Moves to beef up tools available to loan recovery firms

Parliament on Wednesday began reviewing a government bill that aims to amend evidentiary legislation in a way that would allow debt management companies to use banks’ documentation on borrowers in court.

Nicos Tornaritis, chair of the House legal affairs committee, later explained that these companies, once they ‘buy’ outstanding loans from the banks, also receive the relevant documentation from the banks.

But the law as it stands makes it difficult for the companies to submit this documentation in a court of law. Under the current law of evidence in Cyprus, whenever banks submit documentation on borrowers – for example the history of an account – this is automatically accepted by the court as undisputed evidence.

But the same does not apply for debt management companies – whereas they can submit the documentation to a court, they need to convince the judge of its usefulness so that it can be deemed admissible evidence.

The bill now under discussion aims to give equal status to loan recovery companies in this regard.

In parliament, all stakeholders agreed with the legal amendment – including representatives of the borrowers’ association. The only holdouts were the bar association.

Tornaritis said his party has not formed an opinion yet on the matter, but will hear all views first.

Elaborating, he also said that debt management companies must change their conduct toward borrowers. Parliamentarians have received complaints from debtors that these companies often use aggressive methods.

For their part, main opposition Akel seemed opposed to the bill. They feel the proposed change will give another tool to debt recovery companies to squeeze debtors.

“They are attempting to amend the term ‘bank books’, so that through the back door they can tamper with evidentiary law at the expense of borrowers and guarantor,” commented Akel MP Aristos Damianou.

The committee also discussed another bill, which would deny a defendant the right to make an unsworn statement before a court – whether oral or written.

Tornaritis explained to the Cyprus Mail that currently a defendant has three options. The first is to make an unsworn statement, which the court may at its discretion take or not take into account; and in this case the defendant cannot be cross-examined by the public prosecutor.

The second option is to make a sworn statement, where the defendant can be cross-examined.

The third is where a defendant makes no statement.

Asked whether depriving a defendant of the first of these options is problematic, in that it constrains a defendant’s rights, Tornaritis said they have received advice from legal experts that on balance disallowing the unsworn statement is a positive.

“For example, some argue that a defendant may make an unsworn statement, where he or she makes all kinds of allegations about their co-defendants, and then that defendant cannot be held accountable or cross-examined about those allegations.”

A number of countries with similar legal systems to Cyprus have long done away with the unsworn statement, he added.

He said the bar association, which initially opposed the abolition of the unsworn statement, has now made a U-turn and supports the idea.