Newsroom
Thousands of borrowers across Cyprus could soon see fairer treatment from banks, thanks to a landmark court decision banning the use of abusive clauses in loan contracts.
The Nicosia District Court has ordered the immediate halt and non-repetition of unfair terms used by the Housing Finance Organization (HFO), a move hailed by the Legal Service as “extremely important” for consumer protection.
The decision, issued on May 13, came after the Attorney General filed a case on behalf of the Consumer Protection Service. It is the second ruling of its kind against a financial institution in Cyprus and could set a strong precedent for future legal action against banks using similar terms.
What this means for you
The court’s order targets a number of contract terms that allowed the bank to make major changes to loans without the borrower’s consent. These include:
- Charging fees or expenses at the bank’s discretion
- Unilaterally increasing interest rates or ending interest subsidies
- Changing loan repayment terms, installment amounts, and payment schedules at will
- Imposing extra default interest and legal fees if a borrower misses a payment
- Seizing or offsetting funds from any borrower account without notice
In plain terms, these clauses gave the bank near-total control over how a loan was managed, leaving many consumers feeling powerless and exposed to hidden charges and last-minute changes.
Broader impact
Legal experts say the ruling doesn’t just apply to the Housing Finance Organization. The court cited EU case law that suggests other financial institutions using similar unfair terms could face the same consequences.
That means this decision could eventually force banks across Cyprus to revise their loan agreements, offering more transparency and balance in borrower-bank relationships.
Before the ruling becomes a broader game-changer, similar legal actions may need to be brought against other institutions. But the Legal Service says the decision provides strong legal guidance for future cases and represents a major step forward in defending consumer rights.
