On 21 December last year, the European Court of Justice ruled that the abusive bank clauses known as ‘floor clauses’ were unlawful and banks are liable to pay back full refunds to customers.

Many people who have bought property in Spain with Spanish mortgages will have been subject to a ‘floor clause’, which sets a minimum interest rate. The official Euribor rate dropped drastically in 2009 and failed to recover. Unfortunately, however, customers were unable to take advantage of these lower rates and were stuck with paying overly inflated monthly interest payments.

Following the European Court ruling, customers are now able to claim back the overpaid interest from day one, which in many cases is over €10,000. They may also be entitled to claim back the set-up costs of the mortgage.

Lawyers in Spain have had a lot of success in claiming back overpaid interest for clients who hold or have held Spanish mortgages. Many banks are deciding to settle as the prospect of success of any court action following the European ruling is very slim, especially with regard to British clients, who are much more unlikely to have understood the implications of the floor clause on signing up to their mortgage.

If you have clients who have a Spanish mortgage which might contain this clause and are interested in claiming a refund from their bank in Spain, I would like to hear from you.

Victoria Westhead, solicitor, Malaga, Spain