| 1 |
Financial Supervisory Commission agrees to conditionally allow financial institutions to sell non-performing loans associated with credit card, cash card and unsecured loan businesses to asset management companies
From: Financial Supervisory Committee, Executive Yuan
Date: 05/12/2006
Ref. No.: Jin-Kuan-Yin-(4)-Zi-No.09500190540
Subject: Issues related to the suggestion of the Bankers Association of the Republic of China to conditionally allow banks to sell non-performing assets associated with credit card, cash card and unsecured loan businesses to asset management companies.
Explanations:
1. This is in reply to the Bankers Association of the Republic of China letter Ref. No. Chuan-Shou-Hsiao-Zi-No.1391 dated April 27, 2006.
2. The Commission agrees that a financial institution that meets the following conditions may sell its non-performing loans associated with credit card, cash card and unsecured loan businesses to asset management companies without being subject to the provisions set forth in FSC letter Ref. No. Jin-Kuan-Yin-(4)-Zi-09440010950 dated December 19, 2005 and FSC letter Ref. No. Jin-Kuan-Yin-(4)-Zi-09540001860 dated March 31, 2006:
(1) Loans that are in the Consumer Debt Negotiation Mechanism adopted by members of the Bankers Association of the ROC may not be sold to an asset management companies.
(2) The asset management company purchasing the non-performing loans may not resell the non-performing loans to any third party and shall entrust the collection operation to the selling financial institution or a collection agency designated or agreed by it. The collection agency shall commit to observe the Banking Act and related regulations. The selling financial institution shall establish an internal control and internal audit system to effectively regulate and audit the collection activities conducted by the collection agency and assume responsibility for the improper collection conduct of the collection agency.
(3) If the obligor of a sold non-performing loan applies for debt negotiation in accordance with the Consumer Debt Negotiation Mechanism, the selling financial institution shall notify the asset management company of the negotiation. If the obligor and the largest creditor bank reach an agreement, the asset management company shall unconditionally accept the agreed repayment plan.
(4) Where the purchasing asset management company violates the relevant agreement, the selling financial institution shall immediately rescind the contract with the company and buy back the non-performing loan, demand a penalty and register the name of said asset management company with the Joint Credit Information Center for the reference of other financial institutions.
(5) The aforementioned provisions shall be included in the sale contract and filed with the Commission for reference. To protect the interest of consumers, a financial institution shall inform the obligors of the provisions in (2) ~ (4) hereof in writing before signing a sale contract with the asset management company.
3. The Commission will, in view of the severity of the situation, impose penalty against financial institutions that violate the provisions herein in accordance with the Banking Act and relevant regulations |