Government tolerates the arbitrariness and illegal practices of banks
Press conference General Secretary of AKEL A. Kyprianou
AKEL C.C. Press Office, 28th November 2020, Nicosia
At a time when the Cyprus economy is going through an unprecedented recession, any tolerance of unfair and illegal practices of the banks is unacceptable.
Since 2015 until today, the Consumer Protection Service has issued 8 decisions documenting the use of unfair and illegal clauses by banks in loan agreements with borrowers. Unfortunately, to date there has been an unforgivable delay observed on the part of the Legal Service in completing proceedings before the Court. As a result, decrees have not been issued so far that would force banks to proceed to remove the relevant terms from the contracts and the taking of corrective measures.
This delay is provoking society’s feelings. First, because it allows banks to continue speculating by exploiting such unfair charges. Second, it permits them to proceed with foreclosure procedures, regardless of the inclusion of such illegal terms and charges in the loan agreements.
In addition, this situation exposes us irreparably at a European level. In a recent reply to a question put by AKEL MEP Giorgos Georgiou, the European Commissioner for Justice Didier Reynders stresses that Cyprus hadn’t effectively implemented the EU directive in relation to the unfair illegal contract terms that are drawn up with consumers resulting in the Commission setting in motion infringement proceedings against Cyprus.
The approval by the Council of Ministers 2 weeks ago of a relevant legislation certainly is a positive step. However, we regret to note that it took seven whole years for an official reaction on the part of the Republic of Cyprus. We reserve the right to study the relevant bill, hoping that it will adequately address the need for effective protection of borrowers against such practices.
In any case, however, we consider that the Government’s negligence on such a serious matter is criminal – not only because it exposes Cyprus once again at a European level, but more so because it reflects the Government’s dogged tolerance of the arbitrariness and unfair practices of the banks towards society. We have said this many times, namely that when it comes to the interests of the banks, the Government takes decisions and approves legislation with fast-track procedures. When it comes to the interests of borrowers it pretends it doesn’t understand what is happening.
We address the Government once again and urge it:
- To proceed to the Republic of Cyprus’ full compliance with the recommendations which have been set by the European Commission on the implementation of the measure and level of consumer protection which the relevant Directive imposes.
- To speed up the procedure before the Court of Justice over the existing decisions that have been issued by the Consumer Protection Service on the unfair and illegal terms in bank loan agreements
- To fulfill the commitment it has undertaken with the Central Bank of Cyprus for the establishment of an independent institutional body that will examine out-of-court the correct application of the legislative and regulatory framework regarding banks and in particular in relation to the implementation of the Cyprus Central Bank Directive on Arrears Management and the existence of unfair and illegal terms in loans.
Any tolerance shown to such practices must end immediately. It is harmful to society because it restricts the protection of borrowers from the risk of foreclosures. However, even more so as it is detrimental to the Cyprus economy because in the face of the very important problem of private debt, it makes the possibility of sustainable restructuring more difficult for borrowers.
