European justice sees the multicurrency mortgages abusive if you do not warn customers of the risks

The Court of Justice of the European Union (CJEU) ruled Wednesday that the multicurrency mortgages can be considered abusive when customers have not been adequately warned of the risks of this financial product. In its judgment, the Community judges state that “when a financial institution yield a loan in foreign currency, must provide the borrower enough for you to make informed and wise decisions information” but left in the hands of national courts the unique examination of each case to check whether the bank has acted in accordance with the law.

In the multicurrency mortgages, which spread during the years of the real estate blast, fees and amortize an amount periodically recalculated in the selected currency, and ocean in yen, Swiss francs or other currency. According to calculations by associations affected Spain, the multicurrency mortgages have caused heavy losses an estimated 70,000 consumers, many of whom denounced in court because they felt they were not aware of the high risk of this type of loan. Wednesday were awaiting the ruling on these loans by the Supreme Court, which had planned to review the use of an affected Madrid. No ban, stakes began the plenary of the Chamber of Civil crossed on the way the judgment of the European Court,

The ruling of the CJEU clarifies one front of the European Court which concluded that loans denominated in foreign currency and must be returned in that currency are regulated as a typical mortgage, they do not have to have specific clauses that explain the risks and do have financial products complex. In the ruling Wednesday, they not ban, the European Council admits for the first time you feed two types of mortgages in foreign currency: a simpler, where the money is returned on the agreed foreign currency, and other more complex, directly an associated one or more foreign currencies, to be repaid in the national currency (in the case of Spain, the euro) but depending on the price of sale of foreign currency applied by the bank. The latter type is the most sold in Spain, so the fact that the ECJ supports this differentiation is important for those affected, because if this second type is considered a financial derivative and not a straightforward loan, the law requires the bank to provide comprehensive information. It will be determined whether he or not.

In addition, the judgment of the European Court of Luxembourg states that even in the case of simple mortgages in foreign currencies the bank also has to meet minimum standards of transparency and, for the first time sets these parameters. The statement explains that the clause should be drafted “in a clear and understandable manner” and makes it clear that should enable consumers to be “in a position to assess, based on accurate and intelligible criteria, the economic consequences arising for him.”

So that the information ocean full, the bank must warn the client that presents an a risk of the exchange rate, inform how they can be these possible fluctuations in the markets, and communicate the risks to underwrite a loan in foreign currency . “It must be clearly informed that, in signing a loan agreement in a foreign currency, exposed an a risk of exchange rate that will eventually be hard to take from an economic point of view if currency devaluation in which receives its revenues. ”

In this situation of strong devaluation of its currency was the Romanian citizen who has taken the case to the Court of Justice of the EU. The applicant, asking to declare the clause signed as abusive, saw an increase in the amount to be paid by their mortgage due to the fall in the currency in which charged the Romanian leu, against the Swiss franc, the currency in which signed the agreement . According to his version, the bank introduced the product misleadingly, stressing only the advantages and concealing potential risks and the likelihood that saw its heritage damaged by the decision.

The ECJ considers that the Romanian court must assess whether we have followed the criteria of transparency and appropriate information. “It is for the national court to determine whether consumers have contacted all the elements that can affect the scope of its commitment, allowing you to evaluate the cost add up to your loan,” says the ruling. further he insists that, in simple loans in foreign currency, the choice to repay a loan in a given currency is an essential element of the contract, and not an accessory.

The lawyer handling the case client Madrid on whose appeal is pending decision by the Supreme, Patricia Gabeiras believes that the ruling of the European Court includes “very important” for those affected Spaniards and hoped that the high council give novelties right, but also he fears that the ruling of the courts in Luxembourg eternice conflict over multicurrency. “We’re not out of the individual case. Undertakes to continue the prosecution of the case because it indicates that child judges who must decide whether reported good or not, but given some parameters to make it.