The Provincial Court of Madrid has given the reason to the consumers in the macrocause against the mortgage floor clauses driven by the ADICAE consumer association. The court, in a ruling issued on Friday, annuls these clauses for considering them abusive, orders the massive return of the overcharged, with interest, and confirms the retroactive effects from the signing of the mortgage contract. The lawsuit affects practically all banking entities that included this type of provision in their contracts.
The Court thus confirms the first instance decision of Commercial Court No. 11 of Madrid, which already ruled in favor of consumers in April 2016 and declared null and void the ground clauses as abusive. But he corrects it. The court of first instance imposed a temporary limitation that now the court eliminates. The Provincial Court now recognizes the right of the injured parties to recover all the amounts they overpaid to the banks, to which the legal interests are added. Banks must return everything from the beginning.
Initially, the macrodemanda joined more than 9,000 affected individuals and went to 101 banking entities, which have finally been in 40 after the mergers. The total retroactivity is in line with the judgment of the Court of Justice of the European Union (CJEU) that in December 2016, determined that the banks should fully refund the money charged for the application of the floor clauses and that in that wayorrigió to the Spanish Supreme Court, that in 2013 had failed that only the money should be returned thereafter.
"It is appropriate to estimate ADICAE's recourse regarding this issue of the full restitution of the amounts charged to consumers affected by the application of the so-called floor clause, without the time limitation assessed in the judgment of the first instance," the ruling says. that adds that the state of jurisprudence (the ruling of the CJEU) "no longer uses previously used criteria".
ADICAE calculates that, on average, the amounts that the bank will have to pay back to each affected range between 12,000 and 15,000 euros. The banking association AEB has declined to comment on the ruling.
The resolution can be appealed in cassation before the First Chamber of the Supreme Court in the next 20 days. The court also imposes costs attributable to the appeals or challenges of two dozen banks that have been dismissed. Among them, Caixabank and Bankia.
Banks have been for years including the so-called floor clauses in their mortgage contracts. Given the constant fluctuation of the Euribor – the interest to which most mortgages in Spain are referenced – the bank included in the contracts maximum ceilings on which interest would not grow even if the Euribor rose above (ceiling) and ceilings under the that interests could never be reduced (soil).
Last year, after the European justice system forced banks to pay back everything paid for the land clauses, 54 special courts were created -One per province in the Peninsula; two in the Balearic Islands and two in the Canary Islands- to face the avalanche of demands from those affected. Citizens have already gone to court with 305,437 lawsuits for all kinds of clauses that they consider abusive: land clauses, early termination clauses, default interest, mortgage formalization expenses or multi-currency mortgages referenced to foreign currency. Of this, only one in four has been resolved. Banks lose 97% of cases.
The Government established in parallel an extra-judicial channel for those affected to claim. Until August 31, 2018, credit institutions have received 1,166,485 refund requests for amounts unduly collected in floor clauses. Of these, banks estimated 68.5% (517,502) and, of these, 93% ended with agreement between the parties. In total, 2,292 million euros have been returned, representing an average amount returned to customers of 4,430 euros. However, the entities have refused to return the money in 226,148 cases, 29.9% of those admitted for processing, despite having ground clauses.
The Minister of Justice, Dolores Delgado, announced a few weeks ago that the government is preparing regulatory changes to penalize banks that insist on going to court and lengthen the process with resources in cases of abusive clauses. Among the measures advanced by Delgado to solve the collapse of the courts specialized in these lawsuits, highlights the imposition of sanctioning interests on banks when they act in bad faith to lengthen the processes or delay the return of money to customers. The objective would be to force them to go to the extrajudicial route, which they hardly use now.