The “Cláusula Suelo” was a means by which Spanish financial institutions continued to charge a higher rate of interest than would otherwise apply if they were to follow the Euribor Rate.
On the 9th of May 2013, the Spanish Supreme Court issued a ruling which in effect said that ‘such contracts lack clarity and transparency’ and that the clauses were hidden deep in an ‘overwhelming amount of data’ saying that although not ‘illegal’, the practice is ‘immoral’.
They ruled that recompense should be made to those who have been overcharged, many Mortgage holders should receive compensation, but need professional advice to get it.
If you have a mortgage in Spanish you should check if you come under the terms of this legislation
What you need know about “Cláusula Suelo”.
Most Spanish Banks, in order to limit their liabilities, placed a “Cláusula Suelo” into the vast majority of their mortgages. This clause has been flagged by Spanish Courts as ‘immoral’. This ruling has forced lenders to reduce the cost of repayments and in many cases to pay compensation.
There is a clear case for compensation; at the very least there should be a noticeable drop in the monthly mortgage payments. The mortgage holder must first find out if the lender has behaved unethically, then it is relatively straightforward to gain compensation for the defective mortgage.
While financial institutions in Spain have been ruled against in the Courts, for the most part, they are not obligated to act; unless asked to by the person holding the mortgage – the onus is on the individual claimant, firstly to check if they come under this legislation, then to seek compensation.
“The report by the European Commission, recommends that customers whose rate floors were declared invalid should be repaid the cost of the floors for the length of their loans.” – Financial Times
