Member Article

1. Introduction

In recent years, the Belgian Parliament hascodified substantial parts of Belgian economic legislation into a new Code ofEconomic Law (“Wetboek van economischrecht” / “Codedu droit economique”). The Code of Economic Law consists of 18Books, including one on payment and credit services (“Boek VII. – Betalings- enkredietdiensten” / “LivreVII. – Services de paiement et de crédit”, “Book VII”).

Book VII regulates payment services and credit to consumers and mainlyimplements the following European legislation into Belgian law:

(a) Directive 2007/64/EC of theEuropean Parliament and of the Council of 13 November 2007 on payment servicesin the internal market amending Directives 97/7/EC, 2002/65/EC, 2005/60/EC and2006/48/EC and repealing Directive 97/5/EC (“Directive 2007/64/EC”);

(b) Directive 2008/48/EC of theEuropean Parliament and of the Council of 23April 2008 on credit agreementsfor consumers and repealing Council Directive 87/102/EEC;

(c) Regulation (EC) No 924/2009 ofthe European Parliament and of the Council of 16 September 2009 on cross-borderpayments in the Community and repealing Regulation (EC) No 2560/2001;

(d) Commission Directive 2011/90/EUof 14November 2011 amending Part II of Annex I to Directive 2008/48/EC ofthe European Parliament and of the Council providing additional assumptions forthe calculation of the annual percentage rate of charge; and

(e) Regulation (EU) No260/2012of the European Parliament and of the Council of 14March 2012establishing technical and business requirements for credit transfers anddirect debits in Euro and amending Regulation (EC) No924/2009.

One large part of Book VII, mainly concerning payments services, entered intoforce on 29 May 2014 and another large part, mainly concerning credits toconsumers, entered into force on 1 April 2015.

From 1 November 2015 (the initial date of entry into force, 1 July 2015, hasbeen changed into 1 November 2015), the remainder of Book VII, which mainlydeals with the licence requirements for providers of credit to consumers, willenter into force. As a result, the providers of credit to consumers andintermediaries must take action to remain authorised to provide credit toconsumers or to act as an intermediary in Belgium. The type of action suchcreditors and intermediaries must take is discussed in Section 4 (Grandfathering rules in respect of newrules and procedures on licences and registrations (deadline: 30 April 2017))below.

First, we will outline the structure of Book VII in Section 2 (Book VII (payment and credit services)- structure).

2. Book VII (Payment and Credit Services) - Structure

Book VII is divided into 7 Titles, each of whichis briefly described below. In addition, the following parts of the BelgianEconomic Code should also be taken into account regarding payment and creditservices:

(a) Book I (Definitions) of theBelgian Economic Code, Title 1 (Generaldefinitions) and Title 2, Chapter 5 (Definitions applicable to book VII.), which,together, contain the definitions related to payment and credit services;

(b) Book VI (Market practices and consumerprotection) of the Belgian Economic Code, which applies, ingeneral, to contracts entered into with consumers; and

(c) Book XV (Law enforcement) of theBelgian Economic Code, which sets out several measures to detect breaches ofthe Belgian Economic Code, imposes and also provides certain administrative andcriminal sanctions on breaching certain provisions concerning payment andcredit services.

2.1 Title 1 – General principles - Title 1 is an introductory title and explains which European legislation has beenimplemented in Book VII.

2.2 Title 2 - Scope - Title 2 sets out Book VII’s scope, stating that it applies to:

(a) payment services; and

(b) consumer credit.

2.3 Title 3 – Payment services - Title 3 of Book VII restates, with certain, slight modifications (taking intoaccount Regulation (EU) No260/2012), the Act of 10 December 2009 onpayment services, which partly implements Directive 2007/64/EC. The Act of 24March 2003, which introduced a basic banking service, has been modifiedsignificantly, to take into account, among other things, the CommissionRecommendation 2011/442/EU of 18 July 2011 on access to a basic paymentaccount, and it has been restated as such in a modified form in a separate Chapterin Title 3 of Book VII.

2.4 Title 4 – Credit agreements - Title 4 of Book VII applies to credit agreements (to be) entered into withconsumers and contains four Chapters. A distinction must be made between:

(a) credit agreements entered intowith consumers in relation to immovable property and secured by a mortgage(“Residential Mortgage Credit”); and

(b) credit agreements entered intowith consumers other than Residential Mortgage Credit (“Consumer Credit”).

Chapter 1 applies to Consumer Credit and restates the Act of 12 June 1991 onconsumer credit, but it also introduces certain new provisions to regulateConsumer Credit further. These new provisions mainly relate to the promotionand granting of Consumer Credit.

