The Provincial Court has ratified a conviction against Banco Popular for establishing "abusive" floor clauses in a mortgage loan and its subsequent extension to three clients in Lanzarote. The beneficiaries of these mortgages went to court and the court of first instance ruled in their favor, but the bank appealed. Now, the Court has endorsed that ruling and has condemned Banco Popular to return to these clients the interest that it charged them "unduly", taking advantage of the "game of floor clauses".
The Court's ruling concludes that these conditions meant that clients signed a contract "apparently" for a variable interest loan in which "downward fluctuations could have an impact on a decrease in the price of money." However, "the truth is that there could never be a decrease in price in favor of the consumer," the Court's ruling states, dated June 7.
That first ruling already condemned the bank to return to the clients the interest that it considered had been generated in its favor unfairly. In its appeal against that ruling by the Court of First Instance number 3 of Arrecife, Banco Popular disagreed and argued that the clauses were "freely agreed" and exceeded the "control of transparency." In addition, it emphasized "in any case the impropriety of the retroactive application" of that nullity.
The ruling that the Court has now issued refutes, based on national and European jurisprudence, all the arguments of the banking entity. Thus, it explains that although floor clauses do not have to be "necessarily abusive", the "problem" occurs when these are introduced "without the necessary transparency". And, paraphrasing rulings of the Supreme Court and the Court of Justice of the European Union, it emphasizes that this transparency is not limited to a mere "grammatical correction" in the wording that makes them "intelligible". It is "necessary", in addition, that the consumer "can get a complete idea of the economic and legal consequences that the inclusion of such a clause will entail".
Consumers "deprived" of being able to "assess" with "precise" criteria
And, the ruling emphasizes, this "lack of transparency" entails a "substantial imbalance" for the consumer, by "depriving" them of the possibility of "comparing between the different offers existing in the market and of making a faithful representation of the economic impact that obtaining the service object of the contract will entail".
To avoid this, the ruling states, citing another ruling of the European Court of Justice, the banking entity must "comply with the agreed service" so that the client can "assess based on precise and intelligible criteria" the economic consequences that derive from that loan. The contract must expose "in a transparent manner both the specific operation of the mechanism to which the clause refers and the relationship between said mechanism and that established by other clauses".
This did not occur in these Banco Popular loans, according to the Court, as it considers that in these clauses "all the circumstances" concur on which the Supreme Court has based other reference condemnatory rulings. Among these requirements, in this case there was that "appearance" of a variable interest loan, and also a "lack of sufficient information" that these clauses were "defining elements of the main object of the contract".
"Masked" among "an overwhelming amount of data"
But, in addition, the ruling states that these clauses were located among an "overwhelming amount of data" among which they were "masked", so that they "dilute the consumer's attention". The banking entity also did not include "simulations of diverse scenarios related to the reasonably foreseeable behavior of the interest rate at the time of contracting", so that clients could get an idea of the amounts they should pay. To this it was necessary to add also the "non-existence of a clear and understandable prior warning about the comparative cost with other products of the entity itself".
As a consequence of this, these Banco Popular clients ended up signing a contract without having been "correctly informed" of the "invariability to the downside of the rate initially fixed in the contract". During the first year, that figure was, "fixed" at 4.5% in the first contract and 4.75% in the second. And, "due to the effect of the floor clause, in the coming years said rate would inexorably remain as a minimum, and despite being a 'variable' rate, the consumer could not benefit when the Euribor together with the agreed differential was lower than said percentages".
For all this, the Court concludes that it is "necessary" to declare the "nullity" of these clauses. And on the retroactivity of the payments, it makes it clear that the "doctrine" established indicates that when the clauses are declared "abusive", the banking entities will have to "return to the borrower the interest" from the date on which that reference ruling of the Supreme Court was issued, on May 9, 2013. With this argument, it condemns Banco Popular to return to its clients the interest that it charged them from May 10, 2013. "The referred rulings, whether or not their reasoning is shared, say what they say, and not what the appellant intends, so the interest on the loans will have to be recalculated", it concludes.
