IRPH News. Lack of transparency but no abusive according to the Supreme Court
Dear clients and readers,
Our weekly post news is about the abusive clause applied to many mortgages, regarding the interest rate called IRPH or commonly known as “CAJAS”. IRPH. Lack of transparency but no abusive according to the Supreme Court.
The Supreme Court has ruled a few days ago four separate appeals, and it has consequently rendered a new landmark Judgment; which is in full compliance with the recent ruling of the European Court of Justice, dated 3rd march 2020, (affair C-125/18).
In a nutshell, the Supreme Court has detected lack of transparency in the 4 appeals mentioned; basically for not informing the clients in advance about the available types of mortgage’s options (i.e. Euribor index rate, etc).
Nevertheless, it is important to point out that the Supreme court; considers that it is not the IRPH index what should be automatically deemed abusive in itself. However, what renders the IRPH clause null and void, is in reality; the lack of the necessary pre-contractual information; which is absolutely crucial, in order to enable the consumer to have a clear understanding, about the different types of available mortgage interests’ rates. The idea is the client should be able to offer the bank, a fully informed consent, before signing of the mortgage contract at the notary.
However, it is important to point out that the Judgment includes a dissenting vote from the magistrate Mr Francisco Javier Arrollo Fiestas; who considers that the IRPH clause is abusive in itself.
In our opinion; the problem with the new Judgment is that instead of unifying once and for all the criteria in the way of considering the IRPH index simply null and void in all cases; the Supreme Court basically puts the responsibility again in the lower courts to decide whether in each individual case; the IRPH clause is abusive or not.
We fully realize that the financial implications for all the Spanish banks are huge; since more than 1 million mortgages have been signed over the past few years containing this abusive interest’s rate. Undoubtedly, this situation of created banking interests can exert a strong influence on the Supreme Court.
Therefore, after reading the Supreme court’s decision, we cannot escape the feeling that justice has not been fully served this time; because after so many years waiting for the landmark ruling of the European Court of Justice; we believe that the Supreme Court has wasted another golden opportunity to clarify this matter once and for all.
In fact with this inconclusive and vague decision, the Supreme Court has basically let down the legitimate expectations of thousands of people affected; who had already filed more than 150 appeals at the Supreme Court, putting their hopes in this long awaited Judgment. That’s why, I believe that justice has not been served this time.
In conclusion, the IRPH clause will be rendered abusive, ONLY IF it can be proven in each single case; that the clause does not meet or comply with the required control of double transparency that is; first that the clause must be written in a clear and comprehensible manner; and second that the consumer must have understood before signing the mortgage deed about the financial implications of choosing the IRPH index in detriment to the Euribor index.
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Finally, thank you very much for your attention; and in case you might have any question or doubt at all; again please do not hesitate to contact us and we will be glad to clarify at your earliest convenience.
We look forward to helping you and the benefit of our “know-how”.
“NON-PRACTISING ENGLISH SOLICITOR IN ENGLAND AND WALES”, under the “Solicitors Regulation Authority” (SRA) SRA number 519196 and practicing Spanish Solicitor.