Financial Ombudsman calls for fewer restrictions on out of court settlements

Valentina Georgiadou, the Financial Ombudsman, has emphasised the need to remove restrictions on the range of borrowers eligible to seek restructuring assistance from the Single Agency for the Out of Court Settlement of Financial Disputes.

During her presentation of the budget to the House Finance Committee on 12 January, Georgiadou noted a significant decline in applications for mediator appointments.

She attributed this to the introduction of limitations on eligible borrowers and time constraints following the expansion of the Financial Ombudsman's responsibilities.

She suggested that, under certain conditions, performing loans should also be eligible for mediation, considering potential future challenges borrowers might face.

Georgiadou expressed concerns that the current limits on mediator appointments have hindered the process. While acknowledging that the new legal framework is a step in the right direction, she believes it hasn't achieved the desired outcomes.

She reported that 1,100 complaints were submitted in 2023, compared to 500 in 2024, along with an additional 250 requests outside her jurisdiction, mainly related to foreclosure or restructuring processes. These cases are handled personally due to the lack of alternative avenues for assistance.

Georgiadou proposed that after the Financial Ombudsman verifies a debt balance, the law should allow a timeframe for both parties to reach a feasible arrangement before initiating foreclosure proceedings.

She also highlighted that significant amounts are being refunded to consumers through out-of-court settlements with banks over excessive charges.However, she noted challenges in cases bound by court decisions, where her intervention is limited.

Regarding the enforceability of her decisions, Ms. Georgiadou aims to achieve binding resolutions through a rational process, reducing the need for court involvement. She believes that building trust in her office's impartiality and fairness will encourage banks and financial institutions to accept these decisions.

She added that the agency's scope extends beyond non-performing loans and foreclosures. Plans are underway to enhance communication through website upgrades and informative presentations.

DISY MP Savvia Orphanidou remarked that the institution of the Financial Ombudsman gained substance and expanded during DISY's governance. She noted that it has demonstrably vindicated many borrowers who were wronged by banks.

(Source: InBusinessNews)