credit servicer are in Estonia.

§ 36.  Number of members of supervisory board and management board

 (1) If a credit servicer prescribes a supervisory board, it must have at least three members unless the articles of association prescribe a higher number of members. In view of the size, nature and scope of the activities of a credit servicer, the Financial Supervision Authority may require the presence of a supervisory board in the credit servicer.

 (2) The management board of a credit servicer must have at least two members.

§ 37.  Requirements for the selection and appointment of the manager

 (1) A person of sufficiently good repute may be elected or appointed as the manager of a credit servicer.

 (2) A person has not sufficiently good repute if the Financial Supervision Authority has established circumstances that cast doubt on the existence of an irreproachable reputation or confirm the lack thereof. When assessing a person's reputation, the Financial Supervision Authority takes into account, among other things, whether the person has been accused or suspected of an offence or otherwise involved in an offence, or whether the person has committed an unlawful, fraudulent or abusive act or has been involved in an unlawful, fraudulent or abusive act or its investigation or supervision.

 (3) A person has not sufficiently good repute, inter alia, if:
 1) they have been convicted of a criminal offence in the first degree or they have been punished for financing or supporting an offence against property, economic, professional, public trust or an offence against a person or an act of terrorism or activities aimed at the commission thereof or an offence related to the issue of consumer credit and their information concerning their punishment has not been deleted from the criminal records database pursuant to the Criminal Records Database Act;
 2) they engage in or has engaged in usury as provided for in subsection 4 of § 39 of the Creditors and Intermediaries Act;
 3) they are subject to an international sanction;
 4) they have not acted in a transparent, open and cooperative manner in their previous dealings with supervisory authorities, or they have misrepresented information or omitted to provide material information to supervisory authorities;
 5) the person is the subject of insolvency proceedings or bankruptcy proceedings, unless the person has been discharged by a court from the obligations outstanding in the bankruptcy proceedings;
 6) an act or omission of the person has resulted in the bankruptcy of a creditor, credit intermediary, credit institution, investment firm or other person subject to financial supervision or revocation of the authorisation thereof on the initiative of a financial supervision authority;
 7) they have been subjected by a court to a prohibition on engaging in business activities pursuant to § 49 of the Penal Code or a prohibition on engaging in business activities pursuant to § 49¹ of the Penal Code, as well as if they have been subjected to a prohibition on engaging in business activities or a prohibition on working in a certain profession or occupation prescribed by law or by a court decision, or has been punished for a violation of such a prohibition.

 (4) The cumulation of minor incidents must not affect the good repute of a person, unless such incidents, taken as a whole, are significant and, inter alia, indicative of systemic failures.

 (5) The managers of credit servicer as a whole must have sufficient knowledge and experience to manage the undertaking in a competent and responsible manner.

 (6) The person selected as the manager of credit servicer must have the necessary time to perform the duties of the position and must be a member of the managing body in terms of knowledge, skills and experience.

 (7) It is prohibited to elect or appoint a person as the manager of the credit servicer or a member of the supervisory board or management board of the parent undertaking or a company belonging to the same consolidation group as the parent undertaking or a person whose previous activities have resulted in the bankruptcy or compulsory liquidation of the company or the revocation of the activity licence of the company or who is subject to a prohibition on business or whose previous activities as the manager of the company have shown that they are unable to organise the management of the company in such a way that the interests of the shareholders, partners, members, creditors and consumers of the company are sufficiently protected or whose previous activities have shown that they are not suitable to manage the company for other good reason.

§ 38.  Responsibilities and tasks of managers and employees

 (1) The managers and employees of a credit servicer must act with the prudence and diligence expected of them and in accordance with the requirements of their position, placing the economic interests of the credit servicer and their clients and debtors before their own economic interests. The managers of a credit servicer must be able to organise the activities of the credit servicer in such a way that the interests of the consumer debtors in particular are sufficiently protected.

 (2) Credit servicer staff are obliged to provide their services lawfully, with sufficient competence, accuracy and diligence and to provide appropriate information to debtors.

 (3) Managers of credit servicer must ensure that the structure of the credit servicer organisation is transparent with clearly defined lines of responsibility, and that procedures are in place for the identification, measurement, management, ongoing monitoring and reporting of risks that are adequate and proportionate to the nature, scale and complexity of the activities of credit servicer.

 (4) The management board of the credit servicer is required to verify that the rules and other rules of procedure established on the basis of this Act are up to date, assess their effectiveness and implement appropriate measures for elimination of deficiencies.

 (5) For the purposes of this Act, an employee is a natural person who works for a credit servicer on the basis of an employment contract or another contract under the law of obligations and whose duties include activities related to the provision of services in the name of the credit servicer, including representing the credit servicer or managing or controlling the credit servicer.

 (6) The minister in charge of the policy sector may, by order, prescribe more specific duties and tasks for the managers and employees of the credit servicer.

§ 39.  Notification of Financial Supervision Authority of managers, internal auditor and audit firm

 (1) The written consent of a person is required for the election or appointment of a director of a credit servicer. Together with the written consent, a person must submit to the Financial Supervision Authority at least the following information and documents:
 1) name and surname, in case of a change of name, former name and the date and reason for the change, personal identification number or, in the absence thereof, date of birth, nationality, place of residence, contact details, a description of the educational background, a complete list of jobs and positions, information on the term and place of office and, in the case of a member of the management board, a description of their area of responsibility, as well as documents confirming their reputation and reliability and compliance with the requirements of this Act;
 2) information on companies in which they hold more than 20 per cent of the capital, including the size of the share capital and a list of activities;
 3) details of any conflicts of interest and of the person's time devoted to the performance of their duties;
 4) a statement that they do not have any circumstances provided for in this Act which exclude the right to be a manager of the credit servicer;
 5) an extract from the criminal records database or, in the case of citizen of a foreign country, an extract from the criminal records database of their country of origin or residence, or an equivalent document issued by a competent judicial or administrative authority, provided that the extract may not be more than three months old.

 (2) In the event of the selection or appointment of an audit firm, the credit debt collection agency must immediately submit to the Financial Supervision Authority the name of the audit firm and the signatory of the statutory auditor's report and a confirmation that there are no circumstances that preclude them from being an audit firm of the credit servicer. Confirmation must also be provided in the event of a change in the signatory of the statutory auditor's report.

 (3) In the event of selection or appointment of an internal auditor, the credit servicer must submit to the Financial Supervision Authority the name of the internal auditor, their identification number and the internal auditor's confirmation that there are no circumstances that preclude them from being an internal auditor of the credit servicer.

 (4) The credit servicer is required to notify the Financial Supervision Authority of the intention to elect or appoint a manager, internal auditor or audit firm, of the extension of the authority, of their resignation or of the initiation of the recall before the expiry of the term of authority at least ten days before making a corresponding decision or immediately after receipt of a corresponding application. The term specified in the previous sentence does not apply if prior notification is not possible for good reasons.

 (5) The information specified in this section must be submitted on a form approved by the Financial Supervision Authority. The Financial Supervision Authority may request additional information in addition to the information provided for in subsection 1 of this section.

§ 40.  Removal, non-election and non-appointment of the manager of a credit servicer

 (1) The Financial Supervision Authority has the right to demand, by a precept, the removal or non-election or non-appointment of the manager of a credit servicer in the following cases:
 1) the person does not comply with the requirements established for managers in this Act;
 2) the person has submitted misleading or incorrect information or false documents in connection with their election or appointment;
 3) the activity of the person as the manager of the credit servicer has shown that the person is unable to manage the credit servicer reliably and securely or organise the management of the credit servicer in such a way that the interests of clients and debtors are sufficiently protected.

 (2) If a credit servicer fails to comply with a precept specified in subsection 1 of this section in full or by the due date, the Financial Supervision Authority has the right to revoke the activity licence of the credit servicer.

§ 41.  Internal rules

 (1) The management board of a credit servicer must establish by a resolution the rules of procedure which organise the activities of the credit servicer and their managers and employees (hereinafter the internal rules) pursuant to which compliance with the legislation regulating the activities of the credit servicer and the decisions of the managers of the credit servicer and the legal and regular provision of services must be ensured.

 (2) The internal rules must determine the level of knowledge, skills and experience of managers and employees required to perform the functions of specific positions within the credit servicer. The level of knowledge and competence must be determined taking into account the qualifications and professional experience necessary for the performance of the duties related to the position or the place of employment.

 (3) The internal rules must establish appropriate arrangements and procedures to ensure effective and sound management, including segregation of duties, business continuity and the avoidance of conflicts of interest. The management board oversees the implementation of policies and procedures in a way that promotes market integrity and the interests of customers and debtors.

