Royal Decree 309/2019 of 26 April, partially developing Law 5/2019 on real estate credit contracts and adopting other financial measures

OFFICIAL STATE GAZETTE
No. 102 Monday, April 29, 2019 Sec. I. Page 43114
I. GENERAL PROVISIONS
MINISTRY OF THE PRESIDENCY,
RELATIONS WITH THE CORTES AND EQUALITY
6299 Royal Decree 309/2019, of April 26, partially developing Law 5/2019, of March 15, regulating real estate credit contracts and adopting other measures in financial matters.
I
The proper functioning of the real estate loan contract market is a fundamental element for the stability and growth of a society's economy, as well as a decisive instrument for social cohesion and the development of citizens' well-being. Traditionally, the characteristics of this market in Spain have allowed a large number of families to access loans or credit lines for financing their owner-occupied housing under reasonable conditions.
However, in the last decade, the real estate market in Spain has been affected by the international financial crisis, which generated problems of confidence in the financial sector and credit restriction, having negative effects on housing access conditions and legal certainty.
On the other hand, one must not forget the transparency problems of the credit system that have been revealed in recent years. The asymmetric position occupied by the lender and the borrower in the contractual relationship justifies public intervention in the regulatory regime of the pre-contractual and contractual information that must be provided to the borrower. In this sense, the party dominating the relationship is required, as a professional, not only to provide information to the borrower but also to act with a higher degree of responsibility in its behavior towards them. Furthermore, public authorities must guarantee the existence of a secure, stable legal regime that offers a response to new uncertainties and conflicts that may arise in this area, harmonizing the regulation of necessary transparency and borrower protection guarantees with adequate legal certainty for real estate credit intermediaries, their representatives, and real estate credit lenders. II To this must be added the obligations in this matter arising from European Union Law. Thus, Directive 2014/17/EU of the European Parliament and of the Council of 4 February 2014 on credit agreements for consumers relating to residential immovable property and amending Directives 2008/48/EC and 2013/36/EU and Regulation (EU) No 1093/2010, has regulated certain aspects of this market, and it has recently been transposed, partially, by Law 5/2019, of March 15, regulating real estate credit contracts. This law has modified, among others, Law 2/2009, of March 31, regulating the contracting with consumers of mortgage loans or credit and intermediation services for the conclusion of loan or credit contracts, defining the scope of application of both with the aim of avoiding certain overlaps regarding the subject matter of each. The main aspects covered by Law 5/2019, of March 15, refer, first, to borrower protection rules related to the marketing of real estate loans, establishing the basic information that must appear in loan advertising, as well as the information to be provided to the borrower before, during, and after the conclusion of the contract and the obligations to assess solvency. Second, the law regulates the code of conduct that real estate credit intermediaries, their representatives, and real estate credit lenders must comply with, such as knowledge and competence requirements applicable to their staff and their remuneration policy. Third, it covers aspects related to the real estate loan or credit contract itself, such as its form and content, or the regulation of cases of maturity or early repayment. Alongside this, its Chapter III establishes the legal regime of real estate credit intermediaries, their representatives, and real estate credit lenders, regulating their necessary registration and supervision. Finally, the law is completed with the necessary sanctioning regime. Consequently, the need for the approval of this Royal Decree is twofold. On the one hand, it is
necessary to complete the transposition of Directive 2014/17/EU of 4 February 2014, already initiated with Law 5/2019, of March 15. On the other, it is appropriate to develop various aspects considered necessary to guarantee the rights recognized to borrowers in said law. III This Royal Decree focuses, first, on regulating those aspects necessary for the full transposition of Directive 2014/17/EU of 4 February 2014, given the urgency derived from the infringement procedure opened by the European Commission for the lack of transposition within the period provided by the aforementioned Directive. This fact explains the partial use of the powers contained in the law, limited to those aspects essential for the full transposition of Directive 2014/17/EU of 4 February 2014. The urgency in the processing is what justifies, therefore, that the present Royal Decree has been limited to regulating the essential aspects to complete the transposition of the said European Directive, developing for this purpose what is precise in Law 5/2019, of March 15, but has not occupied itself with adjusting the corresponding regulatory norms through their pertinent modifications, since these, although necessary, are not affected by the urgency referred to. In this way, the present Royal Decree establishes, on the one hand, what minimum requirements must be met to offer advisory services and will allow, in turn, those providing them to use the terms "independent advice" and "independent advisor." On the other hand, it establishes a series of formal and material requirements for the information that must be offered to the borrower during the validity of the contract. Secondly, the present Royal Decree focuses on developing various aspects considered necessary to guarantee the rights recognized to borrowers in Law 5/2019, of March 15, such as the provisions contained in Chapter IV of this Royal Decree. In addition to the above, this Royal Decree transposes Directive 2017/2399 of the European Parliament and of the Council of 12 December 2017, amending Directive 2014/59/EU with regard to the modification introduced in Article 108 of the latter, on the order of priority of unsecured debt instruments in the event of insolvency, whose object is to clarify what is understood by implicit derivative, a condition that would be exclusionary for qualifying a debt instrument as senior non-preferred. Likewise, this Royal Decree repeals the first additional provision of Royal Decree 84/2015, of February 13, developing Law 10/2014, of June 26, on the organization, supervision, and solvency of credit institutions, in order to exempt Spanish credit entities from prior authorization for their issuances of Additional Tier 1 capital instruments and Tier 2 capital to count towards meeting solvency requirements. Unlike what occurs in Spain, in the vast majority of the rest of the European Union countries, these instruments count as regulatory capital without the obligation of prior administrative
authorization. Thus, in those countries, the obligation of prior approval only applies to ordinary Tier 1 capital instruments, in accordance with European Union regulations. The elimination of this authorization requirement will apply not only to new issuances but also to currently ongoing and unfinished authorization procedures. IV The present Royal Decree is structured in four chapters, containing 12 articles, and in ten additional provisions, two transitional provisions, one repealing provision, and five final provisions.
Chapter I collects the general provisions, including the object and scope of application of the norm. In the same terms as Law 5/2019, of March 15, which it develops, this Royal Decree will apply to all real estate loan contracts collected in Article 2 of that law.
Chapter II establishes the requirements for the provision of advisory services, in development of Article 19 of Law 5/2019, of March 15. To instill trust, it is fundamental to guarantee a high degree of fairness, honesty, and professionalism in the sector, adequate management of conflicts of interest, especially those derived from remuneration, and to require that advice is provided in the service of the interests of borrowers, guarantors, or sureties.
Chapter III regulates, first, the requirements for registration in the corresponding register of real estate credit lenders, in development of Article 42 of Law 5/2019, of March 15, and, second, the information that must be provided to the borrower during the validity of the contract, by virtue of the regulatory powers granted to the Government by the fifteenth final provision of the said law. Regarding the latter, it makes reference to the general characteristics that all information, whether established by Law, in this Royal Decree, or in another applicable norm, or included in the real estate loan contract, must meet when sent to the borrower. It regulates both formal aspects, highlighting the necessary clarity and accuracy to which it must be subject, and material aspects such as information on commissions and expenses incurred and interest rates effectively applied during the previous year, modifications of the borrower rate, or information allowing the heirs of a borrower, guarantor, or surety, once such status is accredited, to know the status of the real estate loan vis-à-vis the lender at the time of the death of the deceased. In order to guarantee the adequate protection of citizens, the information obligations collected here, which refer exclusively to real estate credit, are complemented by the corresponding sectoral regulation collecting the transparency obligations of other products that may eventually be contracted jointly.
Chapter IV establishes the specifics and technical requirements of the telematic means that must be used for the submission to the notary of the documentation established in Article 14.1.g) of Law 5/2019, of March 15, as well as the procedure for submission to the notary by the lender, the credit intermediary, or the designated representative, if applicable, of the necessary documentation to comply with the principle of material transparency contained in Article 15 of said law.
The Royal Decree is completed with ten additional provisions, two transitional, one repealing, and five final provisions.
The first additional provision determines the conditions that the professional civil liability insurance or bank guarantee of credit intermediaries must meet and their minimum amount, by reference to the corresponding Delegated Regulation (EU) No 1125/2014 of the Commission of 19 September 2014, supplementing Directive 2014/17/EU of the European Parliament and of the Council as regards the regulatory technical standards on the minimum amount of professional civil liability insurance or other comparable guarantee that credit intermediaries must have. The second additional provision foresees cooperation between the Bank of Spain and the competent authorities of the autonomous communities regarding the provisions of this Royal Decree.

