Cyprus Consumer Protection Fines Banks €1.4 Million Over Unfair Mortgage Terms

The Cyprus Consumer Protection Service (CCPS) has imposed a combined fine of €1.4 million on two major banks, the Bank of Cyprus and Eurobank (formerly Hellenic Bank), after discovering unfair clauses in over 22,000 mortgage agreements. This decisive action aims to enhance borrower protection and promote fairness in Cyprus’s real estate lending market.

Bank of Cyprus: Over 14,800 Loans Affected

The Bank of Cyprus is required to revise 14,810 mortgage contracts signed since June 2021, predominantly involving young borrowers aged 20 to 45 years. The disputed clauses related to rights of retention, account consolidation and set-off, customer notification duties, and costs linked to property revaluations.

Recognizing the importance of aligning with consumer laws, the Bank of Cyprus cooperated by updating contract terms to improve clarity and transparency. The CCPS regarded this collaboration positively, which contributed to mitigating the penalty.

The Bank was mandated to withdraw the disputed clauses within 60 days. Failure to comply will result in a daily penalty of €1,000 on top of the €800,000 fine.

Eurobank’s Over 7,400 Mortgage Agreements Under Scrutiny

Eurobank was found to have included unfair provisions in 7,456 housing loans since August 2022. These related to repayment methods, collateral requirements, insurance, base interest rates, fees, reporting obligations, definitions of default, and set-off rights.

The CCPS identified these clauses as causing undue financial pressure on borrowers while disproportionately benefiting the bank. While no fraud or targeted exploitation was found, the repetitive use of such terms in long-term contracts was deemed an aggravating factor.

Eurobank also committed to modifying contract terms to align with the legal framework, earning recognition for improved transparency. The bank has been fined €600,000 and must cease using the unfair clauses within 60 days or face additional daily fines.

What This Means for Property Buyers in Cyprus

These rulings underscore a growing commitment in Cyprus to enforce consumer rights and promote fairness in mortgage contracts. For prospective property buyers, especially those interested in Cheap Houses and Villas for Sale Cyprus or Cheap Apartments for Sale Cyprus, knowing the legal landscape is vital to avoid unfavorable contract terms.

Buyers should remain vigilant about the clauses in mortgage agreements and seek full transparency from financial institutions to safeguard their long-term financial wellbeing.

The CCPS decisions represent an important step toward more balanced borrower protections and a healthier real estate financing environment in Cyprus.