Banks must decide how to run their 'floor clause' payouts by Tuesday

  • Over one million homeowners could be refunded

The government's deadline for banks to work out how they will process refund requests from their mortgage clients over 'cláusula suelo' (floor clause) complaints expires on Tuesday 21 February.

Well over one million homeowners could be due payouts after the EU ruled last year that some banks must refund overpayments made between 2009 and 2013 when banks failed to lower customers' mortgage rates as the euro base rate plummeted. Refunds will only be due if the 'floor clause' in mortgage contacts, which capped rate reductions, wasn't properly explained at the time.

Banks are not obliged to contact each client individually about a possible refund. They now have three months to process all requests they receive. Reports this week said that most banks had prepared a standard form for customers to complete to claim back the money, although some were asking for a letter instead.

This week the Spanish Supreme Court has also ratified the EU's recent ruling, giving extra strength to people seeking refunds via the courts.

This legal route is still available if people are unable to reach an agreement with their bank directly. The court's ruling also gave a clearer idea as to what it considered to be a proper explanation or not of a 'floor clause' by a bank to a customer.