Credit Service Providers and Credit Purchasers Act (KKG): new requirements for non-performing loans

On 18 March 2025, the Credit Service Providers and Credit Purchaser Act (Kreditdienstleister- und Kreditkäufergesetz, KKG) came into force, bringing with it significant changes regarding non-performing loans (NPLs). The new KKG regulates the obligations of credit buyers and sellers, the requirements for the provision of credit services and respective supervision by the FMA.

In this article, you will find everything you need to know the Credit Servicer and Credit Purchaser Act (KKG) in a compact format:

European legal background: The Credit Services and Credit Purchasers Directive

It is nothing new that Austrian legislators occasionally take their time implementing EU legal requirements. Ultimately, however, the Credit Service Providers and Credit Purchasers Act (KKG) came into force on March 18, 2025. This means that Directive (EU) 2021/2167 on credit service providers and credit purchasers (Credit Services Directive) has now been incorporated into Austrian law, more than a year late and with an infringement procedure to boot.

The Directive on credit servicers and credit purchasers aims to promote the development of a well-functioning secondary market for non-performing loans in the Union by introducing rules for credit purchasers and service providers. The high levels of non-performing loans held by credit institutions should be reduced and their future accumulation prevented in order to promote competition in the banking sector and lending, and to preserve financial stability. 

When does the KKG apply?

The scope of application of the KKG is limited to the regulation of the secondary market for non-performing loans. The prerequisite is always that a credit purchaser acquires a non-performing loan (or claims arising therefrom) that was granted by a CRR credit institution. Credit agreements that are classified as non-performing exposures in accordance with Art. 47a CRR are considered non-performing.

In addition, the KKG lays down rules for credit service providers who act on behalf of a credit purchaser for the claims of a lender arising from a non-performing loan agreement granted by a CRR credit institution or from the non-performing loan agreement itself. The provision of credit services for the original lender is therefore not regulated.

The following services, among others, do not fall within the scope of the KKG:

• Credit services provided by a CRR credit institution, an alternative investment fund manager under the AIFMG, a management company under the InvFG 2011, or a non-credit institution that is subject to supervision by a competent authority of a Member State under the Consumer Credit Directive or the Residential Property Credit Directive and operates in that Member State,
• Credit purchases by a CRR credit institution, and
• Transfers of non-performing loans or claims arising therefrom that took place before the KKG came into force.

What are the obligations of credit service providers?

Probably the most significant change for credit service providers is that they are now required to obtain a license to provide credit services in relation to non-performing loans. The FMA is responsible for granting licenses in Austria.

A credit service provider is any legal entity that, in the course of its business activities, manages and enforces the rights and obligations associated with the non-performing credit agreement or claims arising therefrom on behalf of the credit purchaser and provides at least one credit service.

Credit services are defined as:

• the collection and recovery of payments due from the borrower,
• the renegotiation of terms with the borrower in accordance with the instructions of the credit purchaser,
• the management of complaints in connection with the credit agreement, and certain notifications (e.g., changes in interest rates) to the borrower.

One of the requirements for authorization as a credit service provider is that the management and administrative bodies of the applicant have the necessary professional competence and personal reliability. The requirements for professional competence have been specified by the EBA in guidelines (EBA/GL/2023/09). In addition, credit service providers must have sound corporate governance arrangements and adequate internal control procedures, including risk management and accounting procedures, and must comply with certain conduct of business and complaint management requirements. All licensing requirements, necessary documents, and the email address to which the license application should be sent can be found on the FMA website (see https://www.fma.gv.at/banken/kreditdienstleister-und-kreditkaeufer/).

The authorization procedure is relatively short. The FMA must check the application for completeness within 45 days of receipt and, if necessary, point out any missing documents or information. Within 90 days of receipt of a complete application or, in the case of an incomplete application, the required information, authorization must be granted or refused.

If credit services are to be provided on a cross-border basis, this is possible by means of passporting (EU passport), without prejudice to the restrictions and requirements of the national law of the host Member State. Authorization as a credit service provider in one Member State therefore generally allows credit services to be provided throughout the Union.

What applies to debt collection agencies?

To date, credit services have mainly been provided by debt collection agencies. This raises the question of whether debt collection agencies are credit service providers within the meaning of the KKG and require authorization from the FMA.

