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ABUSE OF SO-CALLED “FLOOR CLAUSES” IN BANK MORTGAGES

The development of the law in these cases shows a clear process of reinforcing the rights of the consumer which can be traced through the following landmarks:

1.      In judgment number 241/13 of 9 May 2013 the Supreme Tribunal declared that clauses which limit reductions in variable mortgage interest rates to a minimum (“floor clauses”) were invalid. As a consequence, this implied that these floor clauses could not be enforced during the whole lifetime of the mortgage.

2.      The next turn of the screw came with the judgment of the Supreme Tribunal  number 139/15 of 25 March 2015 which established that the previous decision, which declared floor clauses invalid, applied retrospectively from 9 May 2013, the date of the publication of that earlier judgment by the Supreme Tribunal. This allowed recovery through the courts of excess interest which, as a result of a floor clause, had been paid since that date which then became the starting point for claims.

3.      Finally, the last link which should close the “virtuous circle” in the protection of mortgage payers’ consumer rights was forged by the Report of the European Commission of 30 July 2015 which sought a ruling from the Justice Tribunal of the European Union, at the request of Number 1 Mercantile Court in Granada, to the effect that all monies which should not have been paid could be reclaimed without any limit whatsoever.

If the Justice Tribunal ruling - which is expected in the summer of 2016 – is in favour of the Commission’s report that would make it completely clear that all interest paid as a consequence of floor clauses from the inception of the mortgage could be reclaimed.

In this connection we would say that there have already been many judgements in the Provincial Courts which have allowed all over-paid interest to be reclaimed; Bravo Abogados have had the opportunity to bring some of these cases.

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