2023-07-14 18:04:41
The Court of Justice of the European Union (CJEU) yesterday opened a way for more than a million people affected by the Mortgage Loan Reference Index (IRPH) to claim in court the excess they paid compared to the mortgages subject to the Euribor , another reference index for mortgages in Spain.
The IRPH and the Euribor are two types of indices that banks use to calculate mortgage interest. The sentence implies that the banks should have applied a “negative differential” to align the IRPH with the Euribor, which would have reduced the cost of mortgages for many consumers.
The potential magnitude of the claims is significant. According to Goldman Sachs calculations, The blow to the bank could amount to 44,000 million euros, although the banks maintain that it will be considerably lower. Barclays, for example, estimates the impact at 3.6 billion euros.
The CJEU indicated that a Bank of Spain circular issued in 1994 is relevant to the case and establishes the need to apply a negative differential to the IRPH. It also emphasizes that the publication of the circular in the BOE (Official State Gazette) does not guarantee that the average citizen understands such a complex product.
This opinion contradicts the positions defended by the Bank of Spain, the banks and the Spanish Supreme Court, which maintain that the circular is not binding. The CJEU verdict provides respite for consumers and their legal defense.
Those affected now have the right to claim the bank, as long as this negative differential has not been applied to them. However, it remains to be seen how the Supreme Court will interpret this matter, due to the principle of loyal cooperation between the European institutions.
Although the CJEU indicates that Spanish judges must evaluate whether citizens received adequate information about the product, there is concern about the influence of the banks in the Supreme Court and its possible effect on the final interpretation of this matter. Consumers fear that the power and influence of the banks could influence the Supreme Court to find a loophole that favors the banks.
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