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Brussels – The European Court of Justice (ECJ) endorsed this Thursday the collective lawsuit filed by the financial product consumer association, Adicae, on behalf of 820 people affected by the floor clauses of mortgages signed with a hundred banks.
The ruling states that “no provision of the directive (on unfair terms) indicates that judicial control of transparency is excluded in the context of a collective action” when such action “is directed at professionals in the same economic sector” who use “the same general contractual terms or similar terms.”
The Luxembourg court thus responds to the questions raised by the Supreme Court, which had doubts about the legality of collective actions in judicial proceedings to assess the transparency of floor clauses with the aim of determining if they are abusive.
The so-called floor clauses set a minimum limit on the interest rates that mortgage holders had to pay to their financial institution, which in practice prevented them from benefiting from the fall of the Euribor, the reference index for most mortgages in Spain.
The Supreme Court declared these clauses abusive in 2013 but limited the maximum retroactivity of refunds to customers to that year. Three years later, in 2016, the European Court of Justice corrected the doctrine of the Spanish High Court, eliminated this time limit, and required banks to return all the money collected.
After this European ruling, the judicial battle returned to Spain, where the Madrid Provincial Court ruled in 2018 in favor of consumers, recognizing their right to be compensated for what was owed since the signing of the contract.
This pronouncement was appealed again by the entities before the Supreme Court, which decided to ask the ECJ about the doubts it had raised regarding the suitability of a collective lawsuit in this matter.
This Thursday, the European court endorses that the action against the floor clauses in Spain be carried out through collective actions and specifies that Adicae’s macro lawsuit meets the first criterion because “it is directed against professionals in the same economic sector (that of credit institutions).”
The European judges justify at this point that the “organizational difficulties” posed by the matter due to the “large number of entities and consumers” involved “cannot undermine the effectiveness of the subjective rights recognized” by community legislation.
Regarding the second requirement, the ECJ considers that “it also seems to be met,” pending the checks that the Supreme Court must carry out, since the floor clauses of the contracts that are part of the matter are “similar.”
It also adds that the fact that the mortgages were signed “at different times or under different regulatory regimes” does not diminish the similarity of the challenged clauses.
On the other hand, the ruling points out that national judges can control the transparency of the clauses based on an “average consumer” who is “normally informed” and is “reasonably attentive and perceptive,” as long as the mortgages are directed at “specific categories of consumers” and the clauses have been used “over an extended period of time.”
In this way, the ECJ gives the green light for Spanish courts to analyze the transparency and possible abusiveness of the floor clauses without the need to conduct an individual analysis of each affected person.
However, the ruling notes that the perception of the “average consumer” may have evolved, so the Supreme Court should check if the drop in interest rates or its own 2013 ruling may have caused “a change in the level of attention and information of the average consumer.” (July 4)