The Bank of Greece will use an online platform to monitor the debt arrangements that banks and servicers agree with their debtors in the context of the new Ethics Code that has been revised and started applying in early July.
That is incorporated in a special clause inserted in the law on the Hercules asset protection scheme, along with other clauses on the reform of bankruptcy legislation that switches the process of debt arrangements to electronic.
The Ethics Code is the rule book that lenders and debt management companies have to adhere to in order to settle the bad loans of individuals and very small enterprises. It was recently revised to adjust to the changes introduced by the so-called “second-chance law” on bankruptcy.
The application of the code comes with the obligation for the creation of a special online platform, to be developed by the General Secretariat for Information Systems in cooperation with the Special Secretariat for Private Debt Management. However, its monitoring will be the competency of the central bank in the context of its mission as watchdog so as to establish whether commercial lenders as well as servicers are abiding by the code’s procedures. The BoG will further have access to data on how many borrowers are cooperating or not.
Debtors will also have access to that platform, having forfeited their tax and banking secrecy for their creditors to automatically access the necessary information on their economic and property status from the competent authorities.
The obligations banks and services must stick to include communication with the debtor as well as the guarantor of the loan based on a standardized procedure, and offering specific solutions that will take into account not only the economic conditions of the debtor but also their future repayment capacity. Such solutions could be the arrangement or definitive settlement of arrears.
The future repayment capacity of a debtor must weigh the amount creditors would receive in case of a forced measure, and the health and social factors that could affect repayment.