The bill which significantly widens the scope of non-performing loans falling under the jurisdiction of the Financial Commissioner
“Good mood” from parties and involved bodies stated that the Minister of Finance Makis Keravnos found
“Good mood” from parties and involved bodies was stated by the Minister of Finance Makis Keravnos, who presented on Friday afternoon the bill that significantly expands the perimeter of non-performing loans that fall under the jurisdiction of the Financial Commissioner.
The Central Bank of Cyprus, the Association of Banks as well as the Association of Acquisition and Credit Management Companies stated that the bill is in the right direction, however expressing reservations that the perimeter of loans includes terminated loans and loans related to commercial housing, as and the eligibility criterion regarding the amount of the initial credit facility (and not the current balance of the loan) up to €350,000.
The bill widens the scope of loans for which the Financial Commissioner will be able to hear complaints or appoint a ombudsman. Now, in addition to banking institutions, loans found in credit acquisition companies and loans secured by commercial housing are also included. For terminated loans, the borrower and creditor will now be given the opportunity of six months to find a consensual solution. The eligibility criterion for the amount of credit facilities is the initial loan balance of up to €350,000
The coalition parties welcomed the bill. DISY and AKEL expressed reservations, while the Environmentalists insist on the inalienable right to appeal to the Court.
In his statements, Mr. Keravnos said that the bill is balanced on a correct basis and provides solutions, while he noted that the individual comments expressed will be examined.
“The position of of the government is that there must finally be an end to this issue that is afflicting the economy, society and political life of the country”, he said, adding that from next week the rent-for-installment plan will also come into effect.
< p class="text-paragraph">Both in his statements and before the committee, the Minister of Finance referred to the inclusion of terminated loans saying that there are many complaints from borrowers that it had not been possible to find a consensual solution. “We give one more chance to those who have terminated loans within six months to submit an application to the Financial Commissioner” to find a solution, he stressed, noting however that if this is not possible there is the path of legal proceedings.
However, Mr. Keravnos repeated the remarks expressed by the European Stability Mechanism, the International Monetary Fund, the Troika and also rating agencies, which “demand that there be a stable framework for divestments, otherwise unpleasant developments may occur in our economy ».
On behalf of the CBC, Kleanthis Ioannidis, head of the Crisis Directorate, said that the bill is largely satisfactory and that its provisions are in the right direction, especially those concerning increasing accountability and transparency.
Saying that six of the eight comments of the CBC have been incorporated into the bill, Mr. Ioannidis however expressed reservations regarding the issue of the maximum amount of eligible loans in terms of the market value of commercial housing, but also for the inclusion of terminated loans.
“We are not dogmatic but we believe that the perimeter should be reduced,” he said referring to terminated loans.
Noting that the majority of terminated loans show delays of five or seven years, Mr. Ioannidis added that “giving a third and fourth chance creates a culture that there will always be a third and fourth chance. We understand the problem, but because there is a reality of payback culture, the specific perimeter has to be narrowed.”
The Director of the Cyprus Banks Association, Michalis Kronidis, stated that the bill is in the right direction, expressing concern on three points.
According to him, it is about the inclusion commercial housing without putting a ceiling on the values, since the eligibility criterion is linked to the initial amount of the loan, the inclusion of terminated loans, many of which are in court proceedings, but also for the provision that the bank is obliged to submit a proposal restructuring.
Although they were positive about the bill, both the Director of the state KEDIPES and the President of the Credit Redemption Association, Anthi Hexadaktilos, expressed reservations about the inclusion of professional housing and terminated loans.< /p>
The Movement Against Divestments said that as a principle it is in favor of strengthening extra-judicial dispute resolution mechanisms and strengthening the Financial Commissioner, noting however that there is no express provision for suspending the divestment until the complaint is examined.
A representative of the anti-bankruptcy movement expressed his disagreement with the ceiling of €350,000 on the value of the initial facility, but also that the Financial Commissioner cannot intervene when a case is before the Court.
DISY Member of Parliament Haris Georgiadis questioned the position of the Minister of Finance on the CBC's reservations, while like DISY Member of Parliament Onoufrios Koullas, he expressed questions about the amount of loans that will be included in the perimeter. Savvia Orfanidou questioned whether the Financial Commissioner should be reinforced in terms of staff, in order to cope with the expected increased workload.
In response Mr. Keravnos said that the Ministry is ready to reinforce the Office of the Financial Commissioner for whatever is needed, while in response to the reservations about the inclusion of terminated loans he said that this was done because there are complaints that the CBC Code was not implemented. “That's why we said to give a second chance. If it bothers many, let's remove it,” he added.
On behalf of AKEL, Giorgos Loukaidis expressed questions about the volume of loan terminations, while Aristos Damianou wondered why the Court itself should not refer a dispute for an out-of-court settlement for a period of two months with a suspension of the sale, and if it is not subsequently found arrangement for the case to return to Court. Besides, Andreas Kavkalias wondered if this bill answers the concerns if a comprehensive solution is given to the NED problem and the issue of the actual balance is resolved.
However, in a statement issued by Mr. Damianou, he said the bill does not solve the problem and expressed satisfaction that the Ministry of Finance is ready to discuss the enrichment of the bill.
Also, in statements after the at the end of the session the President of the committee and Deputy President of DIKO, Christiana Erotokritou welcomed the bill saying that “it will relieve thousands of our compatriots” through the expansion of the responsibilities of the Financial Commissioner.
“No one can claim that the problem of the NED is solved overnight, but it is a huge step forward, a step that will solve for thousands of our compatriots problems that seemed insurmountable until today,” he said.
DIPA Member of Parliament, Alekos Tryfonidis, expressed his satisfaction with the expansion of the responsibilities of the Financial Commissioner, who will examine overcharging and abusive clauses and added that the inclusion of agricultural plots is also a suggestion of the party.
On behalf of the Environmentalists, Stavros Papadouris said that after the rejection of the law proposal for unimpeded appeal of the borrowers to the Court, anything will be subordinate. He also noted that all the provisions of the bill are based on consensus between the two sides.
The bill will be debated again next Thursday, with Christiana Erotokritou stating that the goal is to its promotion to the Plenary for a vote before the closing of Parliament for the Christmas break.
Increased accountability and transparency
Furthermore, according to the update of the Ministry of Finance, the bill is based on the philosophy that with increased powers it is necessary to increased accountability. The change in composition of the Agency's Board of Directors is promoted, which will be seven members with 3 representatives of Ministries, two from the Ministry of Finance and one from the Ministry of Trade, 3 representatives of the financial sector and 1 representative of the consumer association
The separation of responsibilities of the Board of Directors and the Financial Commissioner is promoted, with the Board issuing instructions on administrative and management matters, while the authority for complaints and the appointment of a mediator is retained by the Commissioner and Assistant Commissioner. A report will now be submitted to the Minister every six months. In addition, the duties of examining complaints are also defined for the Assistant Commissioner up to an amount of loans which will be determined by the Agency's Board of Directors.