 (4) The internal rules must determine, inter alia:
 1) the procedure for the movement of internal information and documents, including the requirements for submission and forwarding of information;
 2) the procedure for processing data of debtors who are legal persons and personal data of debtors who are natural persons in accordance with Regulation (EU) 2016/679 of the European Parliament and of the Council 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 (General Data Protection Regulation) (OJ L 119, 04.05.2016, pp. 1-88);
 3) the duties or functions of employees, relationships of subordination, reporting chains, procedure for submission of reports and delegation of rights, providing for the separation of functions upon assumption of obligations in the name of the credit servicer, recognition of services in accounting and reports and assessment of risks;
 4) the procedure for assessment of suitability of managers;
 5) a description and action plan for mitigating and avoiding conflicts of interest and mitigation measures;
 6) the procedure for outsourcing the activities related to the provision of the service, including the requirements for the qualification of the provider of credit servicing service;
 7) procedures for record keeping, maintenance of databases and data handling;
 8) internal rules of procedure determining the security of the IT systems used and the systems for the safekeeping of the debtor's funds and their regular monitoring;
 9) the procedures for the operation of the internal control system and risk management rules and the procedures for their implementation;
 10) internal rules of procedure for the receipt, processing and forwarding of notices and for dealing with the consequences of violation or possible violation of obligations established in the legislation regulating the activities of a credit servicer;
 11) accounting policies and procedures;
 12) the procedures for verifying the conformity of the activity, where branches exist;
 13) the procedure for providing the debtor with information and warnings relating to the non-performance of the credit agreement;
 14) the procedure for registering and resolving complaints by the debtor;
 15) policies to ensure compliance with the legal provisions relating to the protection of debtors and fair and diligent treatment, including taking into account their financial situation and, where appropriate, their need for the services of a debt counsellor or other social service provider;
 16) the arrangements for the preparation and submission of reports for supervisory purposes, including the composition and regularity of the reports, the staff responsible for the relevant tasks, the information systems to be used and the internal control procedures to verify the accuracy of the information provided.

 (5) The minister in charge of the policy sector may establish by an order more specific requirements for internal rules.

§ 42.  Internal control system

 (1) An adequate internal control system must be established and implemented in the credit servicer with the aim of ensuring compliance of the activities of the credit servicer with this Act, the internal rules in force and the decisions adopted at all levels of management and operation of the credit servicer.

 (2) In order to exercise internal control, the internal rules of the credit servicer must establish the policies and rules for the identification, mitigation or prevention of legal risks arising from failure to perform the obligations arising from this Act and other risks related thereto in connection with the provision of services to clients and credit servicing. Those policies and rules must enable the Financial Supervision Authority to perform their supervisory functions effectively.

 (3) The supervisory board of the credit servicer or, in the absence thereof, the meeting of partners must appoint an internal auditor or a person (hereinafter the internal auditor) who has the knowledge, skills, experience, education, professional suitability and impeccable business reputation necessary for the performance of the duties of an internal auditor. An internal auditor must be governed by the requirements and the legal bases for the activities established for a certified internal auditor in the Auditors Activities Act. An internal auditor must not perform duties which create or may create a conflict of interests.

 (4) An internal auditor must ensure that:
 1) the compliance of the activities of the credit servicer and their managers and employees with this Act and legislation issued on the basis thereof, precepts of the Financial Supervision Authority, decisions of managing bodies, internal rules, contracts entered into by the credit servicer and good practice is regularly checked and the compliance of the internal rules and decisions established by the credit servicer with legislation and the suitability and effectiveness of measures taken to eliminate deficiencies in the performance of the obligations of the credit servicer is assessed;
 2) the persons responsible for the provision of credit servicing services are advised on issues related to the performance of the obligations provided for in this Act;
 3) reports related to the performance of the obligations specified in clauses 1 and 2 of this subsection must be submitted regularly to the management board of the credit servicer and, if the supervisory board exists, to the supervisory board.

 (5) The credit servicer must ensure that the internal auditor has all the working conditions and rights necessary for the performance of their duties, including the right to obtain explanations and information from the managers and employees of the credit servicer and the opportunity to monitor the elimination of discovered deficiencies and compliance with the proposals made.

 (6) An internal auditor is required to forward immediately in writing, in addition to the managers of the credit servicer, in the absence of the supervisory board, the partners or their representatives and the Financial Supervision Authority, any information which becomes known to them concerning the credit servicer and which indicates or may indicate a material offence or damage to the interests of the debtor.

§ 43.  Outsourcing of activities of credit servicer

 (1) A credit servicer may outsource credit servicing activities to a provider of credit servicing service (hereinafter the outsourcing of activities) provided that they enter into a written contract and the credit servicer remains fully liable for the performance of all the obligations provided for in this Act and legislation issued on the basis thereof and if:
 1) a contract for outsourcing of activities entered into between a credit servicer and a provider of credit servicing service determines the obligation of the provider of credit servicing service to comply with the rules arising from legislation, including the relevant rules of European Union and foreign legislation, which are applicable to the claims of the credit institution or creditor provided for in the credit agreement or to the credit agreement;
 2) outsourcing of activities does not lead to a situation where the credit servicer themselves is no longer engaged in the credit servicing activities for which it has been issued an activity licence;
 3) the contract for outsourcing of activities does not change the contractual relationship between the credit servicer and the credit purchaser or the obligations of the credit servicer to the credit purchaser or the debtor;
 4) the outsourcing of activities does not revoke or change any other conditions on the basis of which the activity licence of the credit servicer was granted;
 5) outsourcing of activities does not prevent the exercise of financial supervision over the credit servicer to the necessary level;
 6) the credit servicer retains direct access to information concerning the outsourced activities after the outsourcing of the activity;
 7) after the termination of the contract for outsourcing of activities, the credit servicer has the competence and resources to engage in outsourced credit servicing activities;
 8) outsourcing of activities does not hinder or affect the quality, reliability or functioning of the internal control of the credit servicer;
 9) by outsourcing the activities, the members of the management body of the credit servicer do not delegate their responsibility and the outsourcing of the activities does not otherwise damage the interests of the clients or the debtors;
 10) outsourcing of activities does not hinder the activities of the credit servicer and the performance of their obligations at the necessary level or reduce the quality of provision of services;
 11) the provider of credit servicing service has the necessary knowledge and skills and is able to perform these obligations;
 12) upon outsourcing of activities, the credit servicer must take all measures to avoid additional risks to the activities of the credit servicer;
 13) other requirements arising from this Act are met.

 (2) A credit servicer may also transfer activities other than credit servicing activities to third parties, but only on the condition that the credit servicer remains fully liable for the performance of all the obligations provided for in this Act and legislation issued on the basis thereof.

 (3) Before outsourcing activities to a provider of credit servicing service or other third parties, the credit servicer must notify the Financial Supervision Authority. Where appropriate, the competent supervisory authorities of the country of destination must be informed in the case of a credit agreement concluded by the credit institution.

 (4) A credit servicer must preserve a contract for outsourcing the activities specified in subsections 1 or 2 of this section and essential written instructions given to a provider of credit servicing service for at least five years but not longer than ten years after termination of the contract for outsourcing of activities.

 (5) The Financial Supervision Authority has the right to demand a contract for outsourcing of the activities specified in subsection 1 of this section and other documents and information specified in subsection 4 of this section from a credit servicer and a provider of credit servicing service.

 (6) A provider of credit servicing service to whom the activities of a credit servicer have been outsourced must not be permitted to receive the funds of the debtor which have been granted to the debtor by a credit agreement entered into by the credit institution. The foregoing does not apply in the case of another credit servicer which has been so authorised. In the case of a credit agreement entered into by a creditor, the provider of credit servicing service may accept the funds of the debtor only if the provider of credit servicing service transfers the funds to the credit servicer as soon as possible.

 (7) The Financial Supervision Authority has the right to issue a precept which requires the termination of the outsourcing of activities related to a credit servicer to a specific provider of credit servicing service or another third party or the termination of the outsourcing of all activities entered into by the credit servicer with the providers of credit servicing services or other third parties if:
 1) the legitimate interests of the clients of the credit servicer or the rights of the debtors are violated or there is a risk of such violation or if the stability or reliability of the provision of the service is threatened;
 2) the competent supervisory authority of a third country which exercises supervision over a third country person has no legal basis or possibilities for co-operation with the Financial Supervision Authority;
 3) the provider of credit servicing service or any other third party established in a third country does not comply with requirements at least equivalent to those laid down in this Act;
 4) other conditions provided for in this Act are violated.

Chapter 6 Requirements for activities of credit servicer  

§ 44.  Keeping the file related to the management of credit agreement

 (1) The credit servicer must keep a file (hereinafter referred to in this section as the file) of the necessary data and documents collected for the purpose of the administration of the credit agreement from the moment it is appointed to administer the non-performing credit agreement or the claim arising therefrom. If the credit purchaser does not appoint a credit servicer as their representative, the file must be kept by the credit purchaser. The file is kept separately for each debtor.

 (2) The credit servicer or, where applicable, the credit purchaser must ensure that the necessary information and documents of the debtor are kept on file throughout the period during which the claim is being managed.

