- On 20 January the government approved Royal Decree-Law 1/2017 so that banks would return what they had collected under floor clauses.
- It followed the December 2016 ruling of the EU Court of Justice, which required full repayment.
- Anyone with a current or past variable-rate mortgage should review the deed and assess with a lawyer whether to claim.
On 20 January 2017 the government approved Royal Decree-Law 1/2017, intended to make banks return what they had overcharged under the floor clauses in mortgages. The rule created an out-of-court procedure so that consumers could claim directly from their bank, without needing to go to court in the first instance. For the banks, it meant orderly handling of a refund whose scope depended on each contract; for customers, the chance to settle it without litigation.
The decree followed the December 2016 ruling of the EU Court of Justice, which required full repayment of the amounts collected. For many households with a variable-rate mortgage, the news was of very practical interest: it opened a faster and less costly route to recover money that, according to that ruling, should never have been paid. Many of those affected had been paying instalments for years without knowing that part of them could be reclaimed.
What a floor clause is
A floor clause is a term in a variable-rate mortgage that stops the interest rate falling below a set minimum, even if the reference index is lower. If that index, usually Euribor, falls, the instalment should fall too; with a floor clause, the borrower keeps paying as if the rate had not fallen. That is why those amounts are regarded as overcharged.
The underlying issue, which European justice placed at the centre, is transparency: consumers must be able to understand clearly what they are signing and what effect such a term will have on their payments. When a clause was not explained in an understandable way, it is considered unfair and the customer may claim back what was collected. The refund is not a favour from the bank but the consequence of a legal obligation. Understanding this difference helps to approach the claim soberly, focusing on documents rather than confrontation.
How to claim
The decree created an out-of-court procedure: the consumer files a claim with the bank, which must examine it and reply, without going straight to court. It is a route designed to resolve cases quickly when both sides agree that a refund is due, and to relieve pressure on the courts.
The judicial route remains open if there is no agreement, whether because the bank rejects the claim or because the amount it offers seems insufficient. That is why it is worth filing the claim with complete documentation and keeping a copy of everything sent and received. With those papers in order, both the out-of-court step and any later proceedings are approached in better shape.
What to do
Anyone who has or has had a variable-rate mortgage should review the deed and check whether it contains a clause of this kind. It helps to gather the deed, the instalment receipts and any communication with the bank about changes in the terms. If the loan was renegotiated at some point, it is important to keep the documents from that transaction as well, because they may bear on the claim.
With the paperwork in order and a lawyer’s advice, it is possible to assess whether a claim makes sense and for how much, and to decide whether the out-of-court or the judicial route is preferable. For anyone who needs financing, it is also worth using the occasion to review the other terms of the mortgage, such as fees or linked products, and to check that they are well understood. A mortgage is a commitment lasting decades, and reviewing it periodically is one of the most worthwhile uses of time for any household.
Reviewing the terms of a mortgage calmly can lead to a significant refund.
This article is general information. It is not legal, tax or investment advice, and it does not take anyone’s particular circumstances into account.