OFFICIAL STATE GAZETTE
No. 102 Monday, April 29, 2019 Sec. I. Page 43115 solvency. Secondly, said law regulates the code of conduct that real estate credit intermediaries, their representatives, and real estate credit lenders must comply with, such as knowledge and competence requirements applicable to their staff and their remuneration policy. Thirdly, it covers aspects related to the real estate loan or credit contract itself, such as its form and content, or the regulation of cases of maturity or early repayment. Alongside this, its Chapter III establishes the legal regime of real estate credit intermediaries, their representatives, and real estate credit lenders, regulating their necessary registration and supervision. Finally, said law is completed with the necessary sanctioning regime. Consequently, the need for the approval of this Royal Decree is twofold. On the one hand, it is necessary to complete the transposition of Directive 2014/17/EU of 4 February 2014, already initiated with Law 5/2019, of March 15. On the other, it is appropriate to develop various aspects considered necessary to guarantee the rights recognized to borrowers in said law. III This Royal Decree focuses, first, on regulating those aspects necessary for the full transposition of Directive 2014/17/EU of 4 February 2014, given the urgency derived from the infringement procedure opened by the European Commission for the lack of transposition within the period provided by the aforementioned Directive. This fact explains the partial use of the powers contained in the law, limited to those aspects essential for the full transposition of Directive 2014/17/EU of 4 February 2014. The urgency in the processing is what justifies, therefore, that the present Royal Decree has been limited to regulating the essential aspects to complete the transposition of the said European Directive, developing for this purpose what is precise in Law 5/2019, of March 15, but has not occupied itself with adjusting the corresponding regulatory norms through their pertinent modifications, since these, although necessary, are not affected by the urgency referred to. In this way, the present Royal Decree establishes, on the one hand, what minimum requirements must be met to offer advisory services and will allow, in turn, those providing them to use the terms "independent advice" and "independent advisor." On the other hand, it establishes a series of formal and material requirements for the information that must be offered to the borrower during the validity of the contract. Secondly, the present Royal Decree focuses on developing various aspects considered necessary to guarantee the rights recognized to borrowers in Law 5/2019, of March 15, such as the provisions contained in Chapter IV of this Royal Decree. In addition to the above, this Royal Decree transposes Directive 2017/2399 of the European Parliament and of the Council of 12 December 2017, amending Directive 2014/59/EU with regard to the modification introduced in
Article 108 of the latter, on the order of priority of unsecured debt instruments in the event of insolvency, whose object is to clarify what is understood by implicit derivative, a condition that would be exclusionary for qualifying a debt instrument as senior non-preferred. Likewise, this Royal Decree repeals the first additional provision of Royal Decree 84/2015, of February 13, developing Law 10/2014, of June 26, on the organization, supervision, and solvency of credit institutions, in order to exempt Spanish credit entities from prior authorization for their issuances of Additional Tier 1 capital instruments and Tier 2 capital to count towards meeting solvency requirements. Unlike what occurs in Spain, in the vast majority of the rest of the European Union countries, these instruments count as regulatory capital without the obligation of prior administrative authorization. Thus, in those countries, the obligation of prior approval only applies to ordinary Tier 1 capital instruments, in accordance with European Union regulations. The elimination of this authorization requirement will apply not only to new issuances but also to currently ongoing and unfinished authorization procedures. IV The present Royal Decree is structured in four chapters, containing 12 articles, and in ten additional provisions, two transitional provisions, one repealing provision, and five final provisions.
Chapter I collects the general provisions, including the object and scope of application of the norm. In the same terms as Law 5/2019, of March 15, which it develops, this Royal Decree will apply to all real estate loan contracts collected in Article 2 of that law.
Chapter II establishes the requirements for the provision of advisory services, in development of Article 19 of Law 5/2019, of March 15. To instill trust, it is fundamental to guarantee a high degree of fairness, honesty, and professionalism in the sector, adequate management of conflicts of interest, especially those derived from remuneration, and to require that advice is provided in the service of the interests of borrowers, guarantors, or sureties.
Chapter III regulates, first, the requirements for registration in the corresponding register of real estate credit lenders, in development of Article 42 of Law 5/2019, of March 15, and, second, the information that must be provided to the borrower during the validity of the contract, by virtue of the regulatory powers granted to the Government by the fifteenth final provision of the said law. Regarding the latter, it makes reference to the general characteristics that all information, whether established by Law, in this Royal Decree, or in another applicable norm, or included in the real estate loan contract, must meet when sent to the borrower. It regulates both formal aspects, highlighting the necessary clarity and accuracy to which it must be subject, and material aspects such as information on commissions and expenses incurred and interest rates effectively applied during the previous year, modifications of the borrower rate, or information allowing the heirs of a borrower, guarantor, or surety, once such status is accredited, to know the status of the real estate loan vis-à-vis the lender at the time of the death of the deceased. In order to guarantee the adequate protection of citizens, the information obligations collected here, which refer exclusively to real estate credit, are complemented by the corresponding sectoral regulation collecting the transparency obligations of other products that may eventually be contracted jointly.
Chapter IV establishes the specifics and technical requirements of the telematic means that must be used for the submission to the notary of the documentation established in Article 14.1.g) of Law 5/2019, of March 15, as well as the procedure for submission to the notary by the lender, the credit intermediary, or the designated representative, if applicable, of the necessary documentation to comply with the principle of material transparency contained in Article 15 of said law.
The Royal Decree is completed with ten additional provisions, two transitional, one repealing, and five final provisions.
The first additional provision determines the conditions that the professional civil liability insurance or bank guarantee of credit intermediaries must meet and their minimum amount, by reference to the corresponding Delegated Regulation (EU) No 1125/2014 of the Commission of 19 September 2014, supplementing Directive 2014/17/EU of the European Parliament and of the Council as regards the regulatory technical standards on the minimum amount of professional civil liability insurance or other comparable guarantee that credit intermediaries must have. The second additional provision foresees cooperation between the Bank of Spain and the competent authorities of the autonomous communities regarding the provisions of this Royal Decree. cve: BOE-A-2019-6299 Verifiable at http://www.boe.es

