Floor clauses: The European Union Court protects the Banks

Posted on 20/07/2016 · Posted in European Union, News, Spain
  • Asufin is very disappointed with the decision of the General Advocate, in reference to the retroactivity of the floor clauses

  • Patricia Suárez. President of Asufin, considers scandalous the fact that such an important legal issue can be manipulated in favor of the Bank

The resolution of the matter of the spanish bank product denominated  “floor clauses” will be a matter of politics and not justice. The general attorney of the European Union has ruled the 13th of July in favor of banks and against those affected.
The present context of Europe is characterized by two things: The imminent rescue of the italian bank and Brexit. Both facts are going to require a brutal injection of money. The banking system of two of the most important economies is weak, and therefor the european institutions do not want to create more problems for another banking system, in this case the spanish one that has been able to survive a major crisis and now is more consolidated.
The unjustified momentary break the Spanish banks have received thanks to the conclusions of the counsel have outraged the bank consumers. According to Patricia Suarez, president of Asufin, “If a legal issue is manipulated and handled to benefit a part so simple, it is a scandal.”

The floor mortgage itself is the minimum interest rate to be paid when paying the acquired mortgage. That is, regardless if it has entered into a variable rate for the mortgage, usually depending on the Euribor, in practice it is a variable rate only upward, with a fixed minimum that will not fall even if the Euribor does.
The Spanish Supreme Court sentenced in May 2013 that all ground clauses were not fully transparent were abusive, and therefore null or invalid. A year later, the Supreme ratified its decision, but decided to only forced the banks to repay the amounts collected from  the clients whom acquired this product after their judgment in May 2013.

This is the reason why these products were trying to receive a better solution that the one given by the Spanish Supreme Court. Even if the decision was in a way in favor of the clients, many of them were still affected due to the established date. The bank clients wanted to see if the European courts ultimately find that this the cutoff date was unfair.
This product was in the spanish bank market since November 2009, when there was a sharp fall in the interest rates. After the report of the European Commission, the judgment had to determine the extent of retroactivity. The clients expected their right to be taken into consideration, and to find a common european justice since the national one did not bring fairness to all of those affected.

The 7.600 millions of euros that should have been recovered by the bank clients are still in possession of the banks and not whom they truly correspond that is to the customers.
The European Commission, a few months ago, came to hint that the referendum would be in favor of the clients. Everything indicated that the  banking consumers would receive the protection the Spanish Supreme Court was not able of offering. It turns out that Paolo Mengozzi, the General Advocate who decided the ruling, considered that these months were worthy of an absolute change in its decision and finally safeguarded the interests of the banks. One of the most important journals in Spain, El País, has currently described this situation as “The bank being set free from their duty to compensate those whom acquired this product and give back the money they have thanks to charging their clients more”.

The European Commission pronounced itself a couple of months ago in favor of the clients. Everything see to indicate that these would receive the protection they needed and that according to their legal rights, they should have had. Paolo Mengozzi, the general advocate that dictated the sentence, considered that these months have created a context that is incompatible with a bank sanction.

According to Suárez “This is a massive torpedo for community law”. ASUFIN, active association on the fight for consumer rights and against the toxic bank products, it is considered amoral that the present european context as also the bank pressures can affect in the decision. These two points mentioned here should have never been binding to the decision. This should have only been based in justice and the need of returning to thousand of families the money they have lost because their bank of confidence was charging more.

If the European Court of Justice allows the national courts to apply their own norms and concepts of justice, their usefulness as also ability is without doubt questioned. After the lack of protection the first customers of this product found in the SPanish Supreme Court, they attended the other viable option they have as members of the European Union. This “secondary” legal option has again let the banks avoid the payment of millions of euros (7.600 million), that belong to the spanish citizens.