Cyprus debtors to start using financial mediation for resolutions with banks

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The agency for financial settlements which are currently resolved outside of court in Cyprus has announced that it will start receiving applications to assign mediators in disputes between financial institutions and individuals who cannot implement repayment of their loans in an attempt to facilitate the restructure the amount of public debt.
The agency for financial settlements which are currently resolved outside of court in Cyprus has announced that it will start receiving applications to assign mediators in disputes between financial institutions and individuals who cannot implement repayment of their loans in an attempt to facilitate the restructure the amount of public debt.

The financial ombudsman Pavlos Ioannou said that the agency’s mediation would apply in cases of credit facilities who were owed funds of up to €350.000 regarding owners of primary properties at the beginning of the loan agreement; provided none of the parties has resorted to legal proceedings and the lender has not initiated the foreclosure procedure and the mortgaged homes are not in receivership.

Mr Ioannou warned that expecting significant change was asking a lot from this project. ‘Unfortunately due to the huge systemic problems that the financial sector of Cyprus is facing, our nationals may have excessive expectations,’ and ‘the result on many occasions are distortions in their strategic decisions in dealing with their mediation problems. We don’t have a magic wand to solve problems’, he said.

Cases brought for arbitration to the agency will take up to a month before they are fully resolved, Ioannou states, while in some cases it will be at the discretion of his office to grant any additional length of time for the parties to reach an out of court agreement. Mediators will receive a €500 fee, funded at 20% to be charged by the individual and 80% by the credit institute.