• Credit institutions must provide detailed information on the applications submitted by the affected consumers
  • The decree also makes more flexible the term of constitution of the reserve fund of the banking foundations

The Council of Ministers has approved a Royal Decree establishing and regulating the Monitoring, Control and Evaluation Commission of the extrajudicial mechanism for the return of improper ground clauses. This rule develops Royal Decree-Law 1/2017, of January 20, on urgent measures for consumer protection in terms of land clauses and regulates the composition of the commission, the functions it will carry out and the information obligations that credit institutions have to assume.

The extrajudicial channel for the claim of amounts unduly charged by the ground clauses was established last January following the ruling of the Court of Justice of the European Union. It established that the restitution of the land clauses should occur from the date of signing the mortgage contract. It is a mechanism that allows claiming to the affected entities in a simple, fast and free way to the affected consumers.

The Monitoring Commission will be in charge of collecting and evaluating the information transferred by the Bank of Spain obtained from credit institutions. A semi-annual report will be published in which the degree of compliance with the extrajudicial complaint mechanism will be evaluated.

To meet this objective, credit institutions will have to submit the following information:

  • Number of applications submitted, those that have ended with agreement and those that have not been possible to reach such agreement, as well as the reasons.
  • Amount corresponding to the applications submitted, those that have ended with agreement and those that have not been possible to reach such agreement
  • Number and amount of compensatory measures other than cash back offered to consumers
  • Each entity must report on the system that has been implemented to guarantee prior communication to consumers, whose mortgage loan has land clauses included

The Commission may also request information from the Ministry of Justice on judicial proceedings. Specifically, those in which individual actions are exercised on general contracting conditions, included in financing contracts with real estate guarantees and whose borrower is a natural person.

The Commission will be made up of the deputy governor of the Bank of Spain, who will chair it; the technical general secretary of the Ministry of Economy, Industry and Competitiveness; a representative of the Ministry of Justice; a representative of the Ministry of Health, Social Services and Equality; a representative of the Council of Consumers and Users; a representative of the General Council of Spanish Law; a representative of the General Council of the Judiciary; and a representative of the Spanish Mortgage Association.

On the other hand, the Royal Decree extends the term of constitution of the reserve fund of the Banking Foundations that control credit institutions, from the current 5 years extendable two more by authorization of the Bank of Spain, up to 8 years expandable one more. The terms count from the date of entry into force of the Bank of Spain Circular of June 2015. In addition, until the reserve fund reaches the target amount, the bank foundations must allocate 30% of the dividends charged by the entities of credit, a percentage that was previously 50%. Both modifications allow a certain flexibility to provide the reserve fund, without diminishing the main purpose of strengthening the solvency of the old savings banks.

The Council of Ministers has also approved the transposition of the European directive that establishes transparency requirements regarding information on issuers whose securities are admitted to trading in a regulated market. The modification introduces the power of the CNMV to suspend the exercise of the voting rights associated with the financial instruments that have been acquired without complying with the corresponding communication obligations.

In addition, the regulation on payment and securities settlement systems has been approved for adaptation to Community regulations. The objective of these changes is to allow the adaptation of Iberclear, the Spanish payment and securities settlement platform, to Target2-Securities, the pan-European platform of which it will be part since September of this year and strengthen the protection of the guarantees granted in the clearing and settlement operations.

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