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Cyprus to get financial ombudsman

The days of banks in Cyprus granting mortgages to home buyers without advising them that the land on which their property is built is already mortgaged may soon be over with the appointment of a financial ombudsman expected in the near future.

PARLIAMENT yesterday unanimously approved the creation of a Financial Ombudsman, offering a cheaper and more simplified option of dealing with economic disputes.

According to the law, which was submitted to the House Legal Affairs Committee in 2007 and only reached the Plenum yesterday, consumers can apply to the Ombudsman to seek out-of-court settlements on disputes with financial institutions (FI).

Consumers will be able to submit complaints of a financial nature and the Ombudsman can mediate and arrange a friendly out-of-court settlement.

The measure doesn’t include co-op banks and the Ombudsman’s decisions won’t be legally binding. The Body will also be able to examine and resolve cross-border financial disputes.

Basically, consumers will be able to seek compensation without having to go through exhausting court procedures. However, if consumers wish, they can turn to court.

The Ombudsman is a legal person of public justice, for whom a board of directors will be appointed – comprising of spokesmen for local authorities, FI spokesmen and a representative for consumers – as well as a Financial Commissioner, a deputy Financial Commissioner and staff employed by the Ombudsman.

The Body will be funded by personal contributions from each FI that has a complaint filed against it, a standard annual contribution from each FI, depending on its activities, and by the consumer who will pay a small fund for his complaint.

The House Plenum’s decision was unanimous with all MPs agreeing it was a positive measure that would be in the consumers’ best interests.

The Legal Affairs Committee chairman, DISY’s Ionas Nicolaou, said if there were any problems in its implementation, amendments would be made.

Cyprus to get financial ombudsman

Editor’s comments

MANY people have been duped into buying property in Cyprus that has been built on mortgaged land – and face the very real threat of losing their homes if the developer fails.

Banks in Cyprus are often complicit in this ‘scam’ as they fail to disclose information about existing mortgages to buyers seeking a mortgage to buy property.

It has taken three years for parliament to reach its decision on the appointment of a Financial Ombudsman. Let us hope he has a sufficient number of staff to deal with the deluge of complaints flooding into his office.

Readers' comments

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  • Richard says:

    Like others – I raise an eyebrow over the decisions not being legally binding – isn’t this a benign puppet function with no teeth or clout?

    It does smack of being a PR exercise to quell the increasing number of disgruntled investors from mutineering.

    Sadly – we’re all a bit tired of the Punch & Judy show.

    Now – a huge team of independent EU inspectors wanting answers within a short time frame arriving by the plane-load – now THAT would be refreshing.

  • Simon Moult says:

    About time an official Financial Ombudsman was appointed, it can’t come soon enough! In no other EU Country could Property Developers and lawyers act in such a corrupt way without being discharged, struck off and closed down, even arrested.

    I am amazed that such corruption, lies and greed have not been addressed by the Government before now. I just hope that a Financial Ombudsman in Cyprus can remain independent and act swiftly against wrong doing, without any corruption or internal politics getting in the way.

  • kojak says:

    When will the Financial Ombudsman’s Office be in place…I hope sooner than the 3 years that it took to make this decision.

  • Stuart Green says:

    What a Joke.

  • Jim says:

    It’s all just window dressing. The words “not legally binding” say it all.

  • John Evans says:

    Fortunately I don’t have a mortgage but then neither do I have Title Deeds. Surely, if a Bank grants a mortgage on a property when they are aware of the developers outstanding loan on the same property they are guilty of aiding and abetting fraud.

  • Alan Leahy says:

    “Not legally binding” so what’s the point?

  • Lisa B says:

    The Ombudsman’s decision will not be legally binding?

    Why bother?

  • Stuart says:

    If the Cyprus Ombudsman’s decisions are not legally binding, why would anyone take any notice of them?

    Is there such a thing as a “friendly, out-of-court settlement” in Cyprus? Don’t make me laugh!

    Here in the UK where the Ombudsman’s decisions are binding, it can take anything up to two years to get a result. Imagine the likely time it will take in Cyprus if people can wait 30 years for Title Deeds!

    Sounds more like a job-creation scheme to me.

  • Dee says:

    It all sounds a bit ‘in-house’ to me; I don’t see the word ‘independent’ written anywhere?

    Will this just be another burden on the taxpayer which leads up the same blind allies?

    (Or have I just lived here too long!).

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