The Cyprus Consumer Protection Service has issued a series of key rulings affecting more than 22,000 mortgage agreements signed with the country’s largest banks. The trigger was the discovery of contract clauses deemed to violate customers’ rights. The review covered provisions related to the banks’ right to withhold funds and consolidate accounts, as well as terms on property revaluation costs, notifications, and the calculation of additional fees.
Correction of disputed clauses
Particular attention was paid to loan agreements signed in recent years with clients aged 20 to 45 — a group considered most vulnerable due to non-transparent terms. The decision requires amendments to the disputed clauses to bring them into compliance with Cypriot law and EU consumer protection directives.
For one of the country’s largest banks — Bank of Cyprus — an administrative fine of €800,000 was imposed, along with an additional daily penalty of €1,000 for continuing to apply the disputed terms after the 60-day deadline granted for corrections.
Eurobank contract adjustments
Similar violations were found in Eurobank contracts, including agreements signed after August 2022. These involve more than 7,400 mortgage contracts containing clauses on repayment terms, interest charges, additional fees, and bank rights in case of breaches. These provisions were found to contradict the Consumer Protection Law of 2021 and were classified as unfair and non-transparent.
Eurobank has been fined €600,000, with additional daily penalties to be imposed until the disputed terms are removed.
Strengthening transparency and consumer protection
Both banks are required to amend their loan agreements, stop using the disputed clauses, and refrain from applying them to existing contracts. Importantly, during the proceedings both institutions cooperated with regulators and expressed their willingness to bring their documentation fully in line with the law.
Experts say this decision sets an important precedent for the lending market in Cyprus. Increased transparency and the removal of unfair terms will help restore trust in the banking sector and provide consumers with stronger safeguards when entering into long-term mortgage agreements.
Impact on the real estate and mortgage market
Since mortgages remain the primary tool for purchasing property in Cyprus — especially for young families and foreign buyers — the new measures could serve as an additional driver of transparency in transactions. This also aligns with the broader European trend of tighter oversight of financial institutions in the field of consumer protection.
Thus, the rulings of the Consumer Protection Service not only restrict the use of unfair terms but also establish a new standard for banking practices in Cyprus’s mortgage lending sector.