SPAIN Trends and Developments Contributed by: Gonzalo Ardila, Margarita Morales, Fátima Mallén and Alberto Witzl, Hogan Lovells Cadwalader
different angles – consumer credit and mortgage lend- ing – yet sharing the same analytical starting point: delimiting which amounts form part of the capital on which remuneratory interest may be charged, and which instead constitute costs associated with the transaction. The first development comes from the Court of Justice of the European Union (CJEU) in its judgment of 23 April 2026 (Case C-744/24, Bank Polska Kasa Opieki ), issued in response to a Polish request for a preliminary ruling on Directive 2008/48/EC on consumer credit agreements. In that case, a consumer had allocated part of the nominal amount of his loan to the payment of a credit insurance premium classified as voluntary, and the bank applied the contractual interest rate to that amount as well. The Court held that the “bor- rowing rate” may only apply to the “amount of credit drawn down” – that is, the sums actually made avail- able to the consumer – thereby excluding amounts allocated to costs of the credit itself, such as the financed premium, which form part of the “total cost of the credit” rather than the amount of credit granted. The CJEU clarified that the judgment does not invali- date the insurance policy or prevent its cost from being passed on through other means; what it pre- cludes is treating that cost as capital that generates interest. The ruling redefines the economic structure of consumer credit, with direct implications for busi- ness models, litigation risk and regulatory strategy in Spain, and takes on particular interpretative sig- nificance ahead of the transition to Directive (EU) 2023/2225, which will replace Directive 2008/48/EC on 20 November 2026. The second development comes from the Span- ish Supreme Court, First Chamber, in Judgment No 913/2026, handed down on 11 June 2026, this time in the mortgage context. The dispute arose from a mortgage loan executed in 2017, the deed of which included a single premium of EUR24,467.62 – over 16% of the principal – for a decreasing-term life insur- ance policy taken out with an insurer. The Supreme Court reversed the criterion applied by the Court of Appeal and held that, on the specific facts of the case, the insurance formed an inseparable commercial unit with the loan, since the borrower had not been offered
any alternative as to the insurer or as to instalment payment of the premium. The Chamber reasoned that the cost of the insurance was not disclosed in the loan deed itself, appearing only in the binding offer and in ancillary documen- tation, and that this lack of disclosure – combined with the consumer’s inability to ascertain the full APR and the effective cost of the financing – rendered the clause non-transparent and, given the resulting imbal- ance, unfair. The Court further noted that the borrow- er could have avoided financing the single premium through a system of periodic premiums, an option that was not offered to him. The Supreme Court also endorsed the position taken by the Directorate-Gen- eral for Insurance since 2006, which has classified this practice as inappropriate and, in some cases, clearly unfair. As an effect of the nullity, the insurance policy retains its coverage until the judgment becomes final, but the bank must refund the single premium together with the agreed interest, deducting only the propor- tional part corresponding to the period during which the policy was actually in force. It is important to underline that neither ruling declares the automatic nullity of every insurance policy linked to a loan: both confine their reasoning to a specific set of circumstances (eg, the absence of an alternative insurer, the lack of clear disclosure of the cost in the loan deed, and corporate ties between the lender and the insurer), the concurrence of which will need to be assessed on a case-by-case basis. That said, read together, both rulings point in the same direction: both the Supreme Court and the CJEU, in the consumer credit sphere, focus their scrutiny on the genuine transparency of the transaction and on the availability of effective alternatives for the consumer – not on the mere fact that the premium is financed within the loan’s principal. Directors’ and Officers’ Liability Insurance (D&O): Key Issues in Light of the Recent Case Law of the Supreme Court Directors’ and officers’ liability insurance – known as D&O insurance – has become consolidated as an essential instrument in corporate risk management. In a context of increasing judicialisation of the liability of
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