The committee continued in an extraordinary session on Friday the discussion of the package of seven bills concerning the transposition into national law of the Directive for credit managers
The new framework regarding credit managers has stricter regulations regarding the protection of borrowers, said the Financial Director at the Ministry of Finance, Avgi Lapathiotis, before the parliamentary Finance Committee, with MPs expressing concern about whether sufficient protection of borrowers is provided.
The committee continued in an extraordinary session on Friday the discussion of the package of seven bills concerning the transposition into national law of Directive (EU) 2021/2167 for credit managers. The discussion took place on the basis of revised texts, with members of the committee expressing discomfort with the fact that even this morning revised texts of bills had been sent, as well as the reduced, according to them, protection of borrowers.
Informing the committee, Ms. Lapathioti said, among other things, that the existing framework was quite restrictive regarding the supervision of credit management companies, the licensing and supervision of credit acquisition companies.
He noted that the new framework has provisions for the management of non-performing loans (NPLs) located within the banking system, while it does not cover NPLs located outside the banking sector, thus allowing the introduction of regulations for “red loans” located outside the banking system. banking sector.
“In Cyprus, €22 billion of loans are outside credit institutions and only €2 billion are inside the banks”, he said.
As he mentioned, now the credit acquisition companies they will not be licensed, with the licensing obligation being transferred to the credit management companies.
Ms. Lapathioti said that in the bill on credit managers, all the changes recommended by the Financial Commissioner and the Personal Data Protection Commissioner were adopted, noting that there is an obligation to inform the borrower when the credit facility will be sold, giving him a period of 45 days in case he wishes to redeem it.
He also said that it is proposed that credit management companies, as the only licensed entities, have full access to the Artemis and Land Registry databases, including guarantors, while credit acquisition companies will not have access.
In the bill a transitional provision was included so that credit buy-out companies would retain access for a period of six months, within which they would have to apply for authorization as management companies, except where they are already contracted with management companies (Grand Fathering).
The Financial Commissioner Valentina Georgiadou expressed satisfaction at the adoption of her recommendations, to emphasize that with regard to the sale of serviced loans she herself will not accept any alteration in the service of borrowers.
On her part, Anthi Exadaktylou , President of the Association of Credit Redemption Companies said that the Association has some reservations about the practical implementation of some provisions included in the law on buying and selling.
DISY Member of Parliament Savia Orfanidou submitted a question to the Ministry of Finance as to whether the scope of borrower protection remains the same under the new framework. was at the core of the bill, but also overseen by the administrator. “And in the new framework, stricter regulations regarding the protection of the borrower were included”, he added.
AKEL Member of Parliament Andreas Kavkalias expressed his displeasure at the late submission of revised bills, stressing that the framework, as it has been formed, is onerous for the borrower.
“As a general position, it is more than obvious that the specific bills, as they are filed before us, do not touch substantive issues concerning the protection of borrowers,” he said.
In response, a representative of the Legal Service stated that the protection of borrowers is guaranteed in most of the draft laws, adding that the transfer of credit facilities does not affect the rights of the borrower. “The framework is tighter,” he said.
The President of the committee, Deputy President of DIKO Christiana Erotokritou observed that the first objective is to ensure that the new framework resulting from the European directive does not adversely affect the borrower. He agreed with Andreas Kavkalias on the late submission of revised bills to add that he reserves the right to study the texts.
The President of EDEK Marinos Sizopoulos expressed reservations specifically about the provision regarding the transfer of serviced loans. He wondered why serviced loans should be sold without the permission and consent of the borrower, especially to natural persons. “We have completed ten years of experience (in the management of NEDs) and unfortunately and with the responsibility of the parliament, the borrowers have been left largely unprotected”.
DIPA Member of Parliament Alekos Tryfonidis stated that it is unthinkable that serviced loans are sold to acquisition companies that will not be licensed, based on the new framework. “That is, for a Cypriot citizen to make a loan in a bank of the Republic of Cyprus and suddenly find himself a client of a fund in Europe while servicing his loan,” he said, adding that it is unthinkable not to license credit acquisition companies and only to license management companies.< /p>
He also said that the discussion of the seven bills cannot be completed until the closing of the Parliament on July 20 with the final solutions expected when the return is in September.
Environmental MP Stavros Papadouris said that the borrowers are informed before the transfer of their loans, but when they submit a proposal to redeem the loans they receive a standardized response.
SYPRODAT General Director Jenny Papacharalambous expressed reservations about whether that have serviced loans whose loans are transferred to credit acquisition companies will be subject to the same service as applies to banks.
