News Column

Cabinet extends authority of financial ombudsman

May 1, 2014

By Staff Reporter

THE cabinet yesterday approved draft legislation extending the authority of the financial ombudsman to include mediation on loan restructuring when the collateral is the borrower's main residence.

The draft law covers cases where borrowers mortgaged their homes for up to 350,000 to finance their small or medium business.

"With the mediation process there is a protective network for the main residence and viable debtors, provided the property in question was used as collateral in the loan that is under restructure," deputy spokesman Victoras Papadopoulos.

The Financial Ombudsman is an independent service tasked with settling disputes between financial institutions and their customers a daunting undertaking given the astronomical number of non-performing loans (NPLs) in post-March 2013 Cyprus that will ostensibly need to be renegotiated.

The office is designed to serve as an independent authority that would be engaged when all internal restructuring efforts made privately between the banks and borrowers have been exhausted, in order to help broker a settlement without resorting to the courts.

Meanwhile, the ombudsman, Pavlos Ioannou, warned that his office must be staffed by personnel seconded from other departments to avoid delays.

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Source: Cyprus Mail