The Advocate General affirms that this reference index is susceptible to transparency control with the legal and economic consequences that this entails.
The Advocate General of the Court of Justice of the European Union is clear: the abusive nature of the IRPH can be determined by the Spanish Courts as a consequence of its possible lack of transparency.
Spanish judges are facing a complicated autumn or at least a busy start of the judicial course; despite the fact that in 2017 our highest Court ruled that the IRPH (by its acronym, reference index for mortgage loans, an interest rate, official, used by financial institutions especially until the beginning of the new century) was an index as official as the Euribor and consequently was completely transparent not being able to be declared void for its hypothetical abusive character, the controversy about the character of this index is now being debated in the high European spheres: the CJEU.
Prior to the Court’s ruling, as usual, the conclusions of the Advocate General of the CJEU on this issue have been made public. Although they are not binding, due to our previous experience in these matters, they are a clear indication of the direction that the long-awaited ruling that the CJEU is due to issue in the coming weeks will take.
The Advocate General considers that, despite the fact that the IRPH is an official index should not be outside the scope of the control of Directive 93/13 on unfair terms in contracts concluded with consumers as instead understood by the Supreme Court in judgment 669/2017 of December 14.
In this sense, the Lawyer maintains that despite the official nature of the IRPH, said index did not have an imperative application as a consequence of the existence of up to six different types of official indexes so that the financial entities could opt for any of the existing ones, thus assuming that it is not a type of index of obligatory imposition and consequently, under the protection of Directive 93/13, a control of transparency of the same can be carried out.
This means that it will be up to the national judge to determine, in accordance with the aforementioned Directive, whether the clause that includes the aforementioned reference index complies with the requirements of good faith and balance necessary to reject its possible abusiveness.
Until now, since it was an official interest rate, it was understood that it was transparent because it was grammatically clear, it was included in each mortgage loan in a simple manner and what consumers should understand was, basically, that their reference rate was the IRPH and not another, such as the Euribor; However, as a consequence of the foreseeable ruling of the CJEU in conjunction with the provisions of the Advocate General, in addition to verifying in each specific case that said clause has been drafted in a transparent and understandable manner for an average consumer, we must analyze whether, prior to the formalization of the contract, the consumer was provided with the necessary information for him to know the economic consequences of his loan being referenced to the IRPH including, and here is an important novelty, the method of calculation of said interest rate.
If both transparency, material and formal, are not overcome, the clause may be declared abusive as the financial entity did not act with the required good faith and due diligence, thus causing a strong imbalance in the relationship between consumer and professional to the detriment of the former.
From Castellucci Abogados we will be attentive and expectant to the next pronouncement of the CJEU and the legal and economic consequences that this ruling may cause to Spaniards with mortgage loans referenced to IRPH in order to provide legal advice to all those consumers who believe they are in this situation, analyzing each specific case and proposing a viable legal solution that allows the borrower to assert their rights before the courts.