New successful case for a client of Bufete Salmerón. The Court of First Instance nº19 of Madrid declared the partial and full nullity of a multi-currency loan deed, due to the lack of transparency regarding the information on the characteristics and risks of the product. The ruling states:

“This lack of transparency with regard to the information given regarding the characteristics and risks of the product is not innocuous to the consumer, but causes a serious imbalance, contrary to the requirements of good faith since it meant that the consumer was unaware of the risks involved in taking out the loan and more specifically that the instalments would increase drastically and the equivalent value in euros of the capital pending repayment would increase instead of decrease as the periodic instalments were made.”

“This radical nullity implies the impossibility of prescription or expiry of the action.”

The claimant was aware that she was contracting a loan with instalments that had to be repaid in the chosen currency. However, she was not warned of the very high risk that could be involved in taking out a loan for such a long term, 30 years, in a foreign currency, when she was a client with no expertise in financial matters and especially in the foreign exchange market. She was also not informed of the situation where the currency appreciated against the Japanese Yen, so she could not even imagine that despite paying the instalments for more than ten years, the capital would not be reduced in the same way as in a conventional mortgage loan despite having paid instalments.

Therefore, the information provided regarding the risks of the product was not complete and sufficient, and the fact that the client consulted the website does not make up for the lack of pre-contractual information. The STS 244/2013, Plenary, of 18 April 2013 states: “the obligation to provide information established by the legal regulations is an active obligation for the bank, not one related to mere availability of the information”.

The Supreme Court, in the recent ruling on 14 March, declared the nullity of the multi-currency mortgage loan deed because of the lack of transparency, thus confirming the abusiveness of this type of mortgage, finding for those affected.

The average amount that can be recovered is around €60,000, with the potential loss caused by this product exceeding €200,000 in some cases.