Chapter 2 applies to Residential Mortgage Credit and restates, with only minormodifications, the Act of 4 August 1992 relating to mortgage credit. Theimplementation of Directive 2014/17/EU of the European Parliament and of theCouncil of 4February 2014 on credit agreements for consumers relating toresidential immovable property and amending Directives 2008/48/EC and2013/36/EU and Regulation (EU) No1093/2010 in Belgium will requirecertain changes to this Chapter.

Chapter 3 sets out the rules on the Central Individual Credit Register(“Centrale voor Kredieten aan Particulieren” / “Centrale des Crédits auxParticuliers”). The Central Individual Credit Register records informationabout both Residential Mortgage Credits and Consumer Credits, including paymentdefaults, and must, in most cases, be consulted by Creditors before thegranting of a Residential Mortgage Credit or a Consumer Credit.

Chapters 1, 2 and 3 entered into force on 1 April 2015.

Chapter 4 sets out the authorisation conditions that must be fulfilled for aprovider (“Creditor”) of or an intermediary (“Intermediary”) in ResidentialMortgage Credit and/or Consumer Credit in Belgium.

Each Creditor active in Belgium must be licensed by or registered with theBelgian Financial Services and Markets Authority (the “FSMA”). It should benoted, however, that, in principle, certain regulated Creditors governed by thelaws of another Member State which are allowed to be active as a Creditor inResidential Mortgage Credit and/or Consumer Credit in such Member State mayalso be active in Belgium in relation to Residential Mortgage Credit and/orConsumer Credit without being licensed by the FSMA on the basis of the right ofestablishment or the freedom to provide services (so a passporting regime is availablefor certain regulated Creditors located in a Member State). These regulatedCreditors governed by the laws of another Member State must submit theirstandard form contracts to the Federal Public Service Economy for approval.

Each Intermediary active in Belgium must be registered in a FSMA-held register.However, certain Intermediaries in Residential Mortgage Credit registered in anequivalent register with the competent authority in their home Member State areexempted from this requirement as they benefit from a passporting regime.

Chapter 4 will enter into force on 1 November 2015 and, to allow Creditors andIntermediaries time to comply with the new authorisation procedures and rulesset out in Chapter 4, there is a transitional period during which Creditors andIntermediaries should obtain the necessary licences or registrations (pleasesee Section 4 (Grandfatheringrules in respect of new rules and procedures on licences and registrations(deadline: 30 April 2017)) below).

2.5 Title 5 –Sanctions - A breach of certain provisions of Book VII by a payment services provider, aCreditor or an Intermediary may result in certain administrative, penal and/orcivil sanctions. Certain civil sanction are listed in title 5 of Book VII.

2.6 Title 6 – Out-of-court dispute resolution mechanisms Title 6 of Book VII provides for the creation of an independent out-of-courtdispute resolution mechanism.

2.7 Title 7 – Final provisions - Title 7 of Book VII restates certain general technical rules on how new BelgianRoyal Decrees must be adopted when implementing Book VII.

3. Detection of Infringements of Book VII

Book XV of the Code of Economic Law grantsparticular civil servants certain special powers to detect infringements that mayarise under Book VII (for example, through “mystery shopping”) and sets out theFSMA’s competences regarding its supervisory duties in relation to Book VII,Title 4, Chapter 4.

4. Grandfathering rules in respect of new rules and procedures on licences andregistrations (deadline: 30 April 2017)

4.1 Creditors - Those Creditors that are already authorised by the FSMA (Residential MortgageCredit) and/or by the Federal Public Service Economy (Consumer Credit) maycontinue to provide Residential Mortgage Credit and/or Consumer Creditrespectively. This authorisation is on the condition that they obtain a finallicence from the FSMA within an 18 month-period starting from 1 November 2015(so, by the latest, 30 April 2017). Such final licence is not required forcertain regulated Creditors governed by the laws of another Member State whichare already registered under the old Belgian laws on Residential MortgageCredit and/or Consumer Credit, provided that they submit their standard formcontracts to the Federal Public Service Economy within an 18 month-periodstarting from 1 November 2015 (so, by the latest, 30 April 2017).

4.2 Intermediaries - Intermediaries in Consumer Credit who have already been registered with theFederal Public Service Economy and all Intermediaries in Residential MortgageCredit (the latter Intermediaries were not subject to specific licence orregistration requirements to act as an Intermediary for Residential MortgageCredit), may continue to intermediate concerning Consumer Credit or ResidentialMortgage Credit respectively, provided that they (i) were active as anIntermediary for more than 1 year prior to 1 November 2015 and (ii) obtain afinal registration with the FSMA within an 18 month-period, starting from 1November 2015 (so, by the latest, 30 April 2017).