Code of Conduct

In 2008, the members of the BKS developed and adopted a Code of Conduct through which they commit themselves to certain processing standards in the management of non-performing loans as well as to ethical guidelines to responsibly deal with borrowers.

 

Purpose

Between global trade and national development

  • The BKS is a neutral observer of the financial industry representing the interests of the main market players in debt purchase and servicing in Germany.
  • We are convinced that the refinancing of credit institutions is important for the existence of the German financial market.
  • The promotion of professional processing of NPLs by servicers generates added value for both the creditors and the borrowers.
  • Our contribution to the functioning and development of this important market is to give the industry a voice as well as to define and maintain quality standards of operation.
  • We advocate a largely free financial industry that goes beyond the legal framework and regulates itself through associations such as the BKS.

 

Principles

Complying with the law and regulations is the basis of every trade

  • Compliance with the applicable laws is the cornerstone of our concept for fair economic practices.
  • Every market player should be able to seize his chances on the German market if he respects the laws and values of this country.
  • The rights of borrowers and guarantors must be respected as strictly as the rights and obligations of the creditors.
  • The BKS always maintains its neutrality when monitoring the NPL market. Possible legal violations by members will not be accepted.

 

Members

As a group we are strong

  • Members can rely on the BKS to represent their interests in the opinion-forming process towards all relevant institutions.
  • We consider it our duty to protect the BKS members from dubious market players, to maintain and further promote the good reputation of our industry.
  • The members of the BKS are committed to the quality standards defined in the Federal Association for the processing of NPL sales and their subsequent handling beyond the legal requirements and framework conditions.
  • Violations of our applicable standards and regulations by members will not be accepted.

Borrowers and guarantors

If there is a right, then there is also a duty

  • Not only the respect for fellow human beings requires the BKS members to always strive to find an amicable solution with the borrowers and guarantors: We are convinced that a cooperative approach is the economically most reasonable for all parties.
  • The borrowers and guarantors can be certain that they will be supported by the participating BKS members in finding compensation or refinancing possibilities for their loan or the guarantee provided.
  • If the realisation of the collateral, the sale of a collateral object for example, is the only way to repay the loan, the participating BKS member will of course assist with the best possible marketing or evaluation.
  • However, we consider it the duty of a borrower to take responsibility for his situation and his previous actions. He should be open to develop constructive proposals for solutions to settle his debts and to actively involve himself in the agreements. The agreements finally signed should be swiftly implemented.

Processing procedure

Quality can be measured

  • We expect understanding, respect, and openness to each other from all persons involved in (and affected by) NPL transactions – from the creditors, loan purchasers, buyers, servicers, and borrowers.
  • As long as the borrower is represented by an expert, the creditor, the loan purchasers or their servicers will definitely seek dialogue with the representative in order to work out a rapid, amicable solution.

In addition to the legal requirements, the BKS defines the following procedural standards for loan processing:

  • The loan purchaser or its servicer shall promptly inform the borrower in writing about the loan transfer in accordance with the provisions of the Risk Limitation Act.
  • The loan purchaser or its servicer introduces himself to the borrower and names contact persons and contact details in writing. In case a new creditor subsequently appears in the relationship with the borrower/guarantor, the servicer will inform the borrower at short notice.
  • Right after the familiarisation with the specific loan exposure, the new creditor will contact the borrower by phone or in person in order to discuss further actions.
  • The new creditor will observe the security purpose agreement underlying a land charge and will not claim that he did not know about the existing security agreement. He therefore cannot claim a good faith (bona fide) acquisition of a defence-free land charge.
  • Forced measures are only to be taken if there are no other promising, timely solutions.
  • The terms and conditions of the loan will be adjusted according to the provisions of the underlying loan agreement and of the applicable laws.
  • The deadlines of the current loan agreement are to be observed. An offer containing new conditions could be made at least three months before the expiry date of the current conditions.
  • The loan conditions are determined by the current refinancing interest rates of the standard market for loans of this type and by the generally accepted principles of risk assessment (collateral value, credit rating of the borrower, etc.).
  • In case a loan is falling due according to the loan agreement, the new creditor can present the borrower three months before the due date the option of a loan extension instead of requesting the repayment.

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