The EUCJ decided on the December the 21st of 2016 Ruling on some queries made by Spanish courts regarding the possibility to force the banks which applied abusive floor clauses to customers to pay back to them all the monies that the banks charged as excessive interests rates. The EUCJ has finally ruled in favor of the consumers again forcing the Spanish bank industry to respect consumers' rights once and for all at least on this subject. So it is easier than ever to claim for your money back from the banks which robbed you.
Sorry, but what is a floor clause?
Yes, let us start from the beginning. A floor clause is an stipulation set on the mortgage varible rate loans which limits the variability of the agreed interest rate. For instance, if you have a variable interest rate loan based on EURIBOR plus 1% and the bank enforces a stipulation which sets the minum interest rate to pay by you at 3% for instance which it means that if the EURIBOR falls under 2% you will be paying anyway 3% which is more than EURIBOR plus 1% thus you will be overcharged by your bank if the stipulation is declared to be abusive. Nowadays, the EURIBOR is under 0% so you should pay 1% on your mortgage loan but due to the limit set on the floor clause the minimum rate you will pay 3% which it does not look fair at all, does it?
The majority of the mortgage loans in Spain are variable rate mortgage loans. And the majority of these loans are based on the EURIBOR rate.
It is illegal a floor clause?
The floor clauses are not illegal at all. They are valid if agreed according to the law. When enforced to consumers' contracts such as mortgage loans the important thing is that the consumer has to understand how the clause floor works and how it does affect their position in the relationship whith the bank. It is not enough that the bank fulfills all the regulations' requeriments to enforce the clause floor in the contract but the consumer needs to understand perfectly how the stipulation works for him now and in the future and that this stipulation is an essential part of the contract as it does affect to the interest payment duty of the debtor which is essential in a loan agreement. This understanding requires an information stage to the consumers which in some cases it did not even exist at all. Many of the floor clauses were enforced in consumers' contract in the good years of the real estate boom when loans were cheap and easy to get and the EURIBOR was higer than 5% so comsumers did not take into account as relevant a floor clause setting a minimum rate of 3% for instance. So it seems that floor clauses were just enforced by banks on their own benefit being the outcome unbalanced contracts with the consumers. This lack of balance abusing of the consumers' good faith is what makes abusive the floor clause. These were essentially the reasons why on May the 9th 2015 the Spanish Supreme Court made void and null the floor clause of some major Spanish banks. The problem is that at the same time the Spanish Supreme Court stated that the banks must not return all the monies paid in excess by clients from the beginning but only from the date of its ruling (May the 9th 2015). This is against both the European and the Spanish basic contrat principles and consumers' righs and that is why some courts submitted a question to the EUCJ to clarify if that decision is accorgind to the European Law. And finally we know that is not legal.
What happens if the floor clause is abusive?
If the floor clause is abusive this cannot affect in any way the consumer. This means that the loan will work as if the floor clause did was not enforced from the very beginning. It means that the floor clause has never existed because is void and null from day one.
And what exactly are the consequences for me if the floor clause is made void and null?
The consequences are that following the example shown in point 1 your next mortgate receipt will show an interest rate of 1% and not 3% and you will pay much less in your mortgages receipts from now on.
Great! And what happens with the monies I overpaid so far?
The bank has to pay them back to you in full plus the corresponding legal interest since the day you overpaid until the day you recover those monies.
Is it difficult to claim to the bank?
Not at all. The procedure is as follows. First of all you have to approach the bank and try to resolve the matter amicably. There is a special claim procedure to the bank to be resolved in three months set specifically by the government to deal with the thousands of claims that are related to this matter. If a solution is not met a formal claim to the bank must be done. Either if the answer is still no or the bank do not reply a formal claim to the Bank of Spain can be done. Taking into account that the claim to the Bank of Spain is not binding for the bank and that the Bank of Spain can only check if regulations' formalities have been met by the bank denounced it makes useless to make this second claim to the Bank of Spain and the only way to claim left is the court.
But if I need to sue the bank, will this be expensive?
Again not at all. When the banks lose the trial they have to pay the legal fees so the final cost for you is of €0.
Understood. So how do I start the claim?
We advise you to contact specialized banking lawyers to deal with the matter from the beginning until the end. If you are interested to know if you are a victim of the floor clauses and how much money have been robbe by your bank, please do not hesitate to contact us and we will advise for free on the claim success chances and the estimate of your case.
Does the BREXIT affects to my claim possibilities if I am of British nationality?
Once more not at all for two reasons. First, so far the UK is still an UE member. We could say that the divorce proceure has started but the divorce decree has not already been issued. Secondly and more important, the EU regulations on consumers' rights are addressed to the EU member States which it means that these regulations have to be applied by Spain to all consumers regardless of nationality therefore it does not matter if the UK is still in or out the EU for the purposes of claiming on the grounds of abusive floor clauses.
Alright, I am decided to claim. What do I do now?
Please contact us to find out if your bank is still robbing you and to claim your money the easiest and cheapest way.
Thank you for your time and attention and I hope this information is of use. You are very welcome to share if you liked it.
Please, note that this is general information on legal subject and cannot be used as specific advice on legal situations. It is always recommended to seek legal advice for any specific situation you might be involved.