Georgios Nikolakopoulos, an attorney at the Supreme Court (Areios Pagos) and the Council of State, spoke on Parapolitika 90.1 and the show “Stichomythies” with Tzouli Tsigka about the provisions of the new Katseli Law settlement. He noted that a significant positive element is the retroactivity of the ruling, as well as the clarification that interest is calculated on the monthly installment. The settlement also has universal applicability. However, he stressed that there are specific points that need improvement — including the fact that those who have already paid off their loans cannot reclaim overpaid amounts. As Mr. Nikolakopoulos points out, another issue concerns borrowers who had previously been excluded from the Katseli Law process, as they cannot be included in the new settlement — and the definition of “exclusion” itself needs to be clarified. Finally, Mr. Nikolakopoulos argues that high penalties must be established for non-compliance, warning that without them, “we will unfortunately see court appeals all over again.”
Key excerpts from Georgios Nikolakopoulos’s interview on Parapolitika 90.1 regarding the Katseli Law settlement
JOURNALIST: A few weeks ago we were discussing the upcoming settlement and we said that one of its key issues would be retroactivity. It seems that is indeed the case — but let’s go through it from the beginning and look at what the Ministry of Finance’s settlement actually provides for.
You are absolutely right — we discussed this on your show previously, where the question arose as to whether retroactivity would be included: that is, whether the method of interest calculation as ruled by the Supreme Court would apply from the beginning of a given Katseli Law arrangement, or only from June 5th of the current month, when the ruling was issued. The bill now confirms this — and it is one of three key positives — that retroactivity is enshrined. From a legal standpoint, it was always self-evident that a ruling interpreting an existing law carries retroactive effect; it is not a new law, it simply clarifies the interpretation of an existing one. So the first of the three positive elements is that the settlement codifies what was already undeniable — the retroactivity we had discussed. The second positive is that the method of interest calculation is now made crystal clear: interest accrues on the monthly installment, as the ruling itself stated — though the funds and servicers had been contesting this. The settlement also clarifies that the interest periods are fixed, meaning one month each. I raise this because a rumor had circulated that funds were claiming the ruling was ambiguous — arguing that while interest may accrue on the monthly installment rather than the total outstanding debt, the first installment could be charged one month’s interest, the second two months’, the third three months’, and so on up to the hundredth installment being charged a hundred months’ worth. The legislative settlement now clarifies this unequivocally. The third key element now enshrined in law is that the Supreme Court ruling carries universal applicability — no individual needs to take their case to court. Banks and funds are therefore obligated to recalculate outstanding debts, and any overpayments made in prior years will be offset against future installments. This will affect a great many people, since most borrowers have been overpaying, given that interest was previously calculated on the principal rather than the installment.
JOURNALIST: So there will be significant relief, I imagine, through this offset.
A very significant relief. Based on calculations I have run, for a debt of €100,000 with a 20-year term, where the base installment was around €400 but the bank had added approximately €200 in interest, bringing the installment to €600 — if a borrower has been paying this for the past five years, the recalculation would effectively mean they have around 25–26 installments credited back to them. That amounts to roughly two years and several months shaved off the end of the loan. I want to emphasize this, because what the law actually says is that you do not receive money back directly — rather, your future installments are reduced at the end of the term. To clarify: a borrower who has been overpaying will not simply stop paying for two or three years. They will continue paying normally, but their loan will end earlier than originally scheduled.
Now, if I may, there are three points that need to be improved, as they will lead to disputes. The first is that the law states those who have reached the end of their loan and completed repayment cannot reclaim the amounts they overpaid. This creates an unjust situation, because someone who was pressured into paying €600 per month — far more than what was legally owed — and who managed to fully repay their loan, perhaps because they entered the Katseli process early or made larger payments over time, cannot now recover the money they overpaid, which has since been deemed illegal. This is inherently unfair. Similarly, the law states that anyone who had previously been excluded from the Katseli Law process cannot be included in the new settlement. The definition of “exclusion” must be examined carefully here.
What this means in practice is that a fund would approach a borrower and say: “You are paying €400 per month; I calculate you should be paying €600. You now owe me €200 per month — over two years that amounts to a significant sum. If you don’t pay, I will terminate your Katseli Law protection and proceed with foreclosure.” Many borrowers have been subjected to exactly this strategy in recent years, and some were indeed led to foreclosure as a result. These individuals cannot now be made whole. It cannot be acceptable for the law to say that this settlement does not apply to them simply because they were pushed out of the Katseli process — especially when the reason they were excluded was that they could not meet demands that have since been ruled illegal. It is particularly unjust for such borrowers to be denied legal protection or a fair settlement.
The final point, which I consider especially critical and which must be added, is this: if high penalties are not established for non-compliance with this law, we will unfortunately see court appeals all over again. If funds and servicers are not threatened with substantial fines, past experience has shown they will not follow lawful procedures. They have repeatedly operated in a climate of impunity. Therefore, in every instance of non-compliance, the threat of a significant financial penalty must be present.
This is precisely how we avoid an avalanche of legal proceedings. And there is a fourth related point: we have a Supreme Court ruling that found a particular method used by funds effectively multiplies interest tenfold. Should this not apply equally to other situations — such as the out-of-court debt settlement mechanism? Because this new law states that those who have gone through the out-of-court mechanism will not benefit from the interest reduction, to put it plainly. This creates a two-tier system — and here I want to connect this to the fact that I have personally been challenging the interest-charging practices of funds in court. Beyond the compound interest abuses that banks have been taken to court over for more than 30 years, in recent years we have seen an additional absurdity: the “accounting magic,” as I call it, through which banks inflate debts — the same practice the Supreme Court has now ruled creates interest levels ten times higher than what another method would produce. On what legal basis are banks and funds applying these accounting tricks?
Funds are not banks. They are not entitled to banking interest rates or the privileges that the banking system enjoys. These are profit-driven companies subject to private law. There is no public interest dimension here — they do not finance trade and industry the way banks do. These are speculative funds and they should enjoy none of the privileges accorded to banks, including banking interest rates. A fair and proportionate rate of interest must therefore be applied in these cases as well. Otherwise, as you rightly said, we will end up with a multi-speed system — with settlements operating at different rates for different categories of borrowers.
JOURNALIST: Regarding those multi-speed cases — first: those who have never been covered by the Katseli Law at all. Should they have hope that by pursuing legal action, they too can benefit from the related legislative settlement?
As an attorney, I can say that in the cases I handle, I will use this ruling as an additional legal tool in the appeals and objections we file, specifically in challenges to interest calculation practices. The Supreme Court ruled a particular method to be unlawful, and that ruling of illegality must be interpreted broadly and applied to other comparable situations.
JOURNALIST: Second — those who, as you mentioned, were excluded from the Katseli Law for one reason or another. Do they also need to go to court in order to have a chance of being reinstated? In other words, is everything at this point contestable only through legal proceedings? And what about a borrower who paid faithfully for eight years but fell behind in the last two because the interest burden had become excessive — interest that has now been ruled illegal? It seems unjust for that person to lose their primary residence protection.
Yes, absolutely — but the point I want to make is that once again, one has to embark on a legal marathon that involves costs, stress, and every kind of burden. That is precisely why I am calling on the government to address these three — or rather four — points now, so that we do not end up with unnecessary court battles. It is a shame that every individual case has to be fought out in the courts.