OFFICIAL STATE GAZETTE
No. 102 Monday, April 29, 2019 Sec. I. Page 43116 The third additional provision empowers the Bank of Spain to establish technical regulations on the form of access to the Risk Information Central; the fourth grants this Royal Decree the character of an ordering and disciplinary norm; and the fifth establishes a series of mandatory governance requirements for real estate credit lenders, which constitutes the development of Article 5 of Law 5/2019, of March 15.
For its part, the sixth additional provision collects the obligation of lenders, credit intermediaries, their designated representatives, and the consolidatable groups of all of them, whose supervision corresponds to the Bank of Spain, to send the information it considers necessary to fulfill its supervision function, in the form and periodicity required by it.
The seventh additional provision charges the Ministries of Economy and Business and Justice to present within one year a report to the Delegated Commission for Economic Affairs analyzing the impact of the predictions of Articles 11 and 12 of this Royal Decree.
The eighth final provision collects the mandatory compliance with Regulation (EU) 2016/679 of the European Parliament and of the Council of 27 April 2016, on the protection of natural persons with regard to the processing of personal data and on the free movement of such data.
The ninth additional provision collects the specific information requirements that must be supplied regarding real estate credit contracts within the framework of voice telephone communications provided for in Article 7.3 of Law 22/2007, of July 11, on the distance marketing of financial services intended for consumers, in the terms determined by Directive 2014/17/EU of the European Parliament and of the Council of 4 February 2014.
The tenth additional provision regulates the exercise of the freedom of establishment of real estate credit intermediaries in the terms defined by Directive 2014/17/EU of the European Parliament and of the Council of 4 February 2014.
The first transitional provision aims to clarify the validity of certain provisions affected by developments not yet carried out of the fifteenth additional provision of Law 5/2019, of March 15.
The second transitional provision foresees the regime applicable to the authorizations provided for in the first additional provision of Royal Decree 84/2015, of February 13, developing Law 10/2014, of June 26, on the organization, supervision, and solvency of credit institutions.
The single repealing provision establishes the repeal of norms of equal or lower rank that oppose this Royal Decree, including the first additional provision of Royal Decree 84/2015, of February 13, developing Law 10/2014, of June 26, on the organization, supervision, and solvency of credit institutions.
The first final provision establishes the competence title, collecting the exclusive state competence over commercial legislation, procedural legislation, bases of credit organization, banking and insurance, and bases and coordination of the general planning of economic activity.
For its part, the second final provision foresees the transposition of Article 108.6 of Directive 2014/59/EU of the European Parliament and of the Council of 15 May 2014, establishing a framework for the restructuring and resolution of credit institutions and investment firms, and amending Council Directive 82/891/EEC, and Directives 2001/24/EC, 2002/47/EC, 2004/25/EC, 2005/56/EC, 2007/36/EC, 2011/35/EU, 2012/30/EU and 2013/36/EU, and Regulations (EU) No 1093/2010 and (EU) No 648/2012 of the European Parliament and of the Council. Said Article 108.6 was introduced by Directive (EU) 2017/2399, of 12 December 2017, regarding the hierarchy of liabilities in the event of insolvency. The third final provision refers to the transposition into the Spanish legal order of European Union regulations. cve: BOE-A-2019-6299 Verifiable at http://www.boe.es

OFFICIAL STATE GAZETTE
No. 102 Monday, April 29, 2019 Sec. I. Page 43117 Finally, the fourth final provision empowers the head of the Ministry of Economy and Business to issue any provisions of a general nature and acts necessary for the development and application of this Royal Decree, and the fifth establishes the entry into force of the Royal Decree.
V
This Royal Decree is issued under the authority of Articles 149.1.6th, 11th, and 13th of the Spanish Constitution, which attribute to the State exclusive competence over commercial legislation, procedural legislation, bases of credit organization, banking and insurance, and bases and coordination of the general planning of economic activity, respectively.
The norm adapts to the principles of necessity, effectiveness, proportionality, legal certainty, transparency, and efficiency, to which the exercise of regulatory power must be subject, in accordance with Article 129 of Law 39/2015, of October 1, on the Common Administrative Procedure of Public Administrations.
In application of the principles of necessity and effectiveness, the norm pursues a general interest by developing regulations for Law 5/2019, of March 15, as well as completing the transposition of European Union regulations. Ensuring minimum, clear, and precise rules for the provision of advisory services is fundamental for the trust of the borrower to whom this service is provided, adequately safeguarding their best interest. On the other hand, it is essential to develop the legal regime of lenders, as established in this Royal Decree, both for the legal certainty of all parties involved and for the necessary knowledge of the borrower after signing the contract. Finally, the regulation of telematic means will allow the mechanisms provided for in Law 5/2019, of March 15, to guarantee material transparency to operate effectively. Likewise, this norm provides coherence to our legal order and is the most appropriate instrument for it, given that its approval is mandatory by mandate of the said Law and as a consequence of the necessary transposition of Directive 2014/17/EU of 4 February 2014. It therefore complies with the principles of proportionality and legal certainty. In application of the principle of transparency, in the elaboration procedure of the present Royal Decree, the provisions of Law 50/1997, of November 27, of the Government, and Law 39/2015, of October 1, on the Common Administrative Procedure of Public Administrations, were taken into account. It was submitted to the public consultation and hearing procedures provided for, respectively, in Article 133.1 of Law 39/2015, of October 1, and Article 26.6 of Law 50/1997, of November 27, of the Government, thus enabling the active participation of potential recipients. However, given the nature of this Royal Decree, urgency in its processing was subsequently declared by the Council of Ministers. Finally, the principle of efficiency is accredited, because the regulatory initiative does not impose unnecessary or accessory administrative burdens. Likewise, the mandate to develop Law 5/2019, of March 15, and to transpose Directive 2014/17/EU of 4 February 2014, is carried out with the greatest possible urgency, in observance of the principles of necessity, proportionality, and effectiveness. The present Royal Decree is issued by virtue of the authorization for regulatory development established in Law 5/2019, of March 15, regulating real estate credit contracts, in its Articles 14.1, 19.6, 36.2, 42.1, and in paragraph 1 of the fifteenth final provision. By virtue thereof, upon proposal of the Ministers of Economy and Business and of Justice, with the agreement of the Council of State, and after deliberation of the Council of Ministers in its meeting of April 26, 2019, cve: BOE-A-2019-6299 Verifiable at http://www.boe.es