 (3) In order to collect a delayed consumer credit contract or a claim arising therefrom from a credit institution or creditor from the credit file provided for in § 48 of the Creditors and Credit Intermediaries Act concerning the granting, monitoring and assessment of consumer credit, the credit servicer or, where applicable, the credit purchaser has the right to obtain the information which has been collected concerning a specific consumer in order to comply with the principle of responsible lending, including data on payment transactions made by the consumer during the period which served as the basis for the assessment of creditworthiness in a form which enables to obtain an overview of the payment transactions of the consumer by types of income and expenses. The credit institution or creditor may provide further clarification on the assessment of the consumer's creditworthiness. A credit servicer or a credit purchaser may use the received information only for the intended purpose and in connection with the management of the non-performing credit agreement or claim arising therefrom for the purposes of subsection 2 of § 3 of this Act.

 (4) The credit servicer or, where applicable, the credit purchaser, must preserve the information and documents specified in subsections 1 and 3 of this section for at least five years after termination of the contract for the management of the claim, but not for longer than ten years.

 (5) The file must provide sufficient information to the person responsible for the management of the credit agreement, as well as to the internal auditor and the auditor and the Financial Supervision Authority on the management and amendment of the credit agreement. Upon such inquiry, the credit servicer is required to forward the file related to the consumer credit contract also to the Consumer Protection and Technical Regulatory Authority.

§ 45.  Entry into credit servicing agreement

 (1) If the credit purchaser does not themselves engage in credit servicing activities, including taking into account the provisions of subsection 7 of § 3 this Act, an agreement (hereinafter the credit servicing agreement) must be concluded between the credit purchaser and the credit servicer, credit institution or creditor for the management of the credit agreement. The credit servicing agreement must contain at least the following:
 1) a detailed description of the credit servicing activity, including the deadlines and other material terms and conditions when and according to which the amounts paid by the debtor will be transferred to the credit purchaser;
 2) the amount of remuneration paid to the credit servicer, credit institution or creditor or the method of calculation thereof;
 3) the extent to which the credit servicer, the credit institution or the creditor can represent the credit purchaser in relations with the debtor;
 4) the obligation of the parties to comply with the requirements of the credit institution or creditor laid down in the credit agreement or the rules of European Union and national law applicable to the credit agreement;
 5) the obligation of the parties to treat the debtor fairly and diligently;
 6) the obligation of the credit servicer, credit institution or creditor to notify the credit purchaser before outsourcing the credit servicing activities to the provider of credit servicing service.

 (2) A credit servicer, credit institution or creditor must preserve a credit servicing agreement for at least five years but not longer than ten years after the date of termination of the credit servicing agreement and the following information:
 1) correspondence between the credit purchaser and the debtor;
 2) the instructions received from the credit purchaser in respect of any non-performing credit agreement or any claim arising therefrom.

 (3) A credit servicer, credit institution or creditor undertakes to forward to the Financial Supervision Authority all the information specified in subsection 2 of this section.

Chapter 7 Requirements for capital of credit servicer and holding of funds of debtor  

§ 46.  Share capital of credit servicer

 (1) The share capital of a credit servicer must be fully paid up.

 (2) The share capital of a credit servicer must be at least 25,000 euros.

§ 47.  Payment by the debtor in connection with performance of the obligation and holding of funds related thereto

 (1) The credit servicer must keep the funds paid for the performance of the obligations of the debtor in a separate payment account. The credit servicer must not use such funds in their economic activities even if the credit servicer has entered into a credit servicing agreement with the credit purchaser which prescribes the receipt of such funds from the debtor.

 (2) The credit servicer must open a payment account specified in subsection 1 of this section only in a credit institution founded in Estonia or another contracting state.

 (3) The credit servicer must promptly submit relevant information concerning the payment accounts specified in subsection 1 of this section to the Financial Supervision Authority and must immediately notify the Financial Supervision Authority if the information changes.

 (4) The funds paid in the payment account specified in subsection 1 of this section for the performance of the obligations of the debtor are not included in the bankruptcy estate of the credit servicer and cannot be used as target assets for satisfaction of the claims of creditors or conduct of bankruptcy proceedings.

 (5) If the debtor makes a payment to the credit servicer for the payment of part or all of the obligation related to the credit agreement, the credit servicer must submit to the creditor a certificate or confirmation of payment on paper or on another durable medium which must indicate the reduction of the amount owed to the debtor.

 (6) Payments made by the debtor to the credit servicer must be deemed to have been paid to the credit purchaser regardless of whether or not the credit servicer has forwarded such amounts to the credit purchaser.

Chapter 8 Accounting and reporting  

§ 48.  Organisation of accounting

 (1) Accounting and reporting must be organised pursuant to the provisions of this Act, the Accounting Act, the articles of association of the credit servicer and the accounting policies and procedures and other legislation related to accounting.

 (2) The accounting must ensure the receipt of true information concerning the financial situation and economic activities of the credit servicer.

 (3) If a credit servicer has the right to receive and hold funds from a debtor, the credit servicer must recognise the funds received from the creditor in their balance sheet until they are transferred to the credit purchaser. The credit servicer must disclose information concerning the funds received from the debtor but not transferred to the credit purchaser in their annual accounts.

§ 49.  Reports and their submission to the Financial Supervision Authority

 (1) The credit servicer must submit to the Financial Supervision Authority the annual report approved by the general meeting together with the sworn auditor's report within two weeks after the general meeting of shareholders or partners, but not later than six months after the end of the financial year. If the credit servicer has published such reports on their website or submitted them to the commercial register within six months after the end of the financial year, the credit servicer need not submit them to the Financial Supervision Authority.

 (2) The Estonian branch of the credit servicer and the credit servicer in another contracting state must submit to the Financial Supervision Authority reports other than those referred to in subsection 1 of this section in accordance with the procedure provided for in this Act and the legislation issued on the basis thereof.

 (3) The period of regular reports provided for in subsection 2 of this section is a quarter and the reports must be submitted to the Financial Supervision Authority within one month after the end of the reporting period, unless otherwise provided for in this Act and legislation issued on the basis thereof. If the last date of submission of the report falls on a day off, the regular report must be submitted no later than on the first working day following the day off.

 (4) In addition to the provisions of this section, the Financial Supervision Authority has the right to demand single or regular reports and information if these are necessary for the exercise of supervision to the extent provided for in this Act.

 (5) On the basis of the reports submitted to the Financial Supervision Authority, the Financial Supervision Authority or the credit servicer may submit information to the Ministry of Finance for the performance of functions arising from the Government of the Republic Act and to Eesti Pank for the performance of functions arising from law.

 (6) The forms, the methodology of preparation and the procedure for submission of the reports of the credit servicer, foreign branch of credit servicer and credit servicer providing cross-border services in Estonia to the Financial Supervision Authority must be established by an order of the minister in charge of the policy sector.

§ 50.  Verification of reports submitted to Financial Supervision Authority, elimination of deficiencies and preservation of source data

 (1) The Financial Supervision Authority must verify the compliance of the supervisory report specified in subsections 2–4 of § 49 this Act with the requirements at the earliest opportunity after receipt of the report.

 (2) If the Financial Supervision Authority identifies deficiencies in the supervisory report, it must notify the person who submitted the report thereof.

 (3) In the case provided for in subsection 2 of this section, the person who submitted the supervisory report is required to eliminate the deficiencies and submit the corrected report to the Financial Supervision Authority without undue delay. A corrected report must also be submitted to the Financial Supervision Authority if the person who submitted the report identifies an error in the data submitted earlier or if the audited data differ from the previously submitted unaudited data.

 (4) The person who submitted the report is required to preserve the documents which are the source of the source data used in the preparation of the supervisory report for five years. This term does not restrict the right of a credit servicer to preserve data and documents for a longer period of time if the credit servicer has other legal basis for processing such data and documents.

§ 51.  Auditing

 (1) The annual accounts of the credit servicer must be audited.

 (2) A trustworthy person specified in subsection 2 of § 7 of the Auditors Activities Act and with sufficient knowledge and experience may be appointed an audit firm of the credit servicer.

 (3) On the basis of an application of the Financial Supervision Authority, the court of the registered office of the credit servicer must appoint an audit firm if:
 1) the general meeting has not appointed an audit firm;
 2) the audit firm appointed by the general meeting waives the performance of the audit;
 3) according to the opinion of the Financial Supervision Authority, the audit firm has lost confidence.

 (4) The authority of an audit firm appointed by the Financial Supervision Authority must continue until the general meeting or meeting of partners appoints a new audit firm.

§ 52.  Notification obligation of audit firm

 (1) An audit firm is required to immediately notify the Financial Supervision Authority in writing of circumstances which become known to it in the course of the audit of the credit servicer and which result or may result in:
 1) material violation of the requirements of the legislation regulating the activities of the credit servicer;
 2) the risk of interruption of the further activities of the credit servicer;
 3) the amended sworn auditor's report on the annual accounts;
 4) a situation due to which the credit servicer is unable to perform their obligations or a risk of such situation;
 5) material proprietary damage arising from the acts of the manager or employee of the credit servicer to the credit servicer or the debtor.

