We know that it’s possible to be too friendly, but can a Member State be too consumer-friendly? That was the question posed to the Court of Justice of the European Union in Case C-484/08: Caja de Ahorros y Monte de Piedad de Madrid v Asociación de Usuarios de Servicios Bancarios (Ausbanc). The specific issue before the Court was whether Spain could provide more generous protection to consumers than the Directive on unfair terms in consumer contracts (Council Directive 93/13/EEC).
The Directive applies to all contract terms which have not been agreed on through individual negotiation. It has, however, two exceptions regarding judicial review of unfair contract terms — that is, assessment of unfairness may not relate to either the definition of the main subject-matter of the contract or to the adequacy of price, where the terms are written in plain, understandable language. When the Directive was transposed into Spanish national legislation those exceptions were not incorporated. Thus, Spanish courts can rule on the unfairness of a term of adhesion (non-negotiated) relating to the subject matter of a contract even if it is written in language which is easily understood by the consumer.
In this case, Ausbanc, a Spanish association of users of banking services, challenged a clause in a mortgage loan agreement which it deemed unfair, asking the Spanish national court to require the lending bank to annul the clause and to prohibit its use in the future. The clause provided that the rate of interest paid by the borrower was to be rounded up to the next quarter of a percentage point whenever the variation in the rate exceeded 0.25%. The Spanish Supreme Court asked the Court of Justice whether the Directive precludes a Member State from choosing not to adopt the exceptions.
The Court of Justice pointed out the fact that the Directive is meant to even out the inequality of bargaining power and knowledge between consumers and suppliers. It found that the Directive carried out only a partial and minimum harmonization of national legislation, recognizing that the Member States may grant consumers a higher level of protection. Therefore, Member States may retain or adopt rules that are stricter than those stipulated in the Directive, if they are advantageous to the consumer.