OFFICIAL STATE GAZETTE
No. 102 Monday, April 29, 2019 Sec. I. Page 43118 I HEREBY ORDER:
CHAPTER I
General Provisions
Article 1. Object.
This Royal Decree aims to develop those provisions of Law 5/2019, of March 15, regulating real estate credit contracts, mandatory for the full transposition of Directive 2014/17/EU of the European Parliament and of the Council of 4 February 2014, on credit agreements for consumers relating to residential immovable property and amending Directives 2008/48/EC and 2013/36/EU and Regulation (EU) No 1093/2010, and others necessary to guarantee the rights recognized to borrowers, guarantors, and sureties in Law 5/2019, of March 15. Specifically, it establishes the requirements applicable for the provision of advisory services and for the registration of real estate lenders; the information obligations of the real estate lender to the borrower and the use of telematic means in the submission of documentation by the lender, the real estate credit intermediary, or designated representative to the notary. It also determines the characteristics required for the professional civil liability insurance or bank guarantee of credit intermediaries, and their conditions.
Article 2. Scope of Application.
The provisions of this Royal Decree shall apply to activities developed in relation to real estate loan contracts included in the scope of application of Law 5/2019, of March 15.
CHAPTER II
Advisory Services
Article 3. Advisory Services.

1. The advisory service defined in Article 4.20 of Law 5/2019, of March 15, provided by the lender, real estate credit intermediary, or designated representative, shall constitute an activity distinct from the granting and intermediation of real estate loans and shall be the subject of a specific contract within the framework provided in Article 19 of said law.
2. Only when the advisory service is provided may the expressions "advisor," "advisory," "advice," or terms that result

OFFICIAL STATE GAZETTE
No. 102 Monday, April 29, 2019 Sec. I. Page 43119 solvency. Secondly, said law regulates the code of conduct that real estate credit intermediaries, their representatives, and real estate credit lenders must comply with, such as knowledge and competence requirements applicable to their staff and their remuneration policy. Thirdly, it covers aspects related to the real estate loan or credit contract itself, such as its form and content, or the regulation of cases of maturity or early repayment. Alongside this, its Chapter III establishes the legal regime of real estate credit intermediaries, their representatives, and real estate credit lenders, regulating their necessary registration and supervision. Finally, said law is completed with the necessary sanctioning regime. Consequently, the need for the approval of this Royal Decree is twofold. On the one hand, it is necessary to complete the transposition of Directive 2014/17/EU of 4 February 2014, already initiated with Law 5/2019, of March 15. On the other, it is appropriate to develop various aspects considered necessary to guarantee the rights recognized to borrowers in said law. III This Royal Decree focuses, first, on regulating those aspects necessary for the full transposition of Directive 2014/17/EU of 4 February 2014, given the urgency derived from the infringement procedure opened by the European Commission for the lack of transposition within the period provided by the aforementioned Directive. This fact explains the partial use of the powers contained in the law, limited to those aspects essential for the full transposition of Directive 2014/17/EU of 4 February 2014. The urgency in the processing is what justifies, therefore, that the present Royal Decree has been limited to regulating the essential aspects to complete the transposition of the said European Directive, developing for this purpose what is precise in Law 5/2019, of March 15, but has not occupied itself with adjusting the corresponding regulatory norms through their pertinent modifications, since these, although necessary, are not affected by the urgency referred to. In this way, the present Royal Decree establishes, on the one hand, what minimum requirements must be met to offer advisory services and will allow, in turn, those providing them to use the terms "independent advice" and "independent advisor." On the other hand, it establishes a series of formal and material requirements for the information that must be offered to the borrower during the validity of the contract. Secondly, the present Royal Decree focuses on developing various aspects considered necessary to guarantee the rights recognized to borrowers in Law 5/2019, of March 15, such as the provisions contained in Chapter IV of this Royal Decree. In addition to the above, this Royal Decree transposes Directive 2017/2399 of the European Parliament and of the Council of 12 December 2017, amending Directive 2014/59/EU with regard to the modification introduced in
Article 108 of the latter, on the order of priority of unsecured debt instruments in the event of insolvency, whose object is to clarify what is understood by implicit derivative, a condition that would be exclusionary for qualifying a debt instrument as senior non-preferred. Likewise, this Royal Decree repeals the first additional provision of Royal Decree 84/2015, of February 13, developing Law 10/2014, of June 26, on the organization, supervision, and solvency of credit institutions, in order to exempt Spanish credit entities from prior authorization for their issuances of Additional Tier 1 capital instruments and Tier 2 capital to count towards meeting solvency requirements. Unlike what occurs in Spain, in the vast majority of the rest of the European Union countries, these instruments count as regulatory capital without the obligation of prior administrative authorization. Thus, in those countries, the obligation of prior approval only applies to ordinary Tier 1 capital instruments, in accordance with European Union regulations. The elimination of this authorization requirement will apply not only to new issuances but also to currently ongoing and unfinished authorization procedures. IV The present Royal Decree is structured in four chapters, containing 12 articles, and in ten additional provisions, two transitional provisions, one repealing provision, and five final provisions.
Chapter I collects the general provisions, including the object and scope of application of the norm. In the same terms as Law 5/2019, of March 15, which it develops, this Royal Decree will apply to all real estate loan contracts collected in Article 2 of that law.
Chapter II establishes the requirements for the provision of advisory services, in development of Article 19 of Law 5/2019, of March 15. To instill trust, it is fundamental to guarantee a high degree of fairness, honesty, and professionalism in the sector, adequate management of conflicts of interest, especially those derived from remuneration, and to require that advice is provided in the service of the interests of borrowers, guarantors, or sureties.
Chapter III regulates, first, the requirements for registration in the corresponding register of real estate credit lenders, in development of Article 42 of Law 5/2019, of March 15, and, second, the information that must be provided to the borrower during the validity of the contract, by virtue of the regulatory powers granted to the Government by the fifteenth final provision of the said law. Regarding the latter, it makes reference to the general characteristics that all information, whether established by Law, in this Royal Decree, or in another applicable norm, or included in the real estate loan contract, must meet when sent to the borrower. It regulates both formal aspects, highlighting the necessary clarity and accuracy to which it must be subject, and material aspects such as information on commissions and expenses incurred and interest rates effectively applied during the previous year, modifications of the borrower rate, or information allowing the heirs of a borrower, guarantor, or surety, once such status is accredited, to know the status of the real estate loan vis-à-vis the lender at the time of the death of the deceased. In order to guarantee the adequate protection of citizens, the information obligations collected here, which refer exclusively to real estate credit, are complemented by the corresponding sectoral regulation collecting the transparency obligations of other products that may eventually be contracted jointly.
Chapter IV establishes the specifics and technical requirements of the telematic means that must be used for the submission to the notary of the documentation established in Article 14.1.g) of Law 5/2019, of March 15, as well as the procedure for submission to the notary by the lender, the credit intermediary, or the designated representative, if applicable, of the necessary documentation to comply with the principle of material transparency contained in Article 15 of said law.
The Royal Decree is completed with ten additional provisions, two transitional, one repealing, and five final provisions.
The first additional provision determines the conditions that the professional civil liability insurance or bank guarantee of credit intermediaries must meet and their minimum amount, by reference to the corresponding Delegated Regulation (EU) No 1125/2014 of the Commission of 19 September 2014, supplementing Directive 2014/17/EU of the European Parliament and of the Council as regards the regulatory technical standards on the minimum amount of professional civil liability insurance or other comparable guarantee that credit intermediaries must have. The second additional provision foresees cooperation between the Bank of Spain and the competent authorities of the autonomous communities regarding the provisions of this Royal Decree. cve: BOE-A-2019-6299 Verifiable at http://www.boe.es

