The “dismantling” of the Code of Conduct, unknown until now to borrowers, and its replacement with a clear framework of sustainable bilateral settlements is brought by the bill of the Ministry of National Economy and Finance that will be presented today at the Cabinet meeting.
The radical change will be made through a series of legislative provisions, which aim:
- To facilitate borrowers in setting out proposals for the settlement of their non-performing loan.
- To ensure a faster response from servicers and banks, either through acceptance of the borrower’s proposal, after first taking into account their income and asset situation, or through a counterproposal from the creditor.
- To ensure a substantiated response from the creditor (bank, servicer) in the event of rejection of the application for loan settlement.
- To improve the communication framework on the creditor’s side with the borrower.
Sustainable settlements
Given that servicers hold approximately 70 billion euros in loans, the need for their swift handling is imperative, mainly the implementation of sustainable settlements in cases that to some extent meet the criteria.
And according to the rationale of the economic staff, this is what the changes being promoted and to be voted on by the Parliament in October are intended to address.
Until today, one tool for a sustainable solution with the possibility of write-off of part of the loan was the Code of Conduct; however, the overwhelming majority of borrowers were unaware of it and the Claims Management Companies did not promote it. Hence, it will be replaced by the new legislative provisions.
Another important parameter of the changes is the need for settlements that will facilitate the long-term servicing of the loan and not be opportunistic, short-term in nature.
Sanctions
The new legislative framework was prepared in cooperation with the Bank of Greece, by virtue of its supervisory role. Thus, in the event of non-implementation, the changes will be accompanied by corresponding sanctions, the well-known fines.
According to information, the framework of sanctions is becoming more strict compared with the existing one, so that there is also an additional incentive for the substantive implementation of the new provisions.