 (2) The forwarding of information to the Financial Supervision Authority pursuant to subsection 1 of this section must not violate the obligation to maintain professional secrecy prescribed in the Auditors Activities Act or the confidentiality requirement imposed on an audit firm by a contract.

Chapter 9 Transformation, merger, division, dissolution and bankruptcy 

§ 53.  Transformation

  The transformation of a credit servicer is permitted only from a private limited company to a public limited company.

§ 54.  Merger

 (1) The merger of a credit servicer must take place pursuant to the procedure provided for in the Commercial Code unless otherwise provided by this Act.

 (2) If a credit servicer is an acquiring company and they continue their activities as a credit servicer, they must immediately notify the Financial Supervision Authority after entry of their merger in the commercial register and submit information concerning the changed information pursuant to the provisions of § 16 of this Act.

 (3) In the event of a merger of a credit servicer with another company pursuant to the provisions of subsection 1 of § 391 of the Commercial Code or by foundation of a new company pursuant to the provisions of subsection 2 of the same section, the activity licence of a credit servicer will not be transferred.

 (4) If a credit servicer merges by establishing a new company or merges with another merging company which does not have a licence to act as a credit servicer, they must apply for an activity licence in accordance with §§ 7–9 of this Act before the merger is entered in the commercial register.

 (5) Before making a merger decision, a confirmation and evidence and documents must be submitted to the Financial Supervision Authority concerning which client contracts have been terminated or the claims have been assigned to another credit servicer holding an appropriate activity licence.

§ 55.  Division

 (1) The division of a credit servicer must take place pursuant to the procedure provided for in the Commercial Code, unless otherwise provided by this Act.

 (2) In the event of division of a credit servicer by separation pursuant to the provisions of subsection 4 of § 434 of the Commercial Code, the activity licence will not be transferred to the company being separated. If, in the case of division by way of separation, the credit servicer being divided continues their activities as a credit servicer, they must immediately notify the Financial Supervision Authority after entry of their division in the commercial register and submit information concerning the changed information pursuant to the provisions of § 16 of this Act.

 (3) In the event of division of a credit servicer by distribution pursuant to the provisions of subsection 2 of § 434 of the Commercial Code, the activity licence of the credit servicer will not be transferred and its term of validity will expire.

 (4) In the case of division, upon transfer of the assets of a credit servicer to an acquiring company which is not a credit servicer, the acquiring company must apply for an activity licence to operate as a credit servicer pursuant to the provisions of §§ 7–9 of this Act before entry of the division in the commercial register.

 (5) Before making a decision for division, the credit servicer must submit to the Financial Supervision Authority a confirmation and evidence and documents concerning which client contracts have been terminated or assigned to another credit servicer holding a corresponding activity licence.

§ 56.  Dissolution

 (1) A credit servicer must be dissolved pursuant to the procedure provided for in the Commercial Code unless otherwise provided by this Act.

 (2) The dissolution of a credit servicer may take place only with the permission of the Financial Supervision Authority.

 (3) In order to obtain an authorisation for dissolution of a credit servicer, the credit servicer must submit to the Financial Supervision Authority an application to which the following information and documents will be appended:
 1) a resolution on dissolution of the general meeting or meeting of partners of the credit servicer, which must set out, inter alia, the resolution on application for authorisation for dissolution from the Financial Supervision Authority;
 2) an assessment of the effect of the dissolution on the interests of their clients and debtors by the credit servicer;
 3) a confirmation and evidence and documents certifying it that all client relationships and client contracts have been terminated or transferred to another credit servicer;
 4) a regular report of the credit servicer concerning the period from the last submission of the regular report until the making of the decision specified in clause 1 of this subsection.

 (4) The provisions of § 9 of this Act apply to the processing of applications for authorisation for dissolution of a credit servicer, verification of the submitted information and verification of whether the dissolution of the credit servicer corresponds to the interests of their clients and debtors.

 (5) The Financial Supervision Authority must make a decision to grant or refuse to grant an authorisation for dissolution of a credit servicer within three months after submission of all the required information and documents.

 (6) The Financial Supervision Authority may refuse to grant an authorisation for dissolution of a credit servicer if dissolution of the credit servicer is in conflict with the interests of their clients or debtors.
 7) The Financial Supervision Authority must promptly notify the credit servicer of a decision to grant or refuse to grant an authorisation for dissolution of the credit servicer.

 (8) A credit servicer may be compulsorily dissolved on the basis of an application of the Financial Supervision Authority by a court ruling if the Financial Supervision Authority has revoked the authorisation granted to the credit servicer on the basis of § 13 of this Act.

 (9) Evidence concerning the circumstances provided for in § 13 of this Act must be submitted to the court together with the application.

 (10) The court must decide on compulsory dissolution of the credit servicer within three working days as of the submission of a corresponding application.

 (11) A ruling on compulsory dissolution is subject to immediate enforcement and the filing and processing of a complaint does not suspend the activities of liquidators.

 (12) In the case specified in subsection 8 of this section, the provisions of subsection 3 of § 203 or subsection 3 of § 366 of the Commercial Code will not apply.

§ 57.  Bankruptcy

 (1) A bankruptcy petition may be filed with regard to a credit servicer by:
 1) The Financial Supervision Authority;
 2) liquidators;
 3) creditors;
 4) the credit servicer themselves.

 (2) An operating credit servicer must promptly notify the Financial Supervision Authority if a bankruptcy petition is filed by a person specified in clauses 2–4 of subsection 1 of this section.

 (3) If the credit servicer holds the funds of debtors, they may file for bankruptcy as a debtor only with the written consent of the Financial Supervision Authority.

Chapter 10 Informing the debtor and lodging complaints  

§ 58.  Communication with the debtor

  A credit servicer and a credit purchaser shall, in communication with the debtor:
 1) act in good faith, fairly and professionally;
 2) provide the debtor with clear, accurate and up-to-date information;
 3) respect and protect the personal data and privacy of debtors;
 4) communicate with the debtor in a manner that does not constitute harassment, coercion or undue influence.

§ 59.  Provision of information to the debtor

 (1) After the acquisition of a non-performing credit agreement or a claim arising therefrom, the credit purchaser must submit a notice to the debtor on paper or another durable medium which contains at least the following information:
 1) notification of the acquisition of the non-performing credit agreement, including the date of assignment of the agreement;
 2) the name, registry code and contact details of the credit purchaser;
 3) where appropriate, the name, registry code and contact details of the credit servicer or the credit institution or creditor acting as a credit servicer;
 4) where appropriate, information concerning the activity licence of the credit servicer;
 5) where applicable, the business name, registration code and contact details of the provider of credit servicing service to whom the credit servicer has outsourced the activities;
 6) the clearly distinguishable contact point or contact details of the credit purchaser or, where applicable, the credit servicer or the credit institution, creditor or provider of credit servicing service, to whom the credit servicer has outsourced the activities, through which the debtor receives information;
 7) information on the amount payable at the time of submission of the notice, together with details of the amount payable in the form of principal, interest, service fees and other prescribed fees, and, where appropriate, copies of the documents on the basis of which the claim is based, if requested by the debtor;
 8) confirmation that Estonian and relevant European Union law applies, in particular with regard to the performance of consumer credit contracts, consumer protection and the rights of the debtor, as well as the liability, including criminal law, of the persons who conduct credit servicing activities themselves in the event of violation;
 9) information concerning the competent authorities, including their contact details and address to which the debtor can file a complaint.

 (2) The information specified in subsection 1 of this section may be submitted in full or in part and with the agreement of the credit purchaser also by the credit servicer appointed as their representative or by the credit institution or creditor appointed as their representative.

 (3) The notice specified in subsection 1 of this section together with the information shall be submitted in Estonian or in the language agreed upon in the contract. No fee may be charged for the submission of the notice.

 (4) The notice specified in subsection 1 of this section together with the information must always be submitted before the collection of the first financial obligation by the credit servicer or the credit purchaser. The debtor will have the right to demand the submission of the information specified in subsection 1 of this section at any time.

 (5) After the submission of a notice in accordance with subsection 1 of this section, the credit purchaser or, where applicable, the credit servicer, credit institution or creditor appointed as their representative must submit all the information in accordance with clause 6 of subsection 1 of this section in the subsequent communication with the debtor. The first sentence of this subsection does not apply in the case of the first exchange of information after the appointment of a new credit servicer. In such case, the information specified in clauses 3 and 4 of subsection 1 of this section must be submitted to the debtor.

§ 60.  Registering and resolving complaints of the debtor

 (1) The credit servicer’s internal rules must establish the procedure for registration and resolution of the complaint of the debtor, which provides for a functioning and transparent procedure for the expeditious resolution of the complaints submitted.

 (2) It is prohibited for a credit servicer to charge a fee for the registration and resolution of complaints submitted by a debtor. An agreement linking the payment of a fee to the resolution of the complaint is null and void.