OFFICIAL STATE GAZETTE
No. 102 Monday, April 29, 2019 Sec. I. Page 43120 The third additional provision empowers the Bank of Spain to establish technical regulations on the form of access to the Risk Information Central; the fourth grants this Royal Decree the character of an ordering and disciplinary norm; and the fifth establishes a series of mandatory governance requirements for real estate credit lenders, which constitutes the development of Article 5 of Law 5/2019, of March 15.
For its part, the sixth additional provision collects the obligation of lenders, credit intermediaries, their designated representatives, and the consolidatable groups of all of them, whose supervision corresponds to the Bank of Spain, to send the information it considers necessary to fulfill its supervision function, in the form and periodicity required by it.
The seventh additional provision charges the Ministries of Economy and Business and Justice to present within one year a report to the Delegated Commission for Economic Affairs analyzing the impact of the predictions of Articles 11 and 12 of this Royal Decree.
The eighth final provision collects the mandatory compliance with Regulation (EU) 2016/679 of the European Parliament and of the Council of 27 April 2016, on the protection of natural persons with regard to the processing of personal data and on the free movement of such data.
The ninth additional provision collects the specific information requirements that must be supplied regarding real estate credit contracts within the framework of voice telephone communications provided for in Article 7.3 of Law 22/2007, of July 11, on the distance marketing of financial services intended for consumers, in the terms determined by Directive 2014/17/EU of the European Parliament and of the Council of 4 February 2014.
The tenth additional provision regulates the exercise of the freedom of establishment of real estate credit intermediaries in the terms defined by Directive 2014/17/EU of the European Parliament and of the Council of 4 February 2014.
The first transitional provision aims to clarify the validity of certain provisions affected by developments not yet carried out of the fifteenth additional provision of Law 5/2019, of March 15.
The second transitional provision foresees the regime applicable to the authorizations provided for in the first additional provision of Royal Decree 84/2015, of February 13, developing Law 10/2014, of June 26, on the organization, supervision, and solvency of credit institutions.
The single repealing provision establishes the repeal of norms of equal or lower rank that oppose this Royal Decree, including the first additional provision of Royal Decree 84/2015, of February 13, developing Law 10/2014, of June 26, on the organization, supervision, and solvency of credit institutions.
The first final provision establishes the competence title, collecting the exclusive state competence over commercial legislation, procedural legislation, bases of credit organization, banking and insurance, and bases and coordination of the general planning of economic activity.
For its part, the second final provision foresees the transposition of Article 108.6 of Directive 2014/59/EU of the European Parliament and of the Council of 15 May 2014, establishing a framework for the restructuring and resolution of credit institutions and investment firms, and amending Council Directive 82/891/EEC, and Directives 2001/24/EC, 2002/47/EC, 2004/25/EC, 2005/56/EC, 2007/36/EC, 2011/35/EU, 2012/30/EU and 2013/36/EU, and Regulations (EU) No 1093/2010 and (EU) No 648/2012 of the European Parliament and of the Council. Said Article 108.6 was introduced by Directive (EU) 2017/2399, of 12 December 2017, regarding the hierarchy of liabilities in the event of insolvency. The third final provision refers to the transposition into the Spanish legal order of European Union regulations. cve: BOE-A-2019-6299 Verifiable at http://www.boe.es

OFFICIAL STATE GAZETTE
No. 102 Monday, April 29, 2019 Sec. I. Page 43121 Finally, the fourth final provision empowers the head of the Ministry of Economy and Business to issue any provisions of a general nature and acts necessary for the development and application of this Royal Decree, and the fifth establishes the entry into force of the Royal Decree.
V
This Royal Decree is issued under the authority of Articles 149.1.6th, 11th, and 13th of the Spanish Constitution, which attribute to the State exclusive competence over commercial legislation, procedural legislation, bases of credit organization, banking and insurance, and bases and coordination of the general planning of economic activity, respectively.
The norm adapts to the principles of necessity, effectiveness, proportionality, legal certainty, transparency, and efficiency, to which the exercise of regulatory power must be subject, in accordance with Article 129 of Law 39/2015, of October 1, on the Common Administrative Procedure of Public Administrations.
In application of the principles of necessity and effectiveness, the norm pursues a general interest by developing regulations for Law 5/2019, of March 15, as well as completing the transposition of European Union regulations. Ensuring minimum, clear, and precise rules for the provision of advisory services is fundamental for the trust of the borrower to whom this service is provided, adequately safeguarding their best interest. On the other hand, it is essential to develop the legal regime of lenders, as established in this Royal Decree, both for the legal certainty of all parties involved and for the necessary knowledge of the borrower after signing the contract. Finally, the regulation of telematic means will allow the mechanisms provided for in Law 5/2019, of March 15, to guarantee material transparency to operate effectively. Likewise, this norm provides coherence to our legal order and is the most appropriate instrument for it, given that its approval is mandatory by mandate of the said Law and as a consequence of the necessary transposition of Directive 2014/17/EU of 4 February 2014. It therefore complies with the principles of proportionality and legal certainty. In application of the principle of transparency, in the elaboration procedure of the present Royal Decree, the provisions of Law 50/1997, of November 27, of the Government, and Law 39/2015, of October 1, on the Common Administrative Procedure of Public Administrations, were taken into account. It was submitted to the public consultation and hearing procedures provided for, respectively, in Article 133.1 of Law 39/2015, of October 1, and Article 26.6 of Law 50/1997, of November 27, of the Government, thus enabling the active participation of potential recipients. However, given the nature of this Royal Decree, urgency in its processing was subsequently declared by the Council of Ministers. Finally, the principle of efficiency is accredited, because the regulatory initiative does not impose unnecessary or accessory administrative burdens. Likewise, the mandate to develop Law 5/2019, of March 15, and to transpose Directive 2014/17/EU of 4 February 2014, is carried out with the greatest possible urgency, in observance of the principles of necessity, proportionality, and effectiveness. The present Royal Decree is issued by virtue of the authorization for regulatory development established in Law 5/2019, of March 15, regulating real estate credit contracts, in its Articles 14.1, 19.6, 36.2, 42.1, and in paragraph 1 of the fifteenth final provision. By virtue thereof, upon proposal of the Ministers of Economy and Business and of Justice, with the agreement of the Council of State, and after deliberation of the Council of Ministers in its meeting of April 26, 2019, cve: BOE-A-2019-6299 Verifiable at http://www.boe.es

