Cyprus Consumer Protection Service Fines Banks €1.4M Over Unfair Mortgage Clauses

The Cyprus Consumer Protection Service (CCPS) has imposed fines totaling €1.4 million on two of the island’s largest banks, the Bank of Cyprus and Eurobank (formerly Hellenic Bank), following an investigation into thousands of mortgage contracts containing unfair terms.

Bank of Cyprus: Over 14,800 Loans Impacted

For the Bank of Cyprus, the CCPS found that 14,810 mortgage agreements, signed since June 2021 and primarily involving borrowers aged 20 to 45, included problematic clauses. These related to the bank’s right of retention, account consolidation and set-off, communication obligations towards customers, and charges linked to property revaluation. The Service ordered the Bank to amend these terms to fully comply with consumer protection laws within 60 days.

The Bank of Cyprus was fined €800,000 with an additional penalty of €1,000 per day for any continued use after the deadline. However, the CCPS acknowledged the Bank’s cooperation and noted positive revisions that enhanced transparency and clearer wording in the updated contracts.

Eurobank Faces Fines for 7,456 Flawed Contracts

Eurobank, with 7,456 housing loan agreements issued since August 2022 under scrutiny, was found to incorporate unfair terms concerning repayment methods, loan collateral, insurance policies, base interest rates, fees, borrower notification obligations, default events, set-off, and liens. The CCPS highlighted that these clauses breached Articles 50 and 52 of the 2021 Consumer Protection Law, noting that their persistent use placed undue financial stress on borrowers while benefiting the bank.

Eurobank received a €600,000 fine plus the same daily penalty of €1,000 for ongoing non-compliance. Similar to the Bank of Cyprus, Eurobank committed to reforming these contract elements, and the CCPS recognized improvements in contract clarity.

Implications for Borrowers and the Real Estate Market

These rulings underline the increasing vigilance in Cyprus regarding consumer rights within the mortgage sector. Borrowers can expect more transparent contract terms in the near future, reducing hidden fees and unfair conditions.

If you’re exploring mortgage options or interested in property investments, it’s essential to stay informed about your rights and the evolving regulatory environment. For more insights into the Cypriot property market, explore our listings for Houses for Sale in Cyprus and check out our Auction Properties in Cyprus section for unique opportunities.

Consumer Protection Matters

The CCPS’s actions reinforce the importance of consumer protection legislation and bank accountability, aiming to foster trust in Cyprus’s real estate finance sector. For prospective buyers and investors, staying informed about such developments helps in making educated decisions and securing fair mortgage deals.