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Cyprus consumer protection decisions

The Cyprus Consumer Protection Service has recently issued decisions against Alpha Bank Cyprus (former Emporiki Bank) and two property development companies Geormaride Ltd and VM Development Ltd.

Cyprus Consumer Protection Service decisionsOVER the past few weeks, the Cyprus Consumer Protection Service (CCPS) has issued decisions against Alpha Bank Cyprus Ltd (former Emporiki Bank – Cyprus Ltd), Geormaride Ltd and VM Development Ltd.

Alpha Bank Cyprus

Following its investigation into abusive clauses in a housing loan given in 2008, the CCPS ruled that the bank violated the law on abusive clauses in consumer contracts. These included:

  • calculation of the interest over 360 days;
  • the right of the bank to change the basic rate, the margin, commission and fees at its discretion;
  • the right of the bank to demand partial or full payment of the loan, interest, commission and expenses with additional interest charges if the consumer fails to do so;
  • the right of the bank to join or merge all of any of the consumer’s accounts, or to transfer money from any of the consumer’s accounts to pay all or part of his/her obligations to the banks;
  • the right of the bank to accept a proposal from the consumer for early repayment of the loan and the payment by the consumer of any expenses, costs, losses (including loss of profits) which the bank may sustain from an early repayment.

Property developer Geormaride Ltd

The CCPS ruled that a sales contract prepared by the company contained abusive clauses that:

  • required consumers to fulfil their payments before the company had transferred the title deeds;
  • imposed a high interest on late payments;
  • burdened consumers with taxes and expenses which should be paid after the property is transferred;
  • required consumers to sign a management agreement for the common areas which was not attached to the sales contract, thereby committing them to conditions they could not have known.

Property developer VM Development Ltd

The CCPS imposed an administrative fine of €200,000 on the company for breaching the Unfair Commercial Practices of Businesses to Consumers Law.

The company built homes without first obtaining the necessary licences from authorities.

Consequently the CCPS concluded that contracts for the sale of property without disclosing the actual situation of the properties to their purchasers and the consequences that arise in relation to transferring absolute ownership and title deeds the buyers.

The Cyprus Land and Building Developers Association (LBDA) issued a statement saying that the company was not one of its members and called on its members follow the laws and regulations.

The LBDA noted that the transfer of title deeds on the sale of a property is the “best way” to protect buyers and does away with the need for expensive and bureaucratic laws, such as the ‘trapped buyers’ law..

Further reading

The decisions of the Cyprus Consumer Protection Service may be viewed (in Greek) by clicking here.

Readers' comments

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  • Costas R Sanity says:

    Thanks Ed, it is my understanding as well why the UK financial services folks have not pursued the IFAs as it’s not within their jurisdiction however the IFAs have a duty to act as a fit and proper person in everything that they do do if they are still in the financial services industry then I think they should be looked at.

    You might recall the chap not so long ago that lost his financial services job, in banking as I recall because he had been dodging his rail fares so was deemed unfit. Whilst not the same the principle should still apply.

    Hopefully one day we will all get justice.

    Ed: Hopefully the many cases will come to court soon.

  • Costas R Sanity says:

    Great posting Mr Fortune absolutely spot on. Here are a few more thoughts and questions. Why hasn’t the public official who deliberately lied when signing the POAs been arrested and charged by the authorities, not to mention the solicitor? What he did is an extremely serious offence under EU bribery and corruption laws but no one is interested.

    The banks will eventually lose, the case is already stacked against them, the evidence is growing the longer that they dodge court and the more it will eventually cost them not forgetting that the older and more dilapidated the properties become the less that they will be worth to the eventual owners i.e. the bank.

    Why in a civilised (?) Country, the UK have the financial authorities not pursued the numerous IFAs who missold and allegedly lied to a lot of innocent buyers?

    Ed: The UK Financial Service Authority has not pursued IFAs who allegedly mis-sold overseas property as an investment because that type of investment is not a regulated product.

  • Costas A Fortune says:

    A bank and a particular property developer have hundreds of people not happy who are taking legal action regarding their development in Paphos. Hopefully these unfair T&C alongside local Cypriot Lawyers and questionable POAs will all show the nastiness and contempt that these people have shown British citizens. If the bank really had a case they think they could win why haven’t they taken people to court yet instead of adjourning court cases and playing for time? Why has the Cyprus Bar not taken action against these lawyers that supposedly checked these contracts ? All of the above should seriously put of any Brits from buying in Cyprus.

  • Costas Apacket says:

    I response to the ED’s comment @11:26:

    It’s one thing to fine a Bank, but regards the clause:

    ‘The right of the bank to change the basic rate, the margin, commission and fees at its discretion’.

    If this is an abusive clause what can I do about the BoC unilaterally tripling its margin over the agreed Euribor rate, and the subsequently higher charges that I have had to pay for may years, which emanated from their decision to apply this abusive clause?

    Ed: As someone commented on the CCPS decision against the Alpha Bank:

    “I agree that the fine is not very high, but that is the fine only. The most important is what this judgement represents. It is an opinion of CCPS to validity of the contract terms and this judgement will be taken into considerations by Cyprus court as well as European court if any of the cases go through all the way.

    It is definitely a positive news.”

  • Richard says:

    @Janice – I align myself very strongly with your observations.

    Alpha Bank were irresponsible lenders, failed spectacularly to disclose the proper terms of loan agreements for a considerable number of years, then appeared to make the rules up as they went along. Lastly (but most significantly) they were utterly hopeless to deal with in any form of useful negotiations to sensibly re-structure loans into something manageable – irrespective of whether this done face to face or remotely. To paraphrase Sir Winston Churchill’s famous quote after the battle of Britain; never in the face of commercial disaster, have so many people been involved in shuffling so much paper about to achieve so little. Hardly surprising really. Not clearing up the mess – covering up their scams – being in denial – and bullying/terrorising individuals (they believe will be less awkward to extort money from) we know from documentary films such as ‘Inside job’ is what many banks have done best in this century. If they believe in Karma (I doubt they do) they should be afraid. Very afraid. It’s already cost some people their lives – which in this day and age – is the very definition of the word ‘disgusting’.

    CCPS may not have as much power as we’d all like (& considering the profits banks made on hedging vast amounts of CHF – €250k could be settled out of ‘petty cash’) but at least it’s clear they recognise who the real culpable folk are in this mess – and that’s extremely welcome.

  • Janice says:

    Very interesting outcome. I think these abuses by Alpha Bank are not by any means unique to this development, but apply to many (if not most) developments in 2006-2008, and may not just involve Alpha Bank either. Hence Cyprus has the highest NPLs in Europe.

    It must surely be clear the NPLs are not down to the ‘bad’ consumers, but down to the the bad banks. I know it is stating the obvious, but the legal cases continue 10 years on, and totally avoidable – but who is paying the innocent consumer’s legal costs? Not the banks!

    Ed: This contract was drawn up by the Emporiki bank, which Alpha Bank acquired in 2015. But the CCPS imposed an administrative fine of €250,000 on the Alpha Bank in 2016 in connection with a Swiss Franc loan agreement.

  • Costas Apacket says:

    I recognise some of those very same clauses in my BoC loan contract.

    Does this mean that the CCPS will be fining the BoC as well?

    Ed: If you consider that your contract with the BoC contains unfair/abusive terms you should complain to the CCPS. (BoC has been fined €170,000 by the CCPS last year.)

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