The Advocate General of the Court of Justice of the European Union has issued an opinion in favour of consumers in relation to mortgage loans linked to the IRPH, potentially opening the way for legal claims to recover the additional costs borne by borrowers through their mortgage repayments.
The formula used by the savings banks to calculate the IRPH is described as “complex and insufficiently transparent for the average consumer”. The Advocate General considers that banks must provide “sufficient information” to enable consumers to make an informed decision. Spanish courts will be able to examine whether the inclusion of the IRPH in each individual mortgage agreement meets the transparency requirements established by EU law. They will also be able to assess, in light of all the circumstances, whether the method used to calculate the interest rate was explained transparently and whether the consumer was in a position to understand the resulting financial consequences.
If the courts examine the transparency of the way the clause was marketed, the banks will have to demonstrate that they provided the appropriate information. If they fail to do so, the clauses may be declared null and void and excluded from the contract. IRPH-linked mortgage loans have reportedly caused borrowers additional costs of up to an average of €165 per month since 2004.