 (3) In the resolution of complaints, the credit servicer must be based on the procedure established by the Financial Supervision Authority pursuant to subsection 4 of § 67 of this Act.

 (4) The credit servicer must register all complaints received and preserve information concerning the complaints submitted, the measures taken to deal with the complaints and the results of the resolution thereof in accordance with the procedure specified in clause 414 of subsection 4 of § 41 of this Act.

 (5) The credit servicer is required to respond in writing or in a format which can be reproduced in writing to a complaint submitted by the debtor and inform the debtor of the possible solution to the complaint within a reasonable period of time, but the debtor who is a consumer not later than within 15 days and the debtor who is a legal person not later than within 30 days after receipt of the complaint. Among other things, the credit servicer is required to substantiate the complaint if they do not consider the complaint of the debtor to be justified or refuse to satisfy the complaint or consent to partial satisfaction of the complaint.

 (6) If it is not possible to respond to a complaint or perform all the acts necessary for the resolution of the complaint within the term specified in subsection 5 of this section for reasons beyond the control of the credit servicer, the latter must justify such delay to the debtor and set a reasonable term for the termination of the necessary acts, which in total must not exceed 49 days as of the submission of the initial complaint.

 (7) The minister in charge of the policy sector may, by order, lay down more detailed requirements for the handling of complaints and the standard documentary basis for lodging a complaint.

Chapter 11 Other rights and obligations of credit purchasers  

§ 61.  Right of the credit purchaser to receive information from the credit institution

  In the course of the pre-contractual negotiations, the credit purchaser will have the right to obtain from the credit institution information on the non-performing credit agreement, the resulting claims of the credit institution and, where applicable, the security, in order to assess the likelihood of recovery of the non-performing credit agreement.

§ 62.  Obligation of the third country credit purchaser to appoint a representative in the contracting state

 (1) A third-country credit purchaser must appoint in writing a representative (hereinafter the appointed representative) who is domiciled or has their registered office in the contracting state.

 (2) The Financial Supervision Authority may make enquiries to the appointed representative on matters relating to compliance with this Act. The appointed representative must be fully responsible for the performance of the obligations of the credit purchaser under this Act and other relevant legislation. A credit servicer, credit institution or creditor specified in subsection 1 of § 3 of this Act is to be deemed, where appropriate, to be a designated representative for the purposes of this Act.

§ 63.  Notification of Financial Supervision Authority of persons engaged in credit servicing

 (1) If a credit purchaser or, where applicable, a representative appointed by the purchaser appoints a credit servicer, credit institution or creditor to engage in credit servicing, the credit purchaser or a representative appointed by the purchaser must notify the Financial Supervision Authority of the business name and address of the person not later than on the date of commencement of credit servicing activities.

 (2) If a person engaged in credit servicing specified in subsection 1 of this section changes, the credit purchaser or, where applicable, a representative appointed by the purchaser must notify the Financial Supervision Authority of the change not later than on the date of the change and must submit the business name and address of the new person engaged in credit servicing.

 (3) In the case of a non-performing credit agreement of a credit institution or a claim arising therefrom, the Financial Supervision Authority shall, where appropriate, forward the information specified in subsections 1 and 2 of this section to the competent supervisory authority of the country of destination, the competent supervisory authorities of the contracting state where the credit was granted and the competent supervisory authorities of the country of origin of the new credit servicer.

 (4) The credit purchaser is not allowed to involve natural persons in the management of a non-performing credit agreement or of a claim arising therefrom.

§ 64.  Notifying the Financial Supervision Authority of the assignment of a non-performing credit agreement or of a claim arising therefrom

 (1) The credit purchaser who, in turn, assigns the non-performing credit agreement or the claim arising therefrom, or, where applicable, their appointed representative, must submit the following information to the Financial Supervision Authority:
 1) the legal entity identifier of the new credit purchaser or, where applicable, the legal entity identifier of their appointed representative or, in the absence thereof, the names and particulars of the members of the management board of the credit purchaser or their appointed representative and the persons with qualifying holdings and the address of the credit purchaser and their appointed representative;
 2) the number of claims arising from the non-performing credit agreements or the aggregate balance of credit agreements of the assigned credit agreements, the number of such claims or credit agreements and the amount of each credit.

 (2) The information specified in clause 2 of subsection 1 of this section shall, inter alia, distinguish between consumer credit contracts which have been surrendered and claims arising from consumer credit contracts and, where appropriate, contain information concerning the types of assets which constitute security for consumer credit contracts.

 (3) The reporting period for the information specified in subsection 1 of this section is a half-year. The information must be provided within one month of the end of the reporting period. If the last date of submission of information is a day off, the information must be submitted not later than on the first working day following the day off. The Financial Supervision Authority may require the credit purchaser or, where applicable, the representative appointed by the purchaser to submit the aforementioned information more frequently, inter alia, for the purpose of better monitoring the large number of assignations of credit agreements or claims arising therefrom which may take place during a crisis.

 (4) If a credit purchaser transfers a non-performing credit agreement credit agreement of the credit institution or a claim arising therefrom to a credit purchaser in another contracting state, the Financial Supervision Authority must forward the information specified in subsection 1 of this section to the competent supervisory authorities of the new credit purchaser and, where applicable, to the competent supervisory authority of the contracting state where the credit was granted. In such case, the provisions of subsection 3 of this section apply to the transmission of information.

 (5) The provisions of this section also apply if the credit purchaser assigns a non-performing credit agreement or a claim arising therefrom back to the original credit purchaser, credit institution or creditor.

 (6) The minister in charge of the policy sector may, by order, establish more detailed procedures and forms for the information to be submitted to the Financial Supervision Authority from a credit purchaser or a representative appointed by the latter.

§ 65.  Performance of obligations on behalf of the credit purchaser

  If a credit purchaser has appointed a credit servicer, credit institution or creditor or another appointed representative to engage in credit servicing, the obligations arising from §§ 63 and 64 of this Act must be performed by the aforementioned credit servicer, credit institution or creditor or another appointed representative thereof.

Chapter 12 Supervision  

§ 66.  Purpose of supervision

 (1) The purpose of supervision prescribed in this Act is to ensure compliance of the establishment of a credit servicer, their activities and provision of services and dissolution with this Act and other legislation which primarily concerns the protection of the interests and rights of the clients and debtors of credit servicer.

 (2) In the case of a provider of credit servicing service, credit purchaser and an appointed representative of a credit purchaser specified in § 62 of this Act, the Financial Supervision Authority must exercise supervision only over the provision of information.

§ 67.  Bases and duties of supervision

 (1) The Financial Supervision Authority must exercise supervision on the bases and pursuant to the procedure provided for in this Act, the Financial Supervision Authority Act and legislation issued on the basis thereof.

 (2) The supervision activities of the Financial Supervision Authority include:
 1) all credit servicers established in Estonia, as well as their managers, employees and auditors;
 2) branches of Estonian credit servicers registered in foreign countries if they are not supervised by a competent supervisory authority of a foreign country or if an appropriate agreement has been entered into with the competent supervisory authority of such country;
 3) persons who have a qualifying holding in the credit servicer
 4) persons engaged in credit servicing in a foreign country who provide services through an Estonian branch or cross-border;
 5) credit purchasers and their appointed representatives to the extent of performance of the obligations prescribed in this Act;
 6) providers of credit servicing service in accordance with § 43 of this Act.

 (3) In the exercise of supervision, the Financial Supervision Authority shall:
 1) decide on the grant, amendment and revocation of authorisations provided for in this Act;
 2) exercise control over the acquisition, increase and reduction of holdings and the gaining of control over the company;
 3) grant permission or consent in the cases provided for in this Act or perform the registrations and approvals provided for in this Act;
 4) monitor reports and other documents, also verifying on-the-spot the compliance of the activities of the credit servicer with the Acts;
 5) issue mandatory precepts and issue orders when necessary;
 6) perform other functions arising from this Act and legislation issued on the basis thereof.

 (4) The Financial Supervision Authority is obliged to prepare and disclose a more detailed procedure for the resolution of complaints on the basis of which the complaint of the debtor is adjudicated pursuant to the provisions of § 60 of this Act.

 (5) In order to exercise state supervision provided for in this Act, the Financial Supervision Authority may apply the measures provided by law, including issue administrative acts, perform acts and apply the special state supervision measures provided for in § 31 of the Law Enforcement Act.

 (6) The Financial Supervision Authority may disclose a ruling made in a misdemeanour matter, an administrative act or an administrative contract on their website pursuant to the provisions of subsection 5 of § 54 of the Financial Supervision Authority Act.

§ 68.  Supervision over credit servicers which have established branches in foreign countries and credit servicers providing cross-border services

 (1) If a credit servicer with a branch established abroad or providing cross-border services abroad breaches the requirements for credit servicing activities in a foreign country and the foreign competent supervisory authority notifies the Financial Supervision Authority thereof and provides evidence, the Financial Supervision Authority shall, upon the proposal of the foreign competent supervisory authority, take measures to stop the breach.

