Cyprus parliament approves major legislation on loan restructurings and foreclosures

On Monday, the plenary of the Cypriot Parliament approved a comprehensive package of laws regarding loans and foreclosures, aiming to enhance the protection of borrowers and guarantors. The package includes two government bills and several legislative proposals that strengthen the role of the Financial Ombudsman. Key provisions allow for binding decisions by the Ombudsman for disputes up to 20,000 euros and enable earlier borrower recourse to the office. The legislation permits debt restructuring through a confirmation mechanism and introduces Personal Repayment Plans as a final measure to prevent the foreclosure of primary residences. Additional provisions include a 45-day suspension period for foreclosures, a ban on additional interest once debt doubles, and a temporary halt on primary residence foreclosures up to 350,000 euros until August. Despite these measures, creditors retain the right to challenge the Ombudsman’s decisions in court, a point which Financial Ombudsman Valentina Georgiadou criticized, arguing it weakens the institution. The bills passed with varying degrees of support, facing opposition from parties including AKEL.