Cyprus Property News - 17 January 2025 - by Nigel Howarth
The Supreme Constitutional Court of Cyprus has accepted an appeal by the Cyprus Consumer Protection Service (CCPS) concerning a €250,000 fine imposed on Alpha Bank for unfair practices.
The lower court had previously annulled the fine, but the Supreme Court overturned that decision.
The CCPS had launched an investigation into Alpha Bank after receiving complaints from ten individuals, some of whom had taken out loans in Swiss francs. Although the investigation was based on these complaints, it was conducted independently.
Alpha Bank investigation
The investigation revealed several unfair practices by the bank. These included failing to properly inform customers about currency risks for foreign currency loans, using unclear contract terms, and charging excessive fees (€5 per email and €50 per postal letter) for providing account information. These fees were seen as disproportionately high and potentially discouraging consumers from requesting information necessary to exercise their legal rights.
Other unfair practices included a statement on account summaries limiting disputes over charges to two weeks, without such a condition in the contracts. This was deemed misleading and likely to deter customers from challenging unfair charges. Additionally, the bank used contract clauses stating that agreements complied with all laws, which could mislead customers into believing they could not question the legality of the terms. Lastly, a clause that required all legal actions to be brought exclusively in Cypriot courts was also found to be unfair.
In 2016, the CCPS fined the bank €250,000 and ordered it to stop these practices and prevent their recurrence. Alpha Bank challenged the decision, and the lower court annulled the fine, citing inadequate reasoning about whether the complainants qualified as “consumers” under the law.
Fine reinstated
The Supreme Court found the CCPS’s investigation and reasoning to be thorough and justified, highlighting that the average consumer lacks the expertise to fully understand foreign currency loans. It ruled that the original fine of €250,000 against the Alpha Bank was appropriate and reinstated it, overturning the lower court’s decision and related cost orders.
