As of June 1, borrowers have acquired additional tools in order to protect their property, which is collateral for a mortgage loan. Specifically, since last Monday, the new legal framework approved by the previous Parliament for foreclosures and for the protection of primary debtors and borrowers has been in force.
The new framework introduces a comprehensive enforcement system, which combines administrative and judicial tools, while enhancing compliance with the decisions of the Financial Commissioner.
At the same time, with other additional legislative regulations, the right of debtors to go to court and suspend the sale of the property for a period of up to one year is strengthened. Also, the insolvency framework is strengthened, while, before the property is taken to auction, safeguards are put in place for its value, as well as restrictions on additional collateral.
Strengthening the powers of the Agency
According to an information note from the Body for the Out-of-Court Settlement of Financial Disputes, the new legislative framework concerns additional tools to strengthen compliance with the Commissioner's binding decisions.
Since June 1, the powers of the Financial Commissioner have been strengthened through three directions. Now, decisions for disputes of up to €20,000 are binding, while decisions can be challenged in court. Enforcement mechanisms for compliance with the Commissioner's binding decisions are also in place, through the imposition of administrative fines and recourse to the District Court. In addition, the eligible debtor has the possibility of settling his debt.
Binding nature of decisions
In detail, the decision of the Financial Commissioner for financial compensation of up to €20 thousand. binding on the parties involved. At the same time, both consumers and financial firms have the right, within 30 days from the day of notification of the decision, to appeal to the District Court.
It is worth noting that the appeal to justice can concern either annulment or modification of the decision. As a result, the binding nature of the decision is suspended until the final decision of the Court.
At the same time, in case of non-recourse to the Court, the interested parties are obliged to comply within 30 days from the expiry of the deadline for registering an application with the Court.
In addition, the Commissioner has the discretion to set a specific deadline for compliance, which must be set in a justified and dispute-based manner. In fact, when the interested parties go to court, they will have to comply after the court decision has been issued.
Six steps to making a complaint
Consumers will have to go through six stages to submit a complaint to the Agency. When it is found that they prima facie meet the conditions for examination, then the complaint is notified to the banks and credit acquiring companies within ten days of receipt of the consumer's file.
Thereafter, and within 30 days, creditors will have to provide the relevant information linked to the complaint. When the conditions are met and the complaint is examined, the decision should be issued within 90 days.
The Commissioner's choices
The Financial Commissioner has three options: to proceed with an amicable settlement or the decision to be in favour of the consumer or in favour of creditors. In the event that the final verdict is in favour of the consumer, compensation of up to €20,000 will have to be paid to him, the decision will be binding and those involved will have the right to challenge it in the District Court.
In the event that the decision is in favour of financial undertakings, it will be final, without there being any right of challenge to the Court.
In total, there are five grounds for appealing to the District Court with the aim of annulling or changing the decision of the Financial Commissioner. This will be done in the event that the decision is contrary to the law or was issued in excess or abuse of power, when there has been a violation of the principle of natural justice, when there has been a procedural error in the examination of the complaint, when there is already a court decision on the same complaint or judicial proceedings are pending, as well as when the amount of monetary compensation is disputed.
Compliance mechanisms
Under the new framework, there are two mechanisms for complying with the Commissioner's binding decisions, which provide for the imposition of an administrative fine and recourse to the Court of Justice.
The first mechanism introduces an enforcement framework that enhances compliance with the decisions of the Financial Commissioner, which will have the possibility to impose an administrative fine on companies if they do not comply with the binding decision. At the same time, financial companies will be able to appeal to the Administrative Court.
The second mechanism introduces direct judicial enforcement in cases of non-compliance. Both the Commissioner and the consumer can apply to the Court for an order to comply with the binding decision.
Administrative fines
With the binding nature of the decisions, the Commissioner will be able to impose an administrative fine in case of non-compliance. In addition, the right to be heard before an administrative fine is imposed, with interested parties having 30 days to submit representations.
The administrative fine will have to be paid within 30 days and the financial firm will be able to appeal to the Administrative Court. It is noted that the fine cannot exceed the monetary value of the decision, while it will be determined after taking into account the nature, gravity and duration of the non-compliance, as well as any previous omissions.
However, the imposition of the fine constitutes an enforceable administrative act and is subject to appeal before the Administrative Court, while the appeal does not suspend the obligation to comply with the binding decision. Non-payment of the fine constitutes a civil debt to the Republic and is collected.
In the meantime, if financial companies do not comply with the Financial Commissioner's binding decision, then she and consumers will be able to go to court. This process enhances the binding nature and compliance of decisions, provides a direct judicial enforcement mechanism and at the same time strengthens the position of consumers. Following the appeal to the Court, a court order will be issued against the financial undertaking.
What happens in case of agreement or rejection of the decision?
According to the new framework, the eligible debtor will have the opportunity to settle the debt, through the submission of a complaint to the Agency, thirty days after receipt of the Type "I" or "IA" notice, and at the same time to contact a licensed insolvency counsellor. The condition will be that the mortgaged property concerns a main residence with a market value of up to €350,000.
It is noted that, if the businesses reject the Commissioner's decision on the amount of the debt, the sale will be suspended until a court decision is issued on the amount due. If no agreement is reached within one month, then the sale will be suspended for 60 days, provided that the eligible debtor turns to an insolvency adviser.
When the 60 days have elapsed, the auction procedures of the mortgaged properties will continue. Finally, if the two parties accept the Commissioner's binding decision, they will have 30 days to reach a settlement or settlement agreement. However, if there is a breach of the agreement by the debtor, then the sale will continue.
