The Bank of Cyprus and Eurobank have been collectively fined €1.4 million by the Cyprus Consumer Protection Service (CCPS) for including unfair terms in more than 22,000 mortgage contracts. Both institutions have been ordered to amend the thousands of affected loan agreements within 60 days.
Details of the Rulings
The investigation found that numerous clauses in the banks’ mortgage contracts violated the 2021 Consumer Protection Law, creating financial strain for borrowers.
- Bank of Cyprus received the larger fine of €800,000. The decision impacts 14,810 loans issued since June 2021. The problematic clauses related to issues such as account set-off, customer notification duties, and property revaluation costs.
- Eurobank (formerly Hellenic Bank) was fined €600,000. The ruling affects 7,456 housing loans issued since August 2022 and cited a wide range of unfair terms concerning repayment methods, collateral, insurance, and base interest rates.
Aggravating and Mitigating Factors
For Eurobank, the CCPS considered the repeated use of the unfair clauses in long-term contracts as an aggravating factor.
However, the consumer watchdog also noted several mitigating factors for both banks. These included a lack of fraudulent intent, full cooperation with the investigation, and a willingness to propose amendments to bring the contracts into compliance with the law. The service acknowledged that the revised contract terms showed improved clarity and transparency.
The Path to Compliance
Both banks have been ordered to cease using the illegal clauses within 60 days and ensure they are not applied to any existing agreements. They face an additional fine of €1,000 per day if they fail to comply with the deadline.
According to the CCPS, the decisions aim to ensure compliance with consumer law, improve transparency in mortgage contracts, and strengthen protections for thousands of borrowers in Cyprus.
Source: Cyprus Property News