In almost all mortgages taken out in recent years, banks included unnegotiated derivative products, as well as interest rate floor and ceiling clauses. Numerous court rulings, including some issued by the Spanish Supreme Court, have held that such clauses are lawful provided they are sufficiently transparent to enable consumers to identify the clause defining the main subject matter of the contract and to understand the actual allocation of risks arising from fluctuations in interest rates.
There is no doubt that the burden of proving compliance with the law lies with the bank. It is the bank that must demonstrate that it acted properly and has all the necessary documentation to show that it provided adequate information and that the product offered was suitable for the customer, since the bank has greater knowledge of the product it offered.
A lack of transparency arises when we can demonstrate that one or more of the following circumstances apply:
- There is no sufficiently clear information indicating that the clause is an essential element defining the main subject matter of the contract.
- The clause is included alongside an interest rate ceiling clause, as though it were a form of consideration for that ceiling.
- The customer has not been provided with simulations of different scenarios showing the reasonably foreseeable behaviour of interest rates at the time the contract was entered into.
- No clear and comprehensible prior information has been provided about the comparative cost of other types of loan offered by the same institution, or no warning has been given that those alternatives are not available to customers with the particular customer’s profile.
- It is also clear that, at the time of signing, the customer is presented with an overwhelming amount of information, within which the clause is obscured and the customer’s attention is diluted.
If we can establish that these circumstances occurred together — lack of transparency, clarity and ambiguity — and take into account where the clause appears in the loan agreement, as well as the absence of specific information about the comparative cost of other types of loan or an explanation of the foreseeable behaviour of interest rates, it is certainly worth considering bringing a claim.