OFFICIAL STATE GAZETTE
No. 102 Monday, April 29, 2019 Sec. I. Page 43122 I HEREBY ORDER:
CHAPTER I
General Provisions
Article 1. Object.
This Royal Decree aims to develop those provisions of Law 5/2019, of March 15, regulating real estate credit contracts, mandatory for the full transposition of Directive 2014/17/EU of the European Parliament and of the Council of 4 February 2014, on credit agreements for consumers relating to residential immovable property and amending Directives 2008/48/EC and 2013/36/EU and Regulation (EU) No 1093/2010, and others necessary to guarantee the rights recognized to borrowers, guarantors, and sureties in Law 5/2019, of March 15. Specifically, it establishes the requirements applicable for the provision of advisory services and for the registration of real estate lenders; the information obligations of the real estate lender to the borrower and the use of telematic means in the submission of documentation by the lender, the real estate credit intermediary, or designated representative to the notary. It also determines the characteristics required for the professional civil liability insurance or bank guarantee of credit intermediaries, and their conditions.
Article 2. Scope of Application.
The provisions of this Royal Decree shall apply to activities developed in relation to real estate loan contracts included in the scope of application of Law 5/2019, of March 15.
CHAPTER II
Advisory Services
Article 3. Advisory Services.

1. The advisory service defined in Article 4.20 of Law 5/2019, of March 15, provided by the lender, real estate credit intermediary, or designated representative, shall constitute an activity distinct from the granting and intermediation of real estate loans and shall be the subject of a specific contract within the framework provided in Article 19 of said law.
2. Only when the advisory service is provided may the expressions "advisor," "advisory," "advice," or terms that result

OFFICIAL STATE GAZETTE
No. 102 Monday, April 29, 2019 Sec. I. Page 43123 solvency. Secondly, said law regulates the code of conduct that real estate credit intermediaries, their representatives, and real estate credit lenders must comply with, such as knowledge and competence requirements applicable to their staff and their remuneration policy. Thirdly, it covers aspects related to the real estate loan or credit contract itself, such as its form and content, or the regulation of cases of maturity or early repayment. Alongside this, its Chapter III establishes the legal regime of real estate credit intermediaries, their representatives, and real estate credit lenders, regulating their necessary registration and supervision. Finally, said law is completed with the necessary sanctioning regime. Consequently, the need for the approval of this Royal Decree is twofold. On the one hand, it is necessary to complete the transposition of Directive 2014/17/EU of 4 February 2014, already initiated with Law 5/2019, of March 15. On the other, it is appropriate to develop various aspects considered necessary to guarantee the rights recognized to borrowers in said law. III This Royal Decree focuses, first, on regulating those aspects necessary for the full transposition of Directive 2014/17/EU of 4 February 2014, given the urgency derived from the infringement procedure opened by the European Commission for the lack of transposition within the period provided by the aforementioned Directive. This fact explains the partial use of the powers contained in the law, limited to those aspects essential for the full transposition of Directive 2014/17/EU of 4 February 2014. The urgency in the processing is what justifies, therefore, that the present Royal Decree has been limited to regulating the essential aspects to complete the transposition of the said European Directive, developing for this purpose what is precise in Law 5/2019, of March 15, but has not occupied itself with adjusting the corresponding regulatory norms through their pertinent modifications, since these, although necessary, are not affected by the urgency referred to. In this way, the present Royal Decree establishes, on the one hand, what minimum requirements must be met to offer advisory services and will allow, in turn, those providing them to use the terms "independent advice" and "independent advisor." On the other hand, it establishes a series of formal and material requirements for the information that must be offered to the borrower during the validity of the contract. Secondly, the present Royal Decree focuses on developing various aspects considered necessary to guarantee the rights recognized to borrowers in Law 5/2019, of March 15, such as the provisions contained in Chapter IV of this Royal Decree. In addition to the above, this Royal Decree transposes Directive 2017/2399 of the European Parliament and of the Council of 12 December 2017, amending Directive 2014/59/EU with regard to the modification introduced in
Article 108 of the latter, on the order of priority of unsecured debt instruments in the event of insolvency, whose object is to clarify what is understood by implicit derivative, a condition that would be exclusionary for qualifying a debt instrument as senior non-preferred. Likewise, this Royal Decree repeals the first additional provision of Royal Decree 84/2015, of February 13, developing Law 10/2014, of June 26, on the organization, supervision, and solvency of credit institutions, in order to exempt Spanish credit entities from prior authorization for their issuances of Additional Tier 1 capital instruments and Tier 2 capital to count towards meeting solvency requirements. Unlike what occurs in Spain, in the vast majority of the rest of the European Union countries, these instruments count as regulatory capital without the obligation of prior administrative authorization. Thus, in those countries, the obligation of prior approval only applies to ordinary Tier 1 capital instruments, in accordance with European Union regulations. The elimination of this authorization requirement will apply not only to new issuances but also to currently ongoing and unfinished authorization procedures. IV The present Royal Decree is structured in four chapters, containing 12 articles, and in ten additional provisions, two transitional provisions, one repealing provision, and five final provisions.
Chapter I collects the general provisions, including the object and scope of application of the norm. In the same terms as Law 5/2019, of March 15, which it develops, this Royal Decree will apply to all real estate loan contracts collected in Article 2 of that law.
Chapter II establishes the requirements for the provision of advisory services, in development of Article 19 of Law 5/2019, of March 15. To instill trust, it is fundamental to guarantee a high degree of fairness, honesty, and professionalism in the sector, adequate management of conflicts of interest, especially those derived from remuneration, and to require that advice is provided in the service of the interests of borrowers, guarantors, or sureties.
Chapter III regulates, first, the requirements for registration in the corresponding register of real estate credit lenders, in development of Article 42 of Law 5/2019, of March 15, and, second, the information that must be provided to the borrower during the validity of the contract, by virtue of the regulatory powers granted to the Government by the fifteenth final provision of the said law. Regarding the latter, it makes reference to the general characteristics that all information, whether established by Law, in this Royal Decree, or in another applicable norm, or included in the real estate loan contract, must meet when sent to the borrower. It regulates both formal aspects, highlighting the necessary clarity and accuracy to which it must be subject, and material aspects such as information on commissions and expenses incurred and interest rates effectively applied during the previous year, modifications of the borrower rate, or information allowing the heirs of a borrower, guarantor, or surety, once such status is accredited, to know the status of the real estate loan vis-à-vis the lender at the time of the death of the deceased. In order to guarantee the adequate protection of citizens, the information obligations collected here, which refer exclusively to real estate credit, are complemented by the corresponding sectoral regulation collecting the transparency obligations of other products that may eventually be contracted jointly.
Chapter IV establishes the specifics and technical requirements of the telematic means that must be used for the submission to the notary of the documentation established in Article 14.1.g) of Law 5/2019, of March 15, as well as the procedure for submission to the notary by the lender, the credit intermediary, or the designated representative, if applicable, of the necessary documentation to comply with the principle of material transparency contained in Article 15 of said law.
The Royal Decree is completed with ten additional provisions, two transitional, one repealing, and five final provisions.
The first additional provision determines the conditions that the professional civil liability insurance or bank guarantee of credit intermediaries must meet and their minimum amount, by reference to the corresponding Delegated Regulation (EU) No 1125/2014 of the Commission of 19 September 2014, supplementing Directive 2014/17/EU of the European Parliament and of the Council as regards the regulatory technical standards on the minimum amount of professional civil liability insurance or other comparable guarantee that credit intermediaries must have. The second additional provision foresees cooperation between the Bank of Spain and the competent authorities of the autonomous communities regarding the provisions of this Royal Decree. cve: BOE-A-2019-6299 Verifiable at http://www.boe.es

