€160,000 Fine Imposed on Alpha Bank Cyprus for Abusive Mortgage Contract Terms

An administrative penalty has been imposed by the Consumer Protection Service (CPS) on Alpha Bank Cyprus for the inclusion of abusive clauses in mortgage loan agreements concluded with consumers. The decision, dated 9 March 2026, stipulates the imposition of a €160,000 fine and requires the bank to immediately discontinue the use of the specific contractual provisions.

The sanction forms part of a wider ex officio investigation conducted by the Consumer Protection Service into the contractual terms used in standard mortgage loan agreements by banking institutions operating within the Cypriot market. The investigation is grounded in the Consumer Protection Law of 2021, which grants the competent authority the power to impose substantial administrative penalties and order the immediate termination of practices that violate consumer protection legislation.

According to the findings of the ΥΚΚ, several clauses contained in the contracts result in a significant imbalance between the rights and obligations of banks and consumers, to the detriment of borrowers. Among the problematic provisions are terms that enable the bank to alter the interest rate and the methodology used to calculate it without clearly defined and objective criteria, a practice that directly influences the overall cost of the loan.

The investigation also identified provisions granting the bank extensive authority to set off and consolidate customer accounts, even without prior notification to the consumer. Additional clauses presume that borrowers have received notices sent by the bank, even in instances where such notices are returned undelivered. Other disputed terms relate to the transfer of the cost of property revaluations to the consumer, without clearly established limits or objective criteria governing such charges.

Furthermore, the CBA determined that certain provisions permit the bank to debit any account held by the customer in order to settle outstanding debts. The contracts also include clauses allowing the bank to terminate agreements and demand immediate repayment in response to a broad range of “misdemeanors,” without clearly defining the circumstances under which such actions may be taken.

Despite the seriousness of the findings, the decision notes several mitigating factors in the assessment of the penalty. In particular, the bank’s initiative to propose amendments and/or the removal of the contested contractual terms in order to align them with the requirements of the applicable legislative and regulatory framework was considered a significant mitigating circumstance.

The decision also highlights that the bank’s acknowledgement of the need to comply with the legal framework demonstrates an intention to limit the consequences of the violation and to ensure improved consumer protection going forward. In addition, the Service noted that the bank cooperated fully with the competent authority throughout the investigation by providing the requested data and information, a factor that was taken into account when determining the level of the administrative sanction.

The case forms part of a broader enforcement effort targeting mortgage loan agreements used by banks in Cyprus. Previous decisions arising from the same investigation have already resulted in substantial fines being imposed on other institutions. On 23 September 2025, the Consumer Protection Service imposed a €800,000 administrative fine on Bank of Cyprus, while on 22 September 2025 a fine of €600,000 was imposed on Hellenic Bank, which now operates as Eurobank Ltd.

These three rulings represent the first comprehensive enforcement actions taken by the competent authority within the framework of the ongoing investigation.

According to the Consumer Protection Service, the inquiry is still underway and is being expanded to include additional banking institutions operating in Cyprus, with the objective of conducting a full assessment of the contractual terms applied in mortgage loan agreements.

At the same time, the Service urges consumers to carefully review and fully understand the terms of any loans they obtain. It also encourages individuals who believe their financial interests may have been adversely affected to pursue their rights through the competent courts.

By fLEXI tEAM