The European Court of Justice has ruled that IRPH index for mortgages may be abusive.
The European Court of Justice (TEU) ruled today, Tuesday 3 March 2020, that the clause in a mortgage loan contract concluded between a consumer and a professional, with the controversial mortgage index (IRPH), “falls within the scope of the Unfair Terms Directive”. This is how European justice establishes that it can be controlled judicially even though its supervision is the responsibility of the Bank of Spain.
In this case, the high court has agreed with the consumers with mortgages linked to the IRPH index, by ruling that the Spanish judges must control if they were marketed in an abusive way, which would allow to demand compensation to the affected ones when it is the case.
The court, based in Luxembourg, specifies that when it is considered that there was an abuse, the national judge may replace the personal income tax with another legal index to protect consumers from the harmful consequences that could result from the cancellation of the loan contract.
In this way, European justice opens the door to a flood of lawsuits in Spanish courts, which would force banks to return large amounts of money to customers if they declare the terms to be effectively unfair.