Buying a property nowadays usually requires taking out a mortgage loan. These bank loans include an arrangement fee, which is a percentage that generally ranges between 0.5 and 1% of the amount of the loan itself, which the banks add to the amount of the mortgage for the processing of the loan, charged in a single payment.
On 16 March 2023, the Court of Justice of the European Union (CJEU) handed down a new ruling (Case C-565/21), following an appeal lodged by Caixabank against a consumer who claimed the nullity of the clause that included the arrangement fee, whereby the CJEU confirms that the arrangement fee charged by banks to open a mortgage can be abusive if certain transparency requirements are not met.
Contrary to Spanish case law, which considered that the arrangement fee regulated an essential element of the contract and therefore constituted a main item of the price, and could not be considered unfair if it was drafted in a clear and comprehensible manner, the CJEU opposes traditional national case law and specifies that it must be ‘ancillary’ to the mortgage contract, and therefore its unfairness can be assessed.
With regard to when an arrangement fee can be abusive, the CJEU states that it will be abusive when it is applied improperly or with a lack of transparency, as would be the case if a bank did not provide clear, specific and comprehensible information on the application of this fee, or for example, if its charge did not correspond to the services actually provided.
In any case, all this information must be in writing in the loan clauses and must be explained to the user. From there, the national judge will have to decide whether the origination fee applied can be considered abusive. In such cases, the user will be able to claim 100% of the commission, for which he/she will have to send a letter to the customer service of the financial entity that provided the mortgage and charged the origination fee. The bank will have a period of 2 months to reply to the user’s letter, and in case of silence on the part of the bank, the user will be able to go to court if he/she wishes to do so.