 (2) The Financial Supervision Authority must notify the details of the measure taken or the decision not to take a measure against the credit servicer to the notifying foreign competent supervisory authority within two months of receipt of the notification pursuant to subsection 1 of this section. After the initiation of proceedings, the Financial Supervision Authority must regularly inform the competent supervisory authority of the foreign country of the status of the proceedings. Where appropriate, the Financial Supervision Authority must also inform the competent supervisory authorities of the contracting state in which the credit was granted of the measure applied with regard to the credit institution if that state is not the country of destination of the credit servicer or Estonia.

 (3) A branch of a credit servicer or a credit servicer which provides services cross-border must submit, at the request of a competent supervisory authority of a foreign country, the information necessary for the exercise of supervision over the activities of the branch or credit servicer in that state.

 (4) In the performance of the functions and obligations arising from this Act, the Financial Supervision Authority may ask the competent supervisory authorities of the country of destination for assistance in carrying out on-site inspections at a credit servicer whose branch is founded in a foreign country or at a provider of credit servicing service to whom the credit servicer has outsourced their activities. An on-site inspection of a branch or a provider of credit servicing service must be carried out in accordance with the laws and regulations of the country where the inspection is to be carried out.

 (5) If the Financial Supervision Authority has made a decision to revoke an activity licence on the basis of § 13 of this Act, the Financial Supervision Authority must notify the competent supervisory authority of the foreign country where the credit servicer provides services cross-border or where the branch of the credit servicer is established.

§ 69.  Supervision of a branch of a person from another contracting state registered in Estonia and of a person providing cross-border services in Estonia

 (1) The Financial Supervision Authority may demand from a person founded in another contracting state whose branch is registered in Estonia or who provides services in Estonia on a cross-border basis additional information and documents necessary for the exercise of supervision over them to the extent provided for in this Act, and information necessary for the purpose of collection of statistics, but not to the extent that such information can be demanded from a credit servicer founded in Estonia.

 (2) A person whose branch is registered in Estonia or who provides services cross-border in Estonia and whose activity licence has been suspended or revoked by a competent supervisory authority of another contracting state may not operate or provide services in Estonia.

 (3) The Financial Supervision Authority has the right to demand, by a precept, the performance of the obligations provided for in this Act or elimination of obstacles to the performance of the obligations provided for in this Act by a person established in another contracting state or its branch within the territory of Estonia or by persons residing or located in Estonia from a person established in another contracting state.

 (4) If a person of another contracting state or a branch thereof registered in Estonia violates the requirements provided for in this Act or legislation issued on the basis thereof, the Financial Supervision Authority may apply the measures provided for in this Act for termination of the violation, including prohibit the provision of services.

 (5) The Financial Supervision Authority must notify the competent supervisory authority of the country of origin of a person established in another contracting state of the measures taken. In exceptional cases, the Financial Supervision Authority may, in order to protect clients or the public interest, apply the measures provided for in this Act and legislation issued on the basis thereof and the Financial Supervision Authority Act to a person of another contracting state without prior notification thereof to the competent supervisory authority of the other contracting state.

 (6) The Financial Supervision Authority has the right to decide on a case-by-case basis on the most appropriate measure to be taken to satisfy a request for assistance from the competent supervisory authority of the country of origin.

 (7) If the Financial Supervision Authority decides to carry out an on-site inspection on behalf of the competent supervisory authority of the country of origin of a person established in another contracting state, the Financial Supervision Authority must immediately inform the competent supervisory authority of the country of origin of the results of the inspection.

 (8) The Financial Supervision Authority may, on their own initiative, inspect and investigate the activities in Estonia of a person established in another contracting state. The Financial Supervision Authority must notify the competent supervisory authority of the country of origin of the person of the results of the inspections and investigations.

 (9) If the Financial Supervision Authority has evidence that a person operating cross-border pursuant to the provisions of § 24 of this Act violates the legal provisions, the Financial Supervision Authority must forward the evidence to the competent supervisory authority of the country of origin and request the application of appropriate measures. The provisions of the first sentence of this subsection are without prejudice to the powers of the Financial Supervision Authority to impose supervision, investigation and penalties.

 (10) If a person established in another state continues to violate legal provisions, the Financial Supervision Authority has the right to impose appropriate penalties or take other measures to ensure compliance with this Act after informing the competent supervisory authority of the country of origin pursuant to subsection 9 of this section if:
 1) the person who violates the legislation has not taken sufficient and effective measures to eliminate the violation within a reasonable period of time; or
 2) if immediate action is necessary in an urgent case in order to respond to a threat to the collective interests of debtors.

 (11) The Financial Supervision Authority may impose the penalties specified in subsection 10 of this section and apply measures regardless of the penalties already imposed by the competent supervisory authorities of the country of origin and the measures taken.

 (12) The Financial Supervision Authority may prohibit further activities in Estonia by a person established in another contracting state who violates the applicable legal provisions until the competent supervisory authority of the country of origin makes a relevant decision.

§ 70.  Supervision over persons engaged in credit servicing of another contracting state if credit was issued in Estonia

  If the Financial Supervision Authority has evidence that a person established and engaged in credit servicing in another contracting state is in breach of obligations under this Act or the law of the contracting state applicable to the credit or credit agreement, and the credit was issued in Estonia, but Estonia is neither the country of destination nor the country of origin of that person, the Financial Supervision Authority must forward the evidence to the competent supervisory authority of the person's country of origin and apply for the application of appropriate measures. The provisions of the first sentence of this subsection are without prejudice to the powers of the Financial Supervision Authority to impose supervision, investigation and penalties.

§ 71.  Cooperation between supervisory authorities

 (1) If Estonian credit servicer provides services in a foreign country, the Financial Supervision Authority must co-operate with the competent supervisory authority of the foreign country and, where appropriate, with the competent supervisory authority of the foreign country which granted the credit.

 (2) The Financial Supervision Authority must submit the information specified in subsections1 and 2 of § 92³ of the Credit Institutions Act and other information which it deems necessary for the performance of their functions and obligations pursuant to this Act to the competent supervisory authorities of the country of origin of the credit purchaser.

§ 72.  Rights and obligations of participant in proceedings in supervision proceedings

 (1) If necessary, the Financial Supervision Authority must explain the rights and obligations of a participant in proceedings in supervision proceedings to the participant in proceedings.

 (2) Participants in proceedings have the right to access the data concerning themselves and collected by the Financial Supervision Authority, and to copy or make extracts of such data. The Financial Supervision Authority has the right to refuse to provide such information to participants in proceedings if this damages or may damage the justified interests of third parties, or if examining the information damages attainment of the objectives of the supervision or ascertainment of the truth in criminal proceedings.

 (3) In supervision proceedings, a participant in proceedings has the right to submit questions to witnesses through the Financial Supervision Authority. The Financial Supervision Authority has the right to refuse, with good reason, to forward questions to witnesses in the case they are not relevant or in order to prevent violation of the rights or interests of witnesses.

§ 73.  Rights of Financial Supervision Authority upon receipt of information

 (1) In order to exercise supervision, the Financial Supervision Authority has the right to demand reports, information, documents and oral or written explanations concerning the facts relevant for the exercise of supervision from the following persons and institutions:
 1) the manager or employee of a credit servicer, a provider of credit servicing service, a credit purchaser or a representative appointed by the credit purchaser;
 2) the manager or employee of a company belonging to the same consolidation group as the credit servicer;
 3) a credit servicer, a provider of credit servicing service, a credit purchaser or a shareholder or a partner of the representative appointed by the credit purchaser;
 4) liquidators or trustees in bankruptcy of credit servicers;
 5) state agency and local authority, the keeper of the main national register or the national register and the controller and processor of a national database;
 6) any other third party.

 (2) For the purposes of exercising supervision, the Financial Supervision Authority has the right to:
 1) conduct on-site inspections of companies belonging to the same consolidation group as the credit servicer in order to verify the information submitted to the Financial Supervision Authority or in the case of other suspicion that legal provisions are violated, and demand the submission of information and documents necessary for the exercise of supervision;
 2) demand all necessary information from the credit servicer in order to verify whether the debtor has properly held the funds and to assess the suitability of the members of the managing body, shareholders and partners;
 3) obtain information from and co-operate with the audit firm of the credit servicer;
 4) obtain information from and co-operate with the internal auditor of the credit servicer;
 5) receive, in justified cases, from the credit institution information containing banking secrets concerning the credit servicer and their clients, debtors and providers of credit servicing services to whom the functions of the credit servicer have been outsourced.

 (3) If necessary, the Financial Supervision Authority may require a person specified in subsection 1 of this section to appear in the offices of the Financial Supervision Authority at a specified time for giving explanations.

 (4) For the purpose of exercising supervision, the Financial Supervision Authority has the right to receive information related to a credit servicer from a third party without receiving the information without notifying the credit servicer. The third party may not notify the credit servicer of the transmission of information.

