In the preliminary question pending before the Court of Justice of the European Union raised by the Court of First Instance No. 17 in Palma de Mallorca (Spain) in case ref. C-265/22 there was an interesting question, which may have and on the grounds of Polish mortgages, about the scope of the information obligation of banks on the rules for determining the amount of the reference index for determining the amount of variable interest rates.
Factual situation
The borrowers entered into a mortgage loan agreement bearing interest at a variable rate. The reference rate in this case was the IRPH of the credit institutions, defined as a simple average of the weighted average interest rates for major mortgage transactions granted for a period of at least three years for the purchase of residential units at market conditions. The interest rate is the reference rate plus 0.20 percentage points.
According to the borrowers, the above method of determining the variable interest rate misled them, as it appeared to be more favorable than Euribor, which even if it had been increased by 2 percentage points would have been more favorable to them.
Court’s position
In its judgment of July 13, 2023. C-265/22, the CJEU reiterated that Articles 4(2) and 5 of Directive 93/13 require that the contractual terms defined with the consumer be transparent, and that it is the duty of the trader to inform the consumer before the conclusion of the contract about the contractual terms and the effects of certain provisions, since it is on the basis of this information that the consumer decides whether he intends to be bound by the contractual terms formulated by the trader. The requirement to provide sufficient information to the consumer, in the Court’s view, must be subject to an expansive interpretation.
The Court, having regard to the requirement that the contractual terms be expressed in plain and intelligible language, indicated that it would be for the national court to assess whether the consumer’s reference to the circular, which is publicly available, was sufficiently easily accessible information for the consumer to consider that the consumer was sufficiently informed about the terms of the reference rate and its features.
As a result, it should be considered that the CJEU has held that the reference rate for determining the interest rate may be an abusive clause insofar as consumers have not been sufficiently informed by the trader about how the rate is determined, or the information concerning it, although publicly available, is not readily available to the average, reasonably prudent consumer.