The state should intervene and call on the Housing Finance Corporation (HFC) to comply with legality, by reinstating the loan guarantee contracts it uses from the abusive terms and release all guarantors, for whom the abusive terms in the guarantee contracts were applied against them, without any need for interested parties to file a complaint with the Financial Commissioner, says Financial Commissioner Paul Ioannou in a briefing note to guarantors in loan contracts.
The note refers to a decision by the Financial Commissioner against the Housing Finance Corporation for discharging a guarantor because of an abusive term in the guarantee agreement, which the Corporation applies against guarantors in loans it grants.
The Financial Commissioner urges all citizen guarantors on OHA loans to review their guaranty contract to determine whether it contains an abusive term and, if it has been applied by OHA against them, to demand cancellation of the guaranty contract.
The note, together with a copy of the Financial Ombudsman's decision, was communicated to the Minister of Finance and the Speaker of the House of Representatives, as well as to the Auditor General of the Republic of Cyprus. Ioannou, is intended to further his efforts for the horizontal application of the principle of equality, as enshrined in Article 28 of the Constitution of the Republic of Cyprus, but also on the basis of the concept of this principle as enshrined in the General Principles of Administrative Law Law Law of 1999.
This, he notes, is a paramount obligation of the Financial Ombudsman, deriving from the Financial Ombudsman's own Law on the Establishment and Operation of the Unified Body for the Out-of-Court Settlement of Financial Disputes of 2010, as amended and replaced from time to time, which defines his powers in accordance with Articles 4 and 14(1) of the said Law.
"In fact I am obliged to raise the issue of the principle of equality and my obligation to apply it horizontally to matters within my jurisdiction in relation to the FCA, due to the fact that for 16 decisions I have issued to date against the OCA for the discharge of guarantors, in each case for exactly the same reasons (existence of an abusive term, failure to provide timely information), the OCA has accepted only three for the discharge of the complainant guarantor," he adds.
Moreover, it is well known, he continues, that the principle of equality, which is a fundamental constitutional principle, permeates the entire breadth of the Cypriot legal order (hence the legal framework within which financial undertakings operate).
"There is also a simultaneous explicit constitutional guarantee of the right of everyone to receive "equal protection and treatment". This provision guarantees the principle of equality, that is, the equality of persons before the law (egalitarianism), the administration and the judiciary." Consequently, the selective acceptance of the Commissioner's decisions by the OCA, as found above, without taking into account the similarity of the matters under regulation, constitutes a flagrant violation of the constitutional principle of equality."
Source: CNA
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