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The purpose of this article is to analyse the content of the recent Supreme Court ruling dated 25th October 2019 (Supreme Court Judgment 566/19 of 25th October) concerning the abusive nature of a clause inserted in a mortgage loan contract, which establishes a commission in favour of the bank KUTXABANK S.A. of Euro 30, in cases of overdraft claims or debtor positions.
To understand this penalty, we must bear in mind that banking legislation allows banks to establish such clauses as long as they meet the conditions defined by the Bank of Spain, namely:
– the accrual of the commission is linked to the existence of effective claims against the debtor customer;
– the commission cannot be repeated when claiming the same balance for additional procedures carried out by the entity with the same purpose, even when payments are not made on time, and this persists in successive settlements;
– the amount must be a one-off, and percentage rates are not allowed;
– it cannot be applied automatically.
Based upon the legality of said clauses, if they meet the aforementioned conditions, the problem that the supreme court resolves is that which is related to a clause that established the following:
“For each situation of non-payment of a loan or credit, as well as for each debtor position that is produced in a sight account, and once the appropriate personalised procedure has been carried out with the client (for which a reliable record shall exist) requesting the regularisation of said situation, a commission will be accrued by way of Commission for claiming overdue debtor positions that will be settled in account, which shall amount to Euro 30”.
Analysing the wording of the clause, the high court, in short, concludes that:
The vagueness of the service (“proper procedure”) means that it is not known what type of procedure or service should be carried out in the event of overdraft or non-payment, and consequently it is not known whether this will generate an effective cost and what the amount will be. In addition, such vagueness means that two concepts overlap, since the interest for delay would be added to the interest for engaging in a position of debt for another equal amount for the same concept, which would mean incurring in a violation of articles 85.6 and 87.5 of the Revised Text of the Consumers and Users Act relating to disproportionate compensation and charges for services not provided.
Likewise, there is an alteration to the burden of proof against the borrower, given that the obligation is imposed on the latter to prove that no procedure has been undertaken by the bank or that the cost of such procedure has not been that established in the contract, which would be contrary to what is set forth in the Revised Text of the Consumers and Users Act, given that such evidence should be provided by the bank.
Finally, it is worth noting that this judgment is particularly interesting because of its innovative character in terms of the type of clause which it annuls and because the clause is not only limited to mortgage loan contracts, but also to other credits and sight accounts.
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Barcelona, 8th November 2019