The Cyprus Consumers Association has raised concerns regarding the effectiveness of the Consumer Protection Service in safeguarding borrowers against unfair clauses in bank contracts. The association’s comments follow the recent penalties imposed on the Bank of Cyprus and Eurobank for including problematic terms in their mortgage agreements.
Borrowers: Recent Fines Highlight Long-Standing Issues
On September 23, the Consumer Protection Service announced that the Bank of Cyprus would be fined €800,000, while Eurobank would face a €600,000 penalty. These fines were the result of a review that found unfair clauses in mortgage contracts that had been in effect since June 2021. The association noted that these terms predominantly affected younger clients aged between 20 and 45.
Concerns Over Delayed Action
The Cyprus Consumers Association welcomed the fines but expressed dissatisfaction with the delay in enforcement. “These decisions were issued four years after the new Consumer Rights Law, N.112(I)/2021, came into effect, leaving consumers unprotected for a significant period,” the association stated. They pointed out that the Consumer Protection Service publicly acknowledged its limitations in assisting consumers, urging them to pursue individual legal action instead.
Specific Unfair Clauses Identified
The regulatory review found several unfair clauses in the Bank of Cyprus’ standard mortgage contracts, including issues related to interest rate changes, set-off rights, and property revaluation. Similarly, Eurobank’s contracts contained non-transparent clauses concerning repayment methods and various fees and charges. The Consumer Protection Service noted that the inclusion of these clauses was an aggravating factor in the banks’ cases.
Collective Consumer Rights at Risk
The Cyprus Borrowers Association, known as Syprodat, hailed the fines as a significant turning point in the country’s banking and consumer policy, asserting that it strengthens citizens’ rights to fair and transparent contracts. They revealed that a total of 22,132 contracts were identified with unfair and disproportionate clauses, suggesting a widespread issue affecting many borrowers.
Questions about Regulatory Intent
Despite the fines, the Cyprus Consumers Association has voiced skepticism regarding the broader approach of the Consumer Protection Service. They questioned why the Service has not acted on provisions under Laws 101(I)/2007 and 91(I)/2023 designed to protect collective consumer interests, particularly since no legal proceedings have been initiated against the banks since 2007.
Ongoing Impact on Consumers
The association expressed concern that the delay in addressing these issues leaves consumers unprotected, potentially affecting tens of thousands of mortgage agreements. Their criticism suggests that the regulatory body’s actions may not reflect a genuine commitment to protecting consumers from abusive practices in banking contracts.