OFFICIAL STATE GAZETTE
No. 102 Monday, April 29, 2019 Sec. I. Page 43124 The third additional provision empowers the Bank of Spain to establish technical regulations on the form of access to the Risk Information Central; the fourth grants this Royal Decree the character of an ordering and disciplinary norm; and the fifth establishes a series of mandatory governance requirements for real estate credit lenders, which constitutes the development of Article 5 of Law 5/2019, of March 15.
For its part, the sixth additional provision collects the obligation of lenders, credit intermediaries, their designated representatives, and the consolidatable groups of all of them, whose supervision corresponds to the Bank of Spain, to send the information it considers necessary to fulfill its supervision function, in the form and periodicity required by it.
The seventh additional provision charges the Ministries of Economy and Business and Justice to present within one year a report to the Delegated Commission for Economic Affairs analyzing the impact of the predictions of Articles 11 and 12 of this Royal Decree.
The eighth final provision collects the mandatory compliance with Regulation (EU) 2016/679 of the European Parliament and of the Council of 27 April 2016, on the protection of natural persons with regard to the processing of personal data and on the free movement of such data.
The ninth additional provision collects the specific information requirements that must be supplied regarding real estate credit contracts within the framework of voice telephone communications provided for in Article 7.3 of Law 22/2007, of July 11, on the distance marketing of financial services intended for consumers, in the terms determined by Directive 2014/17/EU of the European Parliament and of the Council of 4 February 2014.
The tenth additional provision regulates the exercise of the freedom of establishment of real estate credit intermediaries in the terms defined by Directive 2014/17/EU of the European Parliament and of the Council of 4 February 2014.
The first transitional provision aims to clarify the validity of certain provisions affected by developments not yet carried out of the fifteenth additional provision of Law 5/2019, of March 15.
The second transitional provision foresees the regime applicable to the authorizations provided for in the first additional provision of Royal Decree 84/2015, of February 13, developing Law 10/2014, of June 26, on the organization, supervision, and solvency of credit institutions.
The single repealing provision establishes the repeal of norms of equal or lower rank that oppose this Royal Decree, including the first additional provision of Royal Decree 84/2015, of February 13, developing Law 10/2014, of June 26, on the organization, supervision, and solvency of credit institutions.
The first final provision establishes the competence title, collecting the exclusive state competence over commercial legislation, procedural legislation, bases of credit organization, banking and insurance, and bases and coordination of the general planning of economic activity.
For its part, the second final provision foresees the transposition of Article 108.6 of Directive 2014/59/EU of the European Parliament and of the Council of 15 May 2014, establishing a framework for the restructuring and resolution of credit institutions and investment firms, and amending Council Directive 82/891/EEC, and Directives 2001/24/EC, 2002/47/EC, 2004/25/EC, 2005/56/EC, 2007/36/EC, 2011/35/EU, 2012/30/EU and 2013/36/EU, and Regulations (EU) No 1093/2010 and (EU) No 648/2012 of the European Parliament and of the Council. Said Article 108.6 was introduced by Directive (EU) 2017/2399, of 12 December 2017, regarding the hierarchy of liabilities in the event of insolvency. The third final provision refers to the transposition into the Spanish legal order of European Union regulations. cve: BOE-A-2019-6299 Verifiable at http://www.boe.es

OFFICIAL STATE GAZETTE
No. 102 Monday, April 29, 2019 Sec. I. Page 43125 Finally, the fourth final provision empowers the head of the Ministry of Economy and Business to issue any provisions of a general nature and acts necessary for the development and application of this Royal Decree, and the fifth establishes the entry into force of the Royal Decree.
V
This Royal Decree is issued under the authority of Articles 149.1.6th, 11th, and 13th of the Spanish Constitution, which attribute to the State exclusive competence over commercial legislation, procedural legislation, bases of credit organization, banking and insurance, and bases and coordination of the general planning of economic activity, respectively.
The norm adapts to the principles of necessity, effectiveness, proportionality, legal certainty, transparency, and efficiency, to which the exercise of regulatory power must be subject, in accordance with Article 129 of Law 39/2015, of October 1, on the Common Administrative Procedure of Public Administrations.
In application of the principles of necessity and effectiveness, the norm pursues a general interest by developing regulations for Law 5/2019, of March 15, as well as completing the transposition of European Union regulations. Ensuring minimum, clear, and precise rules for the provision of advisory services is fundamental for the trust of the borrower to whom this service is provided, adequately safeguarding their best interest. On the other hand, it is essential to develop the legal regime of lenders, as established in this Royal Decree, both for the legal certainty of all parties involved and for the necessary knowledge of the borrower after signing the contract. Finally, the regulation of telematic means will allow the mechanisms provided for in Law 5/2019, of March 15, to guarantee material transparency to operate effectively. Likewise, this norm provides coherence to our legal order and is the most appropriate instrument for it, given that its approval is mandatory by mandate of the said Law and as a consequence of the necessary transposition of Directive 2014/17/EU of 4 February 2014. It therefore complies with the principles of proportionality and legal certainty. In application of the principle of transparency, in the elaboration procedure of the present Royal Decree, the provisions of Law 50/1997, of November 27, of the Government, and Law 39/2015, of October 1, on the Common Administrative Procedure of Public Administrations, were taken into account. It was submitted to the public consultation and hearing procedures provided for, respectively, in Article 133.1 of Law 39/2015, of October 1, and Article 26.6 of Law 50/1997, of November 27, of the Government, thus enabling the active participation of potential recipients. However, given the nature of this Royal Decree, urgency in its processing was subsequently declared by the Council of Ministers. Finally, the principle of efficiency is accredited, because the regulatory initiative does not impose unnecessary or accessory administrative burdens. Likewise, the mandate to develop Law 5/2019, of March 15, and to transpose Directive 2014/17/EU of 4 February 2014, is carried out with the greatest possible urgency, in observance of the principles of necessity, proportionality, and effectiveness. The present Royal Decree is issued by virtue of the authorization for regulatory development established in Law 5/2019, of March 15, regulating real estate credit contracts, in its Articles 14.1, 19.6, 36.2, 42.1, and in paragraph 1 of the fifteenth final provision. By virtue thereof, upon proposal of the Ministers of Economy and Business and of Justice, with the agreement of the Council of State, and after deliberation of the Council of Ministers in its meeting of April 26, 2019, cve: BOE-A-2019-6299 Verifiable at http://www.boe.es