According to the legislative materials, debt collection agencies are not considered credit service providers ex lege because they have a much broader scope of activity than credit service providers and, unlike credit service providers, a debt collection agency in Austria is permitted to manage or hold third-party funds. Credit services relating to non-performing loans thus represent a specific part of debt collection services that are subject to authorization under the KKG. Debt collection agencies that provide credit services covered by the KKG therefore require a license. It is therefore no longer sufficient for such agencies to operate within the scope of the KKG based on a trade license as a debt collection agency.

However, for a (short) transitional period, collection agencies may also provide credit services domestically without the relevant license. This requires that the agency has already provided credit services prior to the KKG coming into force. In addition, an application for authorization must be submitted within two weeks of the Act coming into force, i.e. by May 1, 2025. If all these conditions are met, credit services may be provided without authorization for five months from the date on which the KKG comes into force (provided that no final decision has been made on the application before the deadline expires).

What are the obligations of credit purchasers?

Firstly, it should be noted that a credit purchaser is any natural or legal person who is not a credit institution and who, in execution of their commercial or professional activities, purchases a non-performing credit agreement or claims arising therefrom in accordance with applicable EU or Member State law. The purchase of credit itself does not constitute a transaction requiring authorization. However, if the credit agreement was concluded with a consumer, the credit purchaser must designate or appoint an authorized credit service provider, a CRR credit institution, or a non-credit institution that is subject to supervision by a competent authority of a Member State in accordance with the Consumer Credit Directive or the Residential Property Credit Directive and operates in that Member State for the purpose of independently providing credit services. This obligation applies to credit purchasers who reside in the EU or have their registered office or head office in the EU. This is to ensure that the same standards of consumer rights are maintained after the transfer.

Credit purchasers from third countries are required to appoint a representative within the EU. If the representative is neither an authorized credit service provider nor a CRR credit institution or supervised non-credit institution, the credit purchaser from a third country is also subject to the aforementioned designation or appointment obligation. This applies to credit purchasers from third countries not only in the case of consumer credit, but also in the case of credit agreements concluded with self-employed persons or micro, small, or medium-sized enterprises.

The FMA must be informed of the appointment. The credit purchaser must notify the FMA of the name and address of the appointed credit service provider or other legal entity no later than the day on which the credit services commence. Any changes must also be notified to the FMA in good time, i.e., no later than the day of the change. In addition, the credit purchaser is also subject to (regular) reporting obligations if it transfers the non-performing credit agreement or claims arising therefrom to a new credit purchaser.

In addition, the issue of consumer/borrower protection is also enshrined in the KKG. The relevant EU and national regulations also apply to the credit purchaser after the transfer of claims. This applies in particular to those regulations concerning the enforcement of contracts, consumer protection, the rights of borrowers, the granting of credit, the provisions on banking secrecy pursuant to §38 BWG (Austrian banking act) and criminal law. The level of protection afforded to consumers and other borrowers, as well as insolvency regulations, may not be impaired by the transfer, without prejudice to the provisions on promissory notes and bills of exchange.

What obligations do credit institutions have as credit sellers?

Not only credit buyers and service providers, but also credit institutions have special obligations when selling non-performing loans. Before concluding a contract, they must provide a potential credit buyer with information about the lender's claims and any collateral. This is intended to enable the potential credit buyer to make an informed decision.

In addition, credit institutions are required to provide the FMA with certain information regarding the credit purchaser (e.g., name and address) and the non-performing loan (e.g., aggregate outstanding amount). This information obligation must be fulfilled every six months. It should be noted that the FMA may also stipulate and provide for a quarterly reporting interval by means of a regulation, and that reports must be submitted exclusively to the OeNB.

Supervision by the FMA

The FMA is responsible for supervising compliance with the provisions of the KKG. To ensure this, the FMA has been granted comprehensive supervisory powers, which are already familiar from existing financial market law. The procedural and penal provisions are set out in the second section of the KKG and stipulate, among other things, that administrative offenses committed by a responsible person of a credit purchaser or service provider within the meaning of §9 VStG are punishable by a fine of up to EUR 150,000 or up to twice the benefit derived from the offense. Under certain conditions, legal entities may also be punished, with fines of up to ten percent of their total annual net turnover.

Finally, it should be noted that the FMA is obliged to maintain a public register of all credit service providers licensed in Austria and operating in Austria under the passporting regime.

How may we help you?

As a boutique law firm specializing in banking and finance law, we are happy to assist you with regulatory and civil law challenges, particularly with regard to the KKG.

Contact: Dr. Bernd Fletzberger & Christopher Falke, LLM