MORTGAGE CLAIMS: Borrowers start winning total refunds for floor clause interest overcharge

Within hours of the European Court of Justice (ECJ) ruling that abusive floor clauses could be reclaimed without any time limit, Spanish judges started implementing the decision.

On the same morning that the ECJ decision was announced on the 21st of December two courts, one in Barcelona and another in Oviedo, ruled that borrowers were entitled to refunds for mortgage interest overcharging due to abusive floor clauses with total retroactivity, going back beyond May 2013.

A judge in Barcelona ruled that a client of Banco Popular had not been adequately informed of “the existence and implications of a floor clause” based on the pre-contractual documentation and simulations provided, and that the floor clause did not meet the “transparency requirements” stipulated by the Supreme Court.

In both Barcelona and Oviedo the judges found the floor clauses to be null and void for lack of transparency, entitling the borrowers to a full refund on mortgage interest overpayments going back over the lifetime of the loans, with no time-limit.

The ECJ ruling has big implications for Spanish lenders, some of whom will now have to return hundreds of millions of Euro in overcharged interest (the total amount overcharged is estimated to be €4 billion).

The Spanish Government recently tried to introduce a ‘Code of Good Conduct’ to reduce the time and cost of getting refunds, but it ran into political and banking opposition, so it abandoned that plan and now proposes a ‘Protocol for Action for Floor Clauses’ (rotocolo de actuación para las cláusulas suelo) based on mediation by an independent committee and non-binding judgements that will be totally ineffective. That means, for now at least, the only way to get a refund will be in court.


Floor clauses are not illegal in themselves. The problem was that, in many cases, they were not adequately explained, and that clauses in contracts were not “transparent” or “understandable”. This means you are not entitled to automatic reimbursement just because you have a floor clauses in your mortgage agreement. You have to go to court to argue the clause was not adequately explained to get it ruled null and void. Then you can reclaim overpaid interest. That means you need a lawyer to take your case to court. See our service directory for lawyers in Spain.

Thoughts on “MORTGAGE CLAIMS: Borrowers start winning total refunds for floor clause interest overcharge

  • I’m guessing that it is more complicated than just getting a refund. For example, if that mortgage interest was used to reduce one’s taxes, it would seem that one would have to file amended tax documents and pay more taxes for the reduced amount of the deduction.

    • Mark Stücklin says:

      That is true Gary. However, this won’t apply to non-residents, of which there are thousands who will be able to claim overcharged interest without any tax implications. I’ve had hundreds of enquiries in the last few days, and it looks to me like many of them will be able to get thousands of euro back.

  • Good morning, does this change in law apply to mortgages taken out (with floor clause) to buy and rent out commercial premises?? ………….

    thanks a lot,


    • Mark Stücklin says:

      Rojoybago, this is consumer legislation, and in principle commercial arrangements are excluded from consumer legislation. However, there could be commercial law angle to consider. Specialist lawyers would need to take a look at the case. Anyone in this situation should fill in the form above and specify in the message that the mortgage was used to buy commercial space.

  • Hi Mark,

    Do you know at this stage how the class action will be paid for (no win no fee or x% up-front). I assume doing this as a class action will reduce the legal costs, is this correct?

    Obviously, the legal people don’t work for free, so how do they get paid, is it by recovering costs from the bank when the case is won, or do they expect a percentage of any money recovered; if so do you know the likely percentage they will expect.

    • Mark Stücklin says:

      Pazza, the service I´m working on will be group action (grouped by lender) on a no-win-no-fee basis, with a conditional fee agreement as a % of principal sum recovered and a modest case file setup fee for admin and compliance (not legal fees). First evaluation will be free, so you only go forward with the case file setup if you know you have an excellent chance of winning. I’ve had hundreds of enquiries in the last 10 days, and it looks to me like many of them have a good chance of getting back thousands of Euro.

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