1.8. Minimum requirements for the recognition of other funded credit protection

Directive 2006/48/EC of the European Parliament and of the Council of 14 June 2006 relating to the taking up and pursuit of the business of credit institutions (recast) (Text with EEA relevance) · European Union

To be eligible for the treatment set out at Part 3, point 79, the protection referred to in Part 1, point 23 must satisfy the following conditions: the borrower's claim against the third party institution is openly pledged or assigned to the lending credit institution and such pledge or assignment is legally effective and enforceable in all relevant jurisdictions; the third party institution is notified of the pledge or assignment; as a result of the notification, the third party institution is able to make payments solely to the lending credit institution or to other parties with the lending credit institution's consent; and the pledge or assignment is unconditional and irrevocable. For life insurance policies pledged to the lending credit institution to be recognised the following conditions shall be met: the company providing the life insurance may be recognised as an eligible unfunded credit protection provider under Part 1, point 26; the life insurance policy is openly pledged or assigned to the lending credit institution; the company providing the life insurance is notified of the pledge or assignment and as a result may not pay amounts payable under the contract without the consent of the lending credit institution; the declared surrender value of the policy is non-reducible; the lending credit institution must have the right to cancel the policy and receive the surrender value in a timely way in the event of the default of the borrower; the lending credit institution is informed of any non-payments under the policy by the policy-holder; the credit protection must be provided for the maturity of the loan. Where this is not possible because the insurance relationship ends before the loan relationship expires, the credit institution must ensure that the amount deriving from the insurance contract serves the credit institution as security until the end of the duration of the credit agreement; and the pledge or assignment must be legally effective and enforceable in all jurisdictions which are relevant at the time of the conclusion of the credit agreement.

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Source: EUR-Lex (Cellar) · retrieved 2026-10-09 · Text as adopted (Official Journal); later amendments are not incorporated in this text.