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.
Useful Terms
What does “Debtor” mean?
The Natural or Legal Person who applies for mediation for the restructuring of a credit facility. Its turnover in the previous year must not exceed €350,000.
What does “credit facility” mean?
((a) a loan or overdraft limit or credit card limit of a total contractual obligation up to the amount of €350,000, which was originally issued by a credit institution to a debtor and/or amended and/or replaced and which is secured by a mortgage or a security assignment agreement filed with the Department of Lands and Surveys on a property used as a primary residence or as business premises, the estimated value of which does not exceed €350,000 and €750,000 respectively; or
(b) financial leasing of a property, which is used as a main residence or as business premises, the estimated value of which does not exceed €350,000 and €750,000 respectively, with a total contractual obligation up to the amount of €350,000.
It is understood that the assessment of the value of the main residence or business premises is carried out by an appraiser who is a member of the Scientific and Technical Chamber of Cyprus.
What does “main residence” mean?
The residence used for the residence of its owner and/or members of his family, for a period exceeding six (6) months per year, the estimated value of which does not exceed €350,000.
Submission requirements
- The application for mediation is made by a natural or legal person with a turnover in the previous year that does not exceed €350,000.
- It 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 debtor must not have been declared bankrupt or be in liquidation proceedings.
- 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 ACI 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, 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.
Mediation Process
- Application Submission: The debtor submits an application for restructuring the credit facility. The application is examined by the competent officers of the Agency.
- Application Verification: The competent officer checks the application details. If all the required supporting documents are not submitted, the applicant is informed to submit them within 5 working days, otherwise the application is rejected. When all the documents are received from the applicant, the licensed institution or the credit purchaser is informed and further documents and relevant confirmation are obtained.
- Commissioner Notification: After receiving all the documents and confirming the details from the licensed institution or the credit purchaser, the competent officer informs the Commissioner about the application.
- Appointment of Mediator: The Commissioner, within 3 working days of the approval of the application, appoints a mediator and informs the debtor and the licensed institution or the credit purchaser.
- Meeting: The licensed institution or the credit purchaser must arrange the first meeting with the debtor and the Mediator within 5 working days from the date of the Commissioner’s notification.
- Mediation Time: The time is calculated from the first meeting at which the mediator’s fee is paid.
- Mediator Fee: The cost for using the Mediator’s services ranges between €400 -€500 (depending on the initial amount of the credit facility), and is divided 80% between the licensed institution or credit purchaser and 20% between the debtor.
- Termination of the Procedure: The debtor may at any time request the Commissioner to terminate the procedure, bearing the full cost of the mediator’s fee.
- Duration of the Procedure: The procedure may not exceed 1 month, but may be extended for another 1 month, if deemed necessary by the Commissioner, based on the information received from the mediator on the progress of the mediation.
Note:
The participation of representatives of the licensed institution or the credit purchaser in the mediation process is mandatory.
During the mediation, the licensed institution or the credit purchaser may not initiate legal proceedings or a process of sale of the mortgaged property.
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.
How to Submit an Application
You can submit your application to the Financial Commissioner in one of the following ways:
- By hand at the address Kypranoros 15, 1st floor, 1061 Nicosia
- By post (by registered mail) P.O. Box 26722, 1647 Nicosia
- By fax to 22660584 or 22660118
- By email at mediations@financialombudsman.gov.cy
- Through an online application on our website:
- For an online mediation application as a natural person, click here.
- For an online mediation application as a legal entity, click here.
If you wish to submit your application for mediation in writing in one of the above ways (1-4), download the corresponding application:
The application can be submitted in Greek or English.
Payment of Application Fee
- Submitting a mediation application costs €20, and payment is made to one of the three bank accounts of the Agency.
- The legal proof of payment must state the name of the consumer who submitted the application.
- The Office of the Financial Commissioner does not accept direct payment from consumers in cash/by card.
- In the event that the Application is rejected or withdrawn, the €20 fee is not refunded.
Required Documents for Submitting a Mediation Request
For debtors who are natural persons:
- Proof of payment of application fee (€20).
- Copy of Identity Card or Alien Registration Card (ARC) or Copy of Passport
- If the application is submitted by a representative: Power of attorney with original certification.
- Credit facility agreement between a debtor and a licensed institution.
- Statement of other credit facilities (if applicable).
- Restructuring proposal from a licensed institution or a letter of negative decision for restructuring.
- Certificate from the community manager that the mortgaged property is a primary residence or business premises.
- Valuation of main residence or business premises (if any).
For debtors who are legal entities:
- Proof of payment of application fee (€20).
- Copy of Identity Card or Alien Registration Card (ARC) or Copy of Passport of legal representative.
- If the application is submitted by a representative: Power of attorney with original certification.
- Credit facility agreement between a debtor and a licensed institution.
- Statement of other credit facilities (if applicable).
- Restructuring proposal from a licensed institution or a letter of negative decision for restructuring.
- Certificate from the community manager that the mortgaged property is a primary residence or business premises.
- Valuation of main residence or business premises (if any).
- Certificate of incorporation of a legal entity.
- Board of Directors decision or authorization for representation.
- One of the following (for financial data):
- Documentary evidence or Certificate from a member of ICPAC (Cyprus Institute of Certified Public Accountants), regarding turnover / annual income / net assets or
- Audited financial statements of the previous year.
Useful Links
Natural Persons
Legal Entities
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Need more information?
See the Frequently Asked Questions page for immediate answers or contact us at email: mediations@financialombudsman.gov.cy.