 (5) If necessary, the Financial Supervision Authority may set a term for compliance with the requirements specified in subsections 1–3 of this section.

 (6) The Financial Supervision Authority must explain to the persons specified in subsection 1 of this section the purposes of requesting information, provided that it does not have an adverse effect on exercising supervision.

§ 74.  On-site inspection

 (1) In order to exercise supervision, the Financial Supervision Authority has the right to conduct on-site inspections at the seat or place of business of a credit servicer, a branch founded in Estonia by a person of another contracting state or a provider of credit servicing service to whom the activities of the credit servicer have been outsourced.

 (2) On-site inspections can be carried out if:
 1) it is necessary to check whether the information submitted corresponds to reality;
 2) the Financial Supervision Authority has a suspicion that the provisions of this Act or legislation established on the basis thereof have been violated;
 3) it is necessary at the request of the competent supervisory authority of the contracting state;
 4) it is necessary for the performance of other supervisory functions.

 (3) In order to carry out an on-site inspection, the Financial Supervision Authority must issue an order which sets out the purpose and extent, duration of the period and time of the inspection. The order must be delivered to the person being inspected at least three working days before the on-site inspection is commenced, unless giving such notice damages attainment of the objectives of the inspection. An on-site inspection must be carried out by an authorised person of the Financial Supervision Authority (hereinafter the inspector), unless otherwise prescribed in this Act.

 (4) In the course of an on-site inspection, inspectors have the right to:
 1) enter all premises, if possible in compliance with the security rules applicable to the person being inspected;
 2) request existence of necessary working conditions and use a separate room necessary for their work;
 3) without restrictions examine the documents and media necessary for the exercise of supervision and make extracts, transcripts and copies thereof;
 4) monitor work processes;
 5) demand oral and written explanations from the managers and employees of the person being inspected.

 (5) The person being inspected is required to appoint a competent representative in the presence of whom the inspection is carried out and who shall provide the inspector with the information necessary for the performance of their duties and submit documents, including the sworn auditor's reports and special reports of the sworn auditor concerning the reports of the person being inspected, and provide the necessary explanations concerning such reports.

 (6) In the case specified in clause 3 of subsection 2 of this section, the Financial Supervision Authority may authorise the competent supervisory authority of a contracting state or an audit firm or expert appointed by them to carry out on-site inspections.

 (7) An inspector is required to prepare a draft report concerning the results of the inspection within three months after the completion of the on-site inspection, of which the Financial Supervision Authority shall notify the person being inspected.

 (8) The person being inspected has the right to submit written explanations within one month as of the delivery of the draft of the report.

 (9) After receipt of the written explanations of the person being inspected or failure to submit such explanations by the due date, but not later than five months after the on-site inspection has ended, the Financial Supervision Authority must approve by a reasoned decision the final report which must be delivered to the person being inspected.

 (10) The Financial Supervision Authority may extend the term specified in subsection 9 of this section by up to two months if the explanations submitted by the person being inspected or other essential circumstances need to be further assessed. If significant amendments are made to the final report during this period, the Financial Supervision Authority must send the final report to the person being inspected again for written explanations.

 (11) The Financial Supervision Authority may, by a final act, grant a term for elimination of the deficiencies identified to the person being inspected or impose other obligations on the person being inspected and impose restrictions and impose a non-compliance levy in the event of failure to comply with the restrictions or inappropriate compliance with the restrictions.

 (12) The Financial Supervision Authority has the right to disclose the final report of the on-site inspection or a part thereof if this is necessary based on the reliability and transparency of the financial sector or the interests of the debtors.

 (13) If the Financial Supervision Authority has carried out an on-site inspection on the basis of clause 3 of subsection 2 of this section, they must immediately inform the competent supervisory authorities of the country of origin of the results thereof.

§ 75.  Risk-based assessment of credit servicer

 (1) The Financial Supervision Authority must assess, using the risk-based method, whether, among other things, the credit servicer has complied with the requirements specified in §§ 41–43, 48 and 60 of this Act.

 (2) The Financial Supervision Authority must notify the competent supervisory authority of the country of destination of the credit servicer or of the contracting state which granted the credit, if it is not Estonia or the country of destination, of the results of the assessment pursuant to subsection 1 of this section if the aforementioned authority so requests or if the Financial Supervision Authority deems it appropriate.

 (3) The Financial Supervision Authority must always inform the competent supervisory authority of the country of destination of the credit servicer or of the contracting state that granted the credit, if it is not Estonia or the country of destination, of the penalties imposed as a result of the risk-based assessment or of the details of the measures taken.

 (4) If the competent supervisory authority of the country of origin of the credit servicer carries out a risk-based assessment of the credit servicer, the Financial Supervision Authority may request the results of the assessment if:
 1) the credit servicer provides cross-border services in Estonia or has established a branch in Estonia;
 2) the credit was granted in Estonia, but Estonia is neither the country of origin nor the country of destination of the credit servicer.

 (5) In the course of the assessment specified in subsections 1 and 4 of this section, the Financial Supervision Authority must exchange relevant information with the competent supervisory authorities of the country of destination of the credit servicer, the country of origin and the contracting state which granted the credit, if that country is not Estonia.

 (6) The provisions of subsections 2–5 of this section applies only to the credit issued by a credit institution.

 (7) The minister in charge of the policy sector may, by order, establish more detailed risk indicators and methodologies for the risk-based assessment of the activities of a credit servicer.

§ 76.  Involvement of experts

 (1) In the course of supervision proceedings, the Financial Supervision Authority may involve an expert in the proceedings in order to ascertain important circumstances requiring special expertise.

 (2) If, in the course of supervision proceedings, an expert ascertains important circumstances which the Financial Supervision Authority had not directly instructed them to ascertain, they must also submit their opinion or assessment concerning such circumstances.

 (3) The expert is required to maintain the confidentiality of information which is not subject to disclosure for an unspecified term and which becomes known to them in connection with the performance of the duties specified in this section.

 (4) The costs of expert assessment must be covered by the Financial Supervision Authority.

§ 77.  Precept

 (1) The Financial Supervision Authority has the right to issue a precept if:
 1) as a result of supervision, a violation of the requirements of this Act, the Acts specified in § 2 of the Financial Supervision Authority Act or other legislation regulating the activities of credit servicers, providers of credit servicing services or credit purchasers or legislation established on the basis thereof has been discovered;
 2) there is a need to prevent the offence specified in clause 1 of this subsection;
 3) the risks assumed by the credit servicer have increased to a significant extent or there are other circumstances which endanger or may endanger the activities of the credit servicer, clients or the interests or reliability of the debtors or the financial sector as a whole;
 4) it is necessary for the protection of the interests of clients or debtors of credit servicer or for ensuring transparency in the financial sector;
 5) before deciding on revocation of the activity licence pursuant to the provisions of the second sentence of subsection 2 of § 13 of this Act.

 (2) The recipient of a precept must immediately commence compliance with the precept after notification thereof.

§ 78.  Rights of Financial Supervision Authority upon issue of precept

 (1) The Financial Supervision Authority has the right, by issuing a precept, to:
 1) prohibit the conclusion of transactions or acts of a credit servicer or a credit purchaser or restrict the volume thereof;
 2) prohibit or restrict the use or disposal of the assets of a credit servicer or a credit purchaser, including accounts;
 3) prohibit, in part or in full, the making of payments from the profit of the credit servicer;
 4) require the amendment or updating of internal rules and internal control systems for credit servicer;
 5) demand the removal, non-election or non-election of the manager of the credit servicer or temporary suspension of their powers;
 6) make a proposal to the general meeting or meeting of partners of a credit servicer for the exchange of the audit firm of the credit servicer;
 7) demand the suspension of an employee of the credit servicer;
 8) demand cancellation of the contract for outsourcing of the activities of the credit servicer;
 9) upon material violation of the requirements of this Act or the Acts specified in § 2 of the Financial Supervision Authority Act or legislation established on the basis thereof, demand suspension of the economic activities of the credit servicer;
 10) require that the credit servicer amends or updates their policies and the procedure for resolving the complaint of the debtor;
 11) request additional information concerning the claims of a credit institution or creditor prescribed in a non-performing credit agreement or the assignment of a non-performing credit agreement;
 12) submit other requirements for compliance with the legislation regulating the activities of the credit servicer.

 (2) In the event of failure to comply with a precept, the Financial Supervision Authority may take other measures prescribed in this Act, including:
 1) demand the removal of the manager of the credit servicer by the court;
 2) impose a non-compliance levy;
 3) revoke the authorisation for registration of the branch;
 4) revoke the activity licence of the credit servicer.

§ 79.  Convening of managing bodies and revocation of resolution of managing body at request of the Financial Supervision Authority

 (1) The management board of the credit servicer must notify the Financial Supervision Authority of the holding of the general meeting and the meeting of the supervisory board at least two weeks in advance. If possible, the special general meeting must be notified at least one week in advance.

