unfair mortgage — The Cyprus Borrowers Association (Syprodat) has hailed the fines imposed on local banks for unfair mortgage terms as a pivotal moment in consumer protection. This week, the Consumer Protection Service announced penalties against the Bank of Cyprus and Eurobank, drawing attention to the need for fair mortgage agreements.
The Bank of Cyprus faces a substantial fine of €800,000, while Eurobank, formerly known as Hellenic Bank, will pay €600,000. This decision follows an extensive investigation that uncovered 22,132 mortgage contracts containing unfair clauses detrimental to consumers.
Syprodat expressed that this ruling is a “significant turning point” in the banking sector, emphasising the importance of transparent contracts. The association noted that the matter will soon be discussed by the House trade committee, indicating the broader implications for consumer rights in Cyprus.
On Tuesday, the Consumer Protection Service detailed the findings from their thorough review, which evaluated evidence, the banks’ positions, and their willingness to meet legal standards. The investigation revealed that several clauses in the Bank of Cyprus’ mortgage contracts—such as those concerning interest rate changes and property revaluation—were deemed unfair.
These problematic terms were identified in contracts issued since June 2021 and impacted a significant demographic, particularly clients aged 20 to 45. The regulator highlighted the critical nature of mortgage agreements, which often represent the largest financial commitment for individuals and are typically secured against their first home.
The inclusion of clauses that limit consumer rights in such high-value contracts was a key factor in the decision to impose fines. However, the Consumer Protection Service also acknowledged the Bank of Cyprus’s willingness to revise these clauses to meet legal requirements, which served as a mitigating factor in the penalties imposed.
The bank’s cooperation during the investigation, including the provision of necessary data and evidence, was another positive aspect noted by the regulator. Furthermore, it was reported that newer contracts from the Bank of Cyprus are demonstrating improved clarity and transparency, suggesting progress towards compliance.
In regard to Eurobank, the investigation similarly found unfair and non-transparent clauses in its mortgage contracts. These problematic terms included repayment methods, collateral, interest rates, fees, charges, default events, and set-off rights.
The review process took into account the submissions and commitments made by Eurobank and concluded that the bank’s practices violated essential consumer protection requirements. The fines are the result of an ex officio investigation aimed at ensuring that consumers have access to fair and transparent mortgage agreements.
