Fears over access to borrowers’ data in loan recovery plan

Opposition parties on Monday stayed unsatisfied with tweaks to a government bill regulating the access to borrowers’ data by companies buying loan portfolios and debt administrators.

Although the bill will go to the plenum soon, the risk remains that Cyprus’ action plan for loan recoveries – which this item of legislation aims to address – may not get the final nod from the European Commission in time for the release of some €85 million from the Recovery and Resilience Facility.

The sticking point in parliament relates to safeguards which opposition parties – like Diko – want included so that the law does not get abused by companies, as the latter would have access to the ‘Artemis’ credit database and the Department of Lands and Surveys.

The Greens, Elam and Dipa had previously tabled an amendment aimed at preventing debt-purchasing companies from having access to these databases.

In a bid to assuage these concerns and help the bill get passed, the finance ministry came back with certain amendments to the original legislation.

As it now stands, the text of the bill – which will still need to pass muster with the European Commission – stipulates that credit acquiring companies must secure the explicit consent of collateral providers before accessing their financial data, while loan guarantors are exempt altogether from having their data accessed.

Also, debt administrators will be supervised by the Central Bank of Cyprus.

In addition, the bill’s revised text provides that credit-acquiring companies and debt administrators must: act in good faith and professionally; provide borrowers and/or guarantors and/or collateral providers information that is not misleading, unclear or false; respect and protect the personal data and privacy of borrowers/guarantors/collateral providers; and “communicate with the borrowers/guarantors/collateral providers in a way that does not constitute harassment, coercion or undue influence.”

The initial deadline for approval of the bill was December 31, 2021, as agreed with the Recovery and Resilience Facility. That deadline was missed, but the funds could still be released if the legislature approves the bills by February, when the government has to submit its report to the European Commission.

However approval is not a foregone conclusion. The government’s application for payment has to provide documentation that the approval of the bill will achieve the reform target – reducing the stock of non-performing loans on banks’ books.

The Commission will have three months to examine Nicosia’s application and ensure the measures are effective before releasing the funds from the Recovery and Resilience Facility.

In short, even if the legislation passes now, that does not guarantee the Commission would consider it effective.