THE chairman of the House Ethics Committee suggested on Tuesday that loan sharking legislation should be amended to include banks as more and more borrowers complain they are being ripped off while trying to restructure their loans.
Demetris Syllouris said restructuring a loan was a process of making it viable.
“It appears the opposite is happening,” he said, suggesting that banks were using this to pressure borrowers, raise the interest rates, and increase the collateral.
Speaking during a state television lunchtime news show, Syllouris said the committee had discussed the complaints on Tuesday morning, and has also looked into the law on loan sharking and profiteering – passed in 2011 – which exempts banks.
“My view is that an amendment must be submitted to include banks,” he said. “They must realise that a free market is free and must be free but there are rules. Some cannot have more freedom than others.”
The committee heard from the state legal service that restructuring a loan did not mean re-evaluation of the mortgaged property.
Banks should have considered all the risks at the time of processing the application, a state attorney said.
“The borrower is not responsible if real estate values have dropped,” DISY MP Andreas Kyprianou said.
Kyprianou said banks could not use restructuring as an excuse to re-evaluate properties and force borrowers to put up more collateral.
“The aim is to overcome this recession with the lowest possible cost and not mortgage all the people’s properties,” he said.
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