The first court decision on the issue of abusive Banking clauses in Cyprus

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The Parliamentary Committee on Energy, Trade, Industry and Tourism welcomed the issuance of the first court decision on the issue of abusive banking clauses, following an briefing on Tuesday by the Legal Service.

Complaints and criticisms were heard in the Commission against the banks, during the ex-officio examination of the issue of charges and commissions by the banks and the inclusion of abusive clauses in contracts. The issue was examined ex officio following a proposal by MPs George Perdikis, Stefanos Stefanos, Pavlos Mylonas and Marinos Mousiouttas. Also, following a proposal by MPs Kyriakos Hatzigiannis and Andreas Kyprianou, the high amounts that citizens have to pay to banks in order to secure details of their accounts were examined.

On behalf of the Legal Service, Frosso Sotiriou stated that out of the three applications submitted by the Consumer Protection Service regarding abusive clauses, two are pending in court and a decision was issued on the third on 25 February. Based on the decision, a decree was issued according to which some clauses are recognized as abusive, opacity is mentioned and an immediate cessation and non-continuation of the application of these clauses is ordered. On the basis of this decision, he said, the other cases are proceeding. He also stated that there is no intention to withdraw a case for abusive clauses.

The Financial Commissioner, Pavlos Ioannou, referred to cases of refusal by the banks to accept his decisions for abusive clauses and for refusal to issue statements of accounts as a result, as he said, of the absolute “monopoly power of the banks”. He spoke of a case of an elderly British resident of Cyprus in which a bank refused to issue an account of his deceased wife to show that he was a co-owner. The commissioner said he was expected to rule on the case.

He also spoke of excessive demands on the part of banks for the issuance of statements and certificates, when such a thing should be done for free or with a reasonable charge.

At the same time, he said that it is tragic that a banking institution, while accepting its decision in case of abusive clauses, then refuses to apply the same decision in another case. As he said, from the moment the abusive nature of a specific clause was accepted, the banking institution should clear all the contracts from the specific clauses.

He also noted that the staffing of his office with additional staff was blocked on behalf of the banks by the Financial Council.

On behalf of the Central Bank (CBC) it was reported that a supervisory audit is being carried out and a specific study was made on the real charges of the banks, on the basis of which a suggestion was made to the Ministry of Finance and a ceiling was set. It was also reported that the CBC has established a grievance mechanism on the issue of loan restructuring.

On behalf of the SYRODRAT Borrowers Association, Jenny Papacharalambous complained, among other things, that the Consumer Protection Service of the Ministry of Energy has no power to demand the return of the money with which the borrower was over-indebted, that banks sold loans to companies that sold interest rate, and that they ask borrowers to make an affidavit that if their loan restructuring is not successful they will not go to court.

On behalf of the Association of Banks, Elena Frixou stated that there are mechanisms and framework for dealing with these issues such as recourse to justice or the Financial Commissioner. He also said that the banks are informed and comply with the CBC instructions on restructuring. He also expressed hope that institutions and legislation would become more effective.

Representatives of the banks in the Commission pledged to convey the concerns of Members and citizens to the banks and to put themselves in writing to answer the questions raised.

SOURCE: KYPE