OFFICIAL STATE GAZETTE
No. 102 Monday, April 29, 2019 Sec. I. Page 43126 I HEREBY ORDER:
CHAPTER I
General Provisions
Article 1. Object.
This Royal Decree aims to develop those provisions of Law 5/2019, of March 15, regulating real estate credit contracts, mandatory for the full transposition of Directive 2014/17/EU of the European Parliament and of the Council of 4 February 2014, on credit agreements for consumers relating to residential immovable property and amending Directives 2008/48/EC and 2013/36/EU and Regulation (EU) No 1093/2010, and others necessary to guarantee the rights recognized to borrowers, guarantors, and sureties in Law 5/2019, of March 15. Specifically, it establishes the requirements applicable for the provision of advisory services and for the registration of real estate lenders; the information obligations of the real estate lender to the borrower and the use of telematic means in the submission of documentation by the lender, the real estate credit intermediary, or designated representative to the notary. It also determines the characteristics required for the professional civil liability insurance or bank guarantee of credit intermediaries, and their conditions.
Article 2. Scope of Application.
The provisions of this Royal Decree shall apply to activities developed in relation to real estate loan contracts included in the scope of application of Law 5/2019, of March 15.
CHAPTER II
Advisory Services
Article 3. Advisory Services.

1. The advisory service defined in Article 4.20 of Law 5/2019, of March 15, provided by the lender, real estate credit intermediary, or designated representative, shall constitute an activity distinct from the granting and intermediation of real estate loans and shall be the subject of a specific contract within the framework provided in Article 19 of said law.
2. Only when the advisory service is provided may the expressions "advisor," "advisory," "advice," or terms that result

OFFICIAL STATE GAZETTE
No. 102 Monday, April 29, 2019 Sec. I. Page 43127 solvency. Secondly, said law regulates the code of conduct that real estate credit intermediaries, their representatives, and real estate credit lenders must comply with, such as knowledge and competence requirements applicable to their staff and their remuneration policy. Thirdly, it covers aspects related to the real estate loan or credit contract itself, such as its form and content, or the regulation of cases of maturity or early repayment. Alongside this, its Chapter III establishes the legal regime of real estate credit intermediaries, their representatives, and real estate credit lenders, regulating their necessary registration and supervision. Finally, said law is completed with the necessary sanctioning regime. Consequently, the need for the approval of this Royal Decree is twofold. On the one hand, it is necessary to complete the transposition of Directive 2014/17/EU of 4 February 2014, already initiated with Law 5/2019, of March 15. On the other, it is appropriate to develop various aspects considered necessary to guarantee the rights recognized to borrowers in said law. III This Royal Decree focuses, first, on regulating those aspects necessary for the full transposition of Directive 2014/17/EU of 4 February 2014, given the urgency derived from the infringement procedure opened by the European Commission for the lack of transposition within the period provided by the aforementioned Directive. This fact explains the partial use of the powers contained in the law, limited to those aspects essential for the full transposition of Directive 2014/17/EU of 4 February 2014. The urgency in the processing is what justifies, therefore, that the present Royal Decree has been limited to regulating the essential aspects to complete the transposition of the said European Directive, developing for this purpose what is precise in Law 5/2019, of March 15, but has not occupied itself with adjusting the corresponding regulatory norms through their pertinent modifications, since these, although necessary, are not affected by the urgency referred to. In this way, the present Royal Decree establishes, on the one hand, what minimum requirements must be met to offer advisory services and will allow, in turn, those providing them to use the terms "independent advice" and "independent advisor." On the other hand, it establishes a series of formal and material requirements for the information that must be offered to the borrower during the validity of the contract. Secondly, the present Royal Decree focuses on developing various aspects considered necessary to guarantee the rights recognized to borrowers in Law 5/2019, of March 15, such as the provisions contained in Chapter IV of this Royal Decree. In addition to the above, this Royal Decree transposes Directive 2017/2399 of the European Parliament and of the Council of 12 December 2017, amending Directive 2014/59/EU with regard to the modification introduced in
Article 108 of the latter, on the order of priority of unsecured debt instruments in the event of insolvency, whose object is to clarify what is understood by implicit derivative, a condition that would be exclusionary for qualifying a debt instrument as senior non-preferred. Likewise, this Royal Decree repeals the first additional provision of Royal Decree 84/2015, of February 13, developing Law 10/2014, of June 26, on the organization, supervision, and solvency of credit institutions, in order to exempt Spanish credit entities from prior authorization for their issuances of Additional Tier 1 capital instruments and Tier 2 capital to count towards meeting solvency requirements. Unlike what occurs in Spain, in the vast majority of the rest of the European Union countries, these instruments count as regulatory capital without the obligation of prior administrative authorization. Thus, in those countries, the obligation of prior approval only applies to ordinary Tier 1 capital instruments, in accordance with European Union regulations. The elimination of this authorization requirement will apply not only to new issuances but also to currently ongoing and unfinished authorization procedures. IV The present Royal Decree is structured in four chapters, containing 12 articles, and in ten additional provisions, two transitional provisions, one repealing provision, and five final provisions.
Chapter I collects the general provisions, including the object and scope of application of the norm. In the same terms as Law 5/2019, of March 15, which it develops, this Royal Decree will apply to all real estate loan contracts collected in Article 2 of that law.
Chapter II establishes the requirements for the provision of advisory services, in development of Article 19 of Law 5/2019, of March 15. To instill trust, it is fundamental to guarantee a high degree of fairness, honesty, and professionalism in the sector, adequate management of conflicts of interest, especially those derived from remuneration, and to require that advice is provided in the service of the interests of borrowers, guarantors, or sureties.
Chapter III regulates, first, the requirements for registration in the corresponding register of real estate credit lenders, in development of Article 42 of Law 5/2019, of March 15, and, second, the information that must be provided to the borrower during the validity of the contract, by virtue of the regulatory powers granted to the Government by the fifteenth final provision of the said law. Regarding the latter, it makes reference to the general characteristics that all information, whether established by Law, in this Royal Decree, or in another applicable norm, or included in the real estate loan contract, must meet when sent to the borrower. It regulates both formal aspects, highlighting the necessary clarity and accuracy to which it must be subject, and material aspects such as information on commissions and expenses incurred and interest rates effectively applied during the previous year, modifications of the borrower rate, or information allowing the heirs of a borrower, guarantor, or surety, once such status is accredited, to know the status of the real estate loan vis-à-vis the lender at the time of the death of the deceased. In order to guarantee the adequate protection of citizens, the information obligations collected here, which refer exclusively to real