Advice from lawyer Carlos Baos: New setback for the banking entities

New setback for the banking entities. After years of contradictory rulings at a national level, the Court of Justice of the European Union has ruled that the arrangement fee of mortgages can be declared abusive by the Courts. If you signed a mortgage in Spain, and paid this fee, please note that you could claim the money back. In today’s article, we explain the importance of this ruling, and how it may impact all consumers affected by fee.

The arrangement fee is a commission that banks usually charge to their clients when awarding a mortgage. This fee includes a variety of expenses: a study of the profile of the person requesting the mortgage, management costs, processing costs, etc. The arrangement fee ranges from 0.5% to 2% of the amount borrowed. For instance. A mortgage loan of €300,000€ would involve an arrangement fee of €1,500€ – €6,000.

Where does the controversy stem from? A European directive on “unfair terms in consumer contracts”, issued in 1993, states that it cannot be assessed whether an essential clause of a contract is abusive or not. Until now, the Spanish Supreme Court defended that the Arrangement Fee was an “essential condition” in mortgage contracts. Therefore, no Spanish Judge or Court could analyse whether this fee, imposed by the bank, was abusive or not.

However, in a recent ruling, handed down on 16.03.203, related to the Spanish bank CAIXABANK, the Court of Justice of the European Union has ruled that:

1.- The arrangement fee is not an essential condition of the loan contract. It is only a supplementary condition.

2.- And therefore, Spanish Courts can study, case by case, if this fee, present is most mortgages, is abusive or not.

The importance of this ruling lies in the fact that, from now on, consumers affected by this type of commission, are able to claim to their money back from the bank. If the Court determines that the clause was abusive, it will be declared null and void and the bank will be forced to reimburse the amounts paid for this fee.

Please note that it does not matter if you have already cancelled or paid in your mortgage in full. You can still claim back the money paid for this fee. Send us your documentation and we will study the viability of your case. At White-Baos we are experts on banking law and consumer rights. Contact us now to get expert legal advice on this and other matters.

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Carlos Baos (Lawyer), White & Baos.

Tel: +34 966 426 185

Email: info@white-baos.com

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