 (2) The Financial Supervision Authority has the right to issue a precept:
 1) for convening the management board, supervisory board or general meeting of the credit servicer;
 2) to include an issue on the agenda of a meeting of the management board or supervisory board or the general meeting if this is necessary in the opinion of the Financial Supervision Authority.

 (3) The Financial Supervision Authority has the right to send representatives to a meeting who have the right to present positions and make proposals and demand the recording thereof in the minutes of the meeting.

 (4) On the basis of an application of the Financial Supervision Authority, the court of the registered office of the credit servicer may revoke a resolution of the general meeting, supervisory board or management board which is in conflict with this Act or the Commercial Code or legislation issued on the basis thereof, if the application is submitted within three months as of the adoption of the resolution.

§ 80.  Non-compliance levy

 (1) The Financial Supervision Authority may impose a non-compliance levy pursuant to the procedure provided for in the Substitutive Enforcement and Penalty Payment Act in the case of failure to comply with a precept or other administrative act issued on the basis of this Act or inappropriate compliance.

 (2) If an administrative act is not complied with or it has been performed improperly, the upper limit of the non-compliance levy must be up to 5,000 euros in the case of a natural person for the first time and up to 10,000 euros for the following times in order to enforce the performance of one and the same obligation and up to 1,000,000 euros in total or an amount corresponding to up to twice the profit earned or the loss avoided as a result of the violation.

 (3) If an administrative act is not complied with or it has been performed improperly, the upper limit of the penalty non-compliance levy must be up to 10,000 euros in the case of a legal person for the first time and up to 100,000 euros for the next time in order to enforce the performance of the same obligation and up to 3,000,000 euros in total or up to ten per cent of the annual net turnover, including gross income according to the latest available financial statements, including net turnover consisting of service fees and interest and similar income, or an amount corresponding to up to twice the profit earned or loss avoided as a result of the violation.

Chapter 13 Liability  

§ 81.  Violation of obligation to preserve data of credit servicing agreement

 (1) Violation of the requirements for preservation of data on credit servicing agreements specified in subsection 2 of § 45 of this Act is punishable by a fine of up to 100,000 euros.

 (2) The same act, where committed by a legal person,
is punishable by a fine of up to 1,000,000 euros.

§ 82.  Violation of requirements for outsourcing of activities of credit servicer

 (1) Violation of the requirements for outsourcing of the activities of a credit servicer provided for in § 43 of this Act is punishable by a fine of up to 100,000 euros.

 (2) The same act, where committed by a legal person,
is punishable by a fine of up to 1,000,000 euros or up to 10 per cent of the annual net turnover.

§ 83.  Violation of requirements for internal rules of credit servicer

 (1) Violation by a credit servicer of the requirements established for internal rules in § 41 of this Act is punishable by a fine of up to 100,000 euros.

 (2) The same act, where committed by a legal person,
is punishable by a fine of up to 1,000,000 euros or up to 10 per cent of the annual net turnover.

§ 84.  Violation of internal control requirements of credit servicer

 (1) Violation by a credit servicer of the internal control requirements provided for in § 42 of this Act is punishable by a fine of up to 100,000 euros.

 (2) The same act, where committed by a legal person,
is punishable by a fine of up to 1,000,000 euros or up to 10 per cent of the annual net turnover.

§ 85.  Violation of requirements for procedure for processing complaints of debtors

 (1) Violation of the requirements for registration or adjudication of a complaint of a debtor pursuant to § 60 of this Act is punishable by a fine of up to 100,000 euros.

 (2) The same act, where committed by a legal person,
is punishable by a fine of up to 1,000,000 euros.

§ 86.  Failure to submit information

 (1) Failure to submit or untimely submission of a report, document, explanation or other information or data provided for in this Act to the Financial Supervision Authority or submission or disclosure of incorrect, incomplete or misleading information or submission of data in a form which does not enable exercise of supervision,
is punishable by a fine of up to 100,000 euros.

 (2) The same act, where committed by a legal person,
is punishable by a fine of up to 1,000,000 euros or up to 10 per cent of the annual net turnover.

§ 87.  Violation by credit purchaser of obligation to appoint credit servicer or representative

 (1) Failure by a credit purchaser to appoint a credit servicer or, where applicable, a representative, to perform an obligation provided for in subsection 7 of § 3or § 62 of this Act,
is punishable by a fine of up to 100,000 euros.

 (2) The same act, where committed by a legal person,
is punishable by a fine of up to 1,000,000 euros.

§ 88.  Violation of requirements for submission of information to debtor

 (1) Violation of the requirements for submission of information to debtor pursuant to § 59 of this Act is punishable by a fine of up to 100,000 euros.

 (2) The same act, where committed by a legal person,
is punishable by a fine of up to 1,000,000 euros.

§ 89.  Violation of obligation related to credit servicing activities in another contracting state or third country

 (1) Violation of the requirements provided for in §§ 17 to 23 of this Act is punishable by a fine of up to 100,000 euros.

 (2) The same act, where committed by a legal person,
is punishable by a fine of up to 1,000,000 euros.

§ 90.  Failure to comply with the requirements for the maintenance of funds of debtor

 (1) Violation of the requirements established by the credit servicer for the maintenance of the funds of a debtor specified in § 47 of this Act,
is punishable by a fine of up to 100,000 euros.

 (2) The same act, where committed by a legal person,
is punishable by a fine of up to 1,000,000 euros or up to 10 per cent of the annual net turnover.

§ 91.  Violation of procedure for acquisition of qualifying holding in credit servicer

 (1) Acquisition of a holding in a credit servicer, transfer thereof or turning an acquirer of a credit servicer into a controlled company without prior notification to the Financial Supervision Authority pursuant to this Act or contrary to a precept specified in § 32 of this Act, and exercise of the right to vote in the credit servicer or other rights enabling control over the company against a precept of the Financial Supervision Authority,
is punishable by a fine of up to 100,000 euros.

 (2) The same act, where committed by a legal person,
is punishable by a fine of up to 1,000,000 euros or up to 10 per cent of the annual net turnover.

§ 92.  Violation of requirements for keeping the file related to the management of credit agreement

 (1) Violation of the requirements established by the credit servicer for keeping the file and management of a credit agreement provided for in § 44 of this Act,
is punishable by a fine of up to 100,000 euros.

 (2) The same act, where committed by a legal person,
is punishable by a fine of up to 1,000,000 euros or up to 10 per cent of the annual net turnover.

§ 93.  Proceedings

 (1) The limitation period of misdemeanours provided in this Chapter is three years.

 (2) The body conducting extra-judicial proceedings concerning the misdemeanours specified in this Chapter must be the Financial Supervision Authority.

Chapter 14 Implementing provisions  

Division 1 Transitional provisions  

§ 94.  Bringing activities into compliance with requirements of this Act

 (1) A person who has been entered in the register and engaged in the activities specified in subsection 2 of § 3 of this Act which concern non-performing credit agreements before the entry into force of this Act applies for an activity licence from the Financial Supervision Authority and bring their activities and documents into compliance with the provisions of this Act not later than by 30 June 2025 or terminate their activities by the specified date.
[RT I, 31.12.2024, 5 - entry into force 01.01.2025]

 (2) A person who has been entered in the register and engaged in the activities specified in subsection 2 of § 3 of this Act concerning non-performing credit agreements which are in delay before the entry into force of this Act and who, as of 30 June 2025, no longer engages in credit agreements entered into by a credit institution or in the management of consumer credit agreements entered into by a creditor need not apply for an activity licence from the Financial Supervision Authority.
[RT I, 31.12.2024, 5 - entry into force 01.01.2025]

 (3) The provisions of this Act also apply to such credit agreements which are not yet delayed at the time of entry into force of this Act but which or the claims arising from which may be transferred or assigned in the future pursuant to this Act.

 (4) A person who has been entered in the register and engaged in the activities specified in subsection 2 of § 3 of this Act before the entry into force of this Act which concern non-performing credit agreements and with regard to which judicial or enforcement proceedings have been initiated before 30 June 2025 may continue credit servicing activities until 31 December 2026 without having to comply with the requirements for credit servicing activities provided for in this Act in such activities.
[RT I, 31.12.2024, 5 - entry into force 01.01.2025]

Division 2 Amendment of Acts currently in force  

§ 95. – § 103. [The provisions amending other Acts omitted from translation.]

Division 3 Entry into force of the Act  

§ 104.  Entry into force of the Act

  Subsection 3 of § 50¹ of the Creditors and Credit Intermediaries Act, as provided in clause 12 of § 97 of this Act, and subsection 4 of § 416¹ of the Law of Obligations Act, as provided in clause 5 of § 102 of this Act, will enter into force on 1 January 2025.

¹ Directive (EU) 2021/2167 of the European Parliament and of the Council on credit servicers and credit purchasers and amending Directives 2008/48/EC and 2014/17/EU (OJ L 438, 08.12.2021, p. 1-37).