News Column

House gives more powers to Financial ombudsman

July 11, 2014

By Angelos Anastasiou

THE House unanimously voted an amendment yesterday to the legislation governing the Financial ombudsman's office, expanding its mediating powers and fulfilling Cyprus' obligation towards its international lenders to have the institution up and running.

The Financial ombudsman will be able to mediate between borrowers and banks on issues related to loans collateralised by the borrower's primary residence, where the borrower is unable to repay and a loan restructuring is required.

The ombudsman's mandate is to satisfy the conditions laid out in the Central Bank of Cyprus' (CBC) directive on arrears management, as well as the recently amended Banking Operations law.

An amendment tabled by Greens' deputy Yiorgos Perdikis and DIKO leader Nicholas Papadopoulos expanding the ombudsman's role to include the handling of complaints by borrowers against banks was also passed. According to the amendment, banking institutions found in less than full compliance with the CBC's code of conduct will be precluded from applying for litigation expenses.

Unanimity notwithstanding, most deputies expressed serious reservations about the ombudsman's ability to effectively tackle the issue of non-performing loans through successful mediation.

According to DISY's Prodromos Prodromou, while strengthening the Financial ombudsman's role was a dire necessity, the "CBC's code of conduct has specific weaknesses."

"It is doubtful whether such an institution will be successful in its mandate during a time of economic crisis," AKEL's Yiannos Lamaris opined.

EDEK's Nikos Nikolaides offered the view that "as it stands, the bill is not effective."

"I am not convinced that the institution has been sufficiently armed with the right tools to operate effectively," said Perdikis.

Perhaps most critical was independent deputy Zacharias Koulias, who appeared adamant that "this institution will not solve the problems in Cyprus."

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Source: Cyprus Mail

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