Mediation Service

Mediation is a structured dispute resolution process, which takes place between the interested parties, with the assistance of the mediator, with the aim of restructuring non-performing credit facilities in cases where they are secured by a mortgage on the main residence or business premises. The mediator facilitates the process and encourages the finding of a mutually acceptable solution to the dispute, without imposing or manipulating the parties concerned.

The role of the Financial Commissioner in the mediation process is purely coordinating. The Office of the Financial Commissioner maintains a Special Register of Mediators, from which it appoints a mediator for each application that meets the criteria for appointing a mediator, for the restructuring of a credit facility.

Individuals or legal entities with a turnover in the previous year not exceeding €350.000, whose credit facility is in arrears or overdue and, therefore, requires restructuring, are entitled to submit an application for mediation. The participation of the ACI/SEC in the mediation process is mandatory.

Submission requirements

• The application for mediation is made by (a) a natural who has not been declared bankrupt or (b) a legal person that is not in liquidation proceedings.
• For legal persons: (a) The turnover of the legal person in the previous year  does not exceed €350.000, or (b) The annual income of the Charitable Institution / Union / Association of Persons in the previous year does not exceed €250.000, or (c) The net assets of the Trust / Provident Fund as at the end of the previous year do not exceed €250.000.
• The application concerns a credit facility with an initial contractual obligation of up to €350.000, secured by a mortgage on a primary residence with an estimated value of up to €350.000 or a commercial property with an estimated value of up to €750.000.
• The application is submitted within 14 days from the date the applicant has submitted all financial information to the Licensed Credit Institution, in accordance with the “Arrears Management Directive”.
• If the application is not submitted within 14 days, it must be submitted within 30 days from the date the Authorized Credit Institution sent the first restructuring proposal to the applicant. This date is indicated in the ACI’s proposal.
• The mortgaged property or the leased property must be used as the owner’s or tenant’s primary residence for at least 6 months per year. This is proven by a certificate from the community registrar of the area where the property is located.
• The Debtor, upon submitting the application, pays a fee of €20.

Applications that are not considered:

• Applications concerning credit facilities for which a court decision has already been issued or a court proceeding or a process of selling the mortgaged property through auction is in progress (following receipt of the Notice Letter Type ‘I’ pursuant to the Transfer and Mortgage of Property Laws), or are terminated.
• Applications concerning credit facilities for which a process of taking possession or selling the property that is the subject of a financial lease has been activated (following receipt of the Notice Letter Type ‘I’ pursuant to the Transfer and Mortgage of Property Laws).

When is the mediation process completed?

a) By reaching an agreement, which is prepared by the mediator and signed by the parties involved.

b) If the mediator considers that the procedure is ineffective. In this case, the mediator draws up a report, which is delivered to the Commissioner.

c) If the debtor decides to discontinue the procedure.

Required Documents for Submitting a Mediation Request

For debtors who are natural persons:

1. Copy of Identity Card or Passport or Alien Registration Certificate (ARC) of the applicant.
2. A special Power of Attorney document accompanied by the original authorization, if the application is being submitted by a representative.
3. The agreement for the credit facility between the consumer and the authorized institution or credit purchaser.
4. Statements of additional credit facilities agreements, in the case these are more than one.
5. The proposal for restructuring from the authorized institution or the credit purchaser, or the letter of the negative decision from the authorized institution or the credit purchaser.
6. The mortgage or collateral assignment over the property for which the credit facility was granted.
7. A certificate issued by the head of the community of the area in which the property is located which proves that the property is the primary residence or the business premises.
8. Appraisal of the primary residence or the business premises, if this exists.
9. Receipt of payment of the fee of twenty euro (€20) for the submission of the application.

For debtors who are legal entities:

1. Certificate of Incorporation of Legal Person
2. Authorization from, or decision of, the Board of Directors in relation to the representation.
3. If the legal person is represented by an external advisor (e.g. lawyer), a special Power of Attorney document accompanied by the original authorization / retainer.
4. Copy of Identity Card or Passport or Alien Registration Certificate (ARC) of the representative.
5. Audited financial statements or certificate by a member of ICPAC which confirms that: (a) the annual turnover of the legal person, in the year preceding the year in which the application is submitted, does not exceed the amount of €350.000 (b) the annual income of the charitable institution, union or association of persons, in the year preceding the year in which the application is submitted, does not exceed the amount of €250.000 (c) the net assets of the trust or provident fund, on the 31st December of the year preceding the year in which the application is submitted, do not exceed the amount of €250.000.
6. The Agreement for the credit facility between the debtor and the authorized institution or the credit purchaser.
7. Statement of additional credit facilities agreements, in the case these are more than one.
8. The proposal for restructuring from the authorized institution or the credit purchaser or the letter of the negative decision from the authorized institution or the credit purchaser.
9. The mortgage or collateral assignment over the property for which the credit facility was granted.
10. A certificate issued by the head of the community of the area in which the property is located which proves that the property is the primary residence or business premises.
11. Appraisal of the primary residence or the business premises, if this exists.
12. Receipt of payment of the fee of twenty euro (€20) for the submission of the application.

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