Disputes continue over the ability of loan management companies to access the banking data of guarantors, collateral providers and persons associated with borrowers in the loans they manage.
This bill was discussed again on Monday in the House Finance Committee, following the postponement of its passage in the House on December 9.
An amendment tabled by the ELAM, DPA-Cooperation of Democratic Forces and Citizens' Ecological Co-operation Movement parties on the bill aims to remove the access of credit facility management companies to the "ARTEMIS database", as well as the "database of the Department of Lands and Surveys", in relation to guarantors, collateral providers and persons associated with borrowers, in order to prevent the misuse of the legislation to their detriment.
On behalf of the Ministry of Finance, it was reported to the Committee that the Government's bill aimed at addressing the major challenge of non-performing loans (NPLs) should have been passed by Parliament earlier, as it is also reflected in the Cyprus Recovery and Resilience Plan. Failure to meet this commitment, he said, could potentially lead to non-disbursement of funds. He also said that any amendment makes it more difficult to achieve the original objective, calling into question the achievement of the objective with a visible risk of not receiving some money from the CBA. He noted that should it make it difficult to manage the problem loans of the Hellenic Bank, KEDIPES and the Housing Finance Agency (HFA), then there would be financial implications for the Government.
Financial Commissioner Pavlos said the bill should have been passed and there should have been an amendment that would mainly address the loans that had the abusive clauses and violation of the Guarantors Act. He added that the law should not have been passed, allowing illegalities against some groups. Stating that of course the guarantor's assets should be checked for a restructuring, he said however that in the Cypriot reality there is a large number of trapped guarantors which is an inhibitor of development. Regarding the amendment, he said that there are redundancies in it which create a lot of uncertainty for proper implementation of these instruments. He said there can be a more rational wording and the bill can be passed along with an amendment.
On behalf of the Legal Department, it was mentioned that the amendment runs afoul of several articles of the Constitution. It was also mentioned that the economic policy of the state is the responsibility of the executive to determine who will have access or not to the data and not the Parliament, so the principle of separation of powers is violated.
Speaking after the end of the Committee, its Chairwoman Christiana Erotokritou said that there are strong opinions on the controversial bill, which was discussed for the fourth time in the Committee. She said that on the one hand, the bill creates the mechanism for the supervision of the CBC of credit facility management companies and on the other hand provides access to the data of borrowers, guarantors and their related persons, and she said there is an ongoing discussion on how this access could be regulated to make this bill much fairer without allowing the misuse of its resources and provisions by anyone in bad faith. With regard to the parties' amendment, he said it is in the right direction, however it needs to be worked on so that it does not lead to contrary results.
DPA - Coalition of Democratic Forces MP Alekos Tryfonides said that the Financial Commissioner clearly states that he is the recipient of many complaints related to blatantly abusive clauses in guarantee contracts and to serial and unprecedented violations of extremely important articles of the Guarantor Protection Law. This, he said, has been admitted before the Finance Committee by the representative of the Ministry of Finance, adding that we should not solve these problems with this legislation, but with other legislation.
He added that they are totally opposed to this unacceptable legislative proposal and will not allow possible abuses, excesses and improper management and conduct by these companies that may occur due to the passage of the bills. He said this proposal will be the beginning of a social unrest where the entire Cypriot people will find themselves in bondage to the Banks and Credit Facilities Management Companies.He added that the party insists on its amendment, which seeks to limit any abuses.
He also asked what is the policy on the rates of purchase of loans by commercial banks and what are the rates of subsequent sale of these loans to credit facility management companies, because they are hearing about rates of 15 and 20 per cent of the value of the loans, when we are talking about huge profits at the expense of the borrowers.
Ecologist MP Stavros Papadouris said he was sad to see that the Ministry of Finance is blind and scaremongering, and said it is tragic that the Legal Service has identified issues of unconstitutionality in the amendment tabled, feeling that the legislature is interfering with the executive. He disputed this, stating that it is not possible that the parliamentary work cannot intervene in possible abuse of the tools that will be given to the management companies to protect citizens. He added that their amendment would go ahead amidst scaremongering and threats being heard. He also said that the NPL issue will end in the next two years, but the question is how it ends and said that they will rise to the occasion by not allowing this continued impoverishment.
The President of the First Home Protection Association Michael Paraskevas in his remarks after the committee said that the parties' amendment is needed to pass in order to protect the rights of mainly connected persons i.e. guarantors from abuse of this measure. At the same time, he pointed out that the agreement between KEDIPES and Altamira provides for a 4% commission for the sale of mortgaged properties and 0.5% for restructuring, so Altamira has at least an interest in restructuring a loan.
Source: CNA
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