• The procedure is free for the consumer and the entities will have three months to resolve the claims
  • Payment will be in cash, although the client and the entity may agree on other formulas, such as the novation of the mortgage
  • A follow-up commission will monitor the process with special protection towards the most vulnerable people

The Council of Ministers has approved a Royal Decree Law (RDL) of urgent consumer protection measures in relation to improper ground clauses. It establishes an extrajudicial channel to resolve in a simple, fast and free way the claims of the consumers derived from the last judicial sentences. The procedure will be mandatory for the financial entity when requested by the client and it will have three months to reach an agreement and resolve the claims. Although the judicial process is always open, it is about preventing the collapse of the courts and allowing the entire process to be carried out with due guarantees for the consumer.

The Court of Justice of the European Union ruled on December 21 that the restitution of abusive ground clauses must occur from the date of signing the mortgage contract. With this decision, the EU Court clarified that the economic effects of the Supreme Court ruling of May 9, 2013 on this same matter are not limited to this last date, but to the entire life of the mortgage. The Government then decided to establish an out-of-court procedure to facilitate the processing of claims that may arise from the European Court ruling and ensure adequate consumer protection.

The RDL approved today establishes a claim mechanism prior to the filing of lawsuits, voluntary for the consumer affected by ground clauses. For credit institutions it is mandatory to implement, within a maximum period of one month, the necessary measures to comply with the procedure. In addition, they must ensure that this system is known to all consumers with floor clauses in their contracts.

The consumer can direct a claim to his credit institution. Once the claim is received, the entity must send the consumer the calculation of the amount to be returned, including interest or, alternatively, the reasons why it considers that the claim is not appropriate. After receiving the communication, the consumer must state if he agrees with the calculation and, if he is, the entity will return the cash. The whole process will be done within a maximum period of three months.

Alternatively, the consumer and the entity can agree on compensatory measures other than cash back, such as the novation of the mortgage conditions. In this case, the acceptance by the client will be handwritten, after having been duly informed of the economic value of the alternative measure.

The consumer can decide the judicial route directly but once the extrajudicial procedure has been initiated and until this has been resolved, the parties may not exercise any alternative judicial or extrajudicial action in relation to the same claim. It also establishes the possibility that, in the lawsuits that are already in progress upon the entry into force of this rule, the parties, by mutual agreement, may request the suspension of these to undergo the extrajudicial proceeding.

In the case of judicial costs, mechanisms are established in the royal decree-law that encourage the entity to resolve in an adequate manner and in good faith. On the one hand, if the consumer demands from the entity after not reaching an agreement in the extrajudicial claim and the sentence he obtains is economically more favorable to him, the entity will be ordered to pay the costs. On the other hand, if the consumer goes to court directly without using the prior claim and the credit institution is fully paid before the procedure for answering the claim, the entity will not be ordered to pay the costs.

The extrajudicial claim procedure will be free. There is also a substantial reduction in notarial and registration fees derived from the novation of contracts that may result from the adoption of compensatory measures other than cash back.

Regarding the tax treatment of the amounts received, the Personal Income Tax Law is amended so that, in the case of refund of amounts unduly charged by land clauses, either in application of the preliminary ruling, derived from any agreement with the financial entities or the compliance with judgments or arbitral awards, guarantee fiscal neutrality for the consumer.

The Government is empowered to regulate the establishment of a body for monitoring, control and evaluation of claims made within the scope of this royal decree-law. In this body, consumers and lawyers will be present in any case and will issue a semi-annual report. This body will ensure that entities meet their information obligations, especially with regard to vulnerable people.

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