Public authorities are obliged to comply with the requirements to avoid regulatory confusion and pursue clarity
For some time now I have been warning of the damage that legal insecurity and confusion in our country about a regulated and supervised product such as ‘revolving’ cards entails, both for consumers and for the industry. Faced with this situation, on October 4, the Supreme Court once again gave clear criteria on how to carry out the usury trial of a ‘revolving’ credit contract: «If there are more specific categories within other broader ones (such as happens with credit cards and ‘revolving’, within the broader category of consumer credit operations), that more specific category should be used, with which the questioned credit operation presents more coincidences (credit duration, amount, purpose, means through which the debtor can dispose of the credit, guarantees, ease of claiming in case of non-payment, etc.), since these common features are determinants of the price of the credit, that is, of the APR of remunerative interest» .
And there are already two consecutive sentences of the Supreme Court this year that insist on the same point. In another ruling on May 4, the high court stated: «To determine the reference to be used as ‘normal interest on money’ to decide if the interest on the ‘revolving’ card is usurious, the average interest rate must be used. corresponding to the specific category to which the questioned credit operation corresponds, that of credit cards and ‘revolving’, not to the more generic consumer credit”.
With both sentences, the Supreme Court shows once again its clarifying work. A movement with appeal interest with which it intends to avoid the wave of lawsuits that have been giving rise to contradictory resolutions in the first instances and in the provincial courts.
The lack of legal certainty prevents this market from operating normally
Unfortunately, there is still a question of vital importance that is to be clear about what the reference prices are. That is, the usual TAES or the normal price ranges applied by the large banking entities that market this financial product and that reflect the reality of this market. Only in this way, both consumers and the courts will be able to clearly elucidate whether or not an APR can be considered usurious. And here the Bank of Spain would be a key player in providing transparency and supporting the clear and direct criteria set by the Supreme Court. But his stats have many limitations.
In the first place, for before 2010, only general consumer credit data exists. Hence, the Supreme Court has made an effort to emphasize in its last two rulings that the average price of ‘revolving’ cards oscillated between 23% and 26% between 1999 and 2009.
Secondly, the Bank of Spain does not publish a reference for usual market prices for this financial product. Since 2010, it has been publishing a statistic called TEDR, which is collected for monetary policy purposes, which includes other products in addition to ‘revolving’ cards, which does not take into account the expenses and commissions of these cards. Nor is an arithmetic mean of the individual TAES useful as a reference, including products with different purposes among which there is a wide dispersion of prices because they do not show the commercial reality of the market.
Contradictions in court decisions cannot be resolved, nor can rigorous judgments be provided as long as the reference price information available to the judges is incorrect.
Above all, the public powers are obliged to comply with the requirements of avoiding regulatory confusion and pursuing clarity, as indicated by the Constitutional Court for the sake of the principle of legal certainty, enshrined in article 9 of the Spanish Constitution. .
Faced with those who, interestedly or through ignorance, understand that this is reduced to a confrontation between credit institutions and consumers, it is necessary to emphasize that this is not the case. ‘Revolving’ credits are a regulated product and form part of the family financing mix. The lack of legal certainty prevents this market from operating normally and pushes families to seek liquidity in unregulated alternatives such as quick ‘online’ loans, with interest rates that even reach 200%. For all these reasons, I cannot stop insisting on the role that public authorities must play in order to avoid legal confusion and pursue clarity.
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