Bravo for EU consumer protection re: abusive mortgage clause

Bravo European consumer protection! Success for mortgage holders

Have you applied for compensation for abusive clauses in your Spanish mortgage? If not, why not? The extent and scale of the abuses carried out by Spanish banks have been well documented and widely commented. Now the Court of Justice of the European Union has added more fuel to the fire by ruling yesterday (21/12/2016) that European Law precludes national case law in consumer mortgage claims.

How will Spanish banks react?

It is a huge blow to the Spanish financial sector as a significant number of banks still maintain these abusive practices. Many people who took out Spanish mortgages during the housing boom (2000-2007) are still paying abusive interest rates. The Court of Justice of European Law states that customers should be paid compensation from the moment the mortgage containing the unfair term was signed. Up until now the Spanish Courts have limited the compensation to applying from the date upon which the decision revoking the clause is delivered, claiming this was in “the interest of legal certainty” (Spanish Supreme Court statement of 23rd of March 2015).

Are you affected?

Probably. If your mortgage is with a Spanish bank bear in mind that around 80% of all mortgages in Spain contain unfair terms such as interest rate floor clauses. These are clauses which limit the variations in the interest rates (Euribor is the one normally used), that are commonly known as “caps” and “floors”. These clauses limit the decreases in a variable interest rates.


What should you do?

Make an appointment with your mortgage lender to begin compensation proceedings. If you have any doubt about this process, please contact us via this formula so that we can review your mortgage free of charge. If you have to take the case to Court to have the abusive clause in your contract declared null, please make sure you engage a specialist lawyer to calculate the amount due over the previous payments you have made as well as to calculate the amounts that you would have paid towards the loan if you had not been duped into paying abusive clauses.

 Just to be clear

The Court of Justice of the European Union has upheld the consumers’ position concerning which date should be used to calculate repayment of money unfairly charged to them through their mortgages in no uncertain terms: 

“The finding of unfairness must have the effect of restoring the consumer to the situation that the consumer would have been in if that term had not existed. Consequently, the finding that “floor clauses” are unfair must allow the restitution of advantages wrongly obtained by the seller or supplier to the consumer´s detriment”.