The Cyprus Borrowers Association (Syprodat) this week described as a “significant turning point” the decision by the Consumer Protection Service to impose fines on the Bank of Cyprus and Eurobank regarding unfair clauses in their mortgage loan agreements.

The fine imposed on the Bank of Cyprus amounts to €800,000, while Eurobank, formerly known as Hellenic Bank, will pay €600,000.

The decision followed an extensive investigation by the service, which identified 22,132 contracts containing terms considered unfair and disproportionate to the detriment of consumers.

“This decision marks a particularly important turning point in the country’s banking and consumer policy, strengthening citizens’ right to fair, balanced and transparent contracts,” Syprodat said.

The association added that “the matter is expected to be discussed by the House trade committee”.

Specifically, the Consumer Protection Service announced on Tuesday that the fines were the result of a thorough review that assessed evidence, the banks’ positions, and their willingness to comply with legal requirements.

According to the announcement, the service determined that several clauses in the Bank of Cyprus’ standard mortgage contracts, including those concerning interest rate changes, set-off rights, consumer notices, and property revaluation, were unfair.

“These terms were included in contracts from June 2021 and applied to a large number of mortgages, particularly affecting clients aged 20 to 45,” the service said.

The regulator underlined the social and financial significance of mortgage agreements, noting that they often represent the largest financial commitment a consumer will undertake and are frequently secured against a first home.

“The repeated inclusion of clauses limiting consumer rights in long-term and high-value agreements was considered an aggravating factor,” the announcement stated.

However, the service also recognised that the Bank of Cyprus showed willingness to revise the clauses to align with legal and regulatory requirements, which was taken as a mitigating factor.

The bank’s full cooperation during the investigation, including the provision of requested data and information, was also acknowledged.

In addition, the regulator observed that more recent contracts from the Bank of Cyprus displayed improved clarity and transparency, suggesting a move toward compliance.

With respect to Eurobank, the service explained that similar clauses in its standard mortgage contracts were also found to be unfair and non-transparent.

These terms related to repayment methods, collateral, interest, fees, charges, default events, and set-off rights.

“The review considered the bank’s submissions and commitments, and the clauses were found to violate consumer protection requirements,” the service stated.

The fines follow an ex officio investigation aimed at safeguarding consumers and ensuring that mortgage agreements are fair and transparent.