Contractual clauses and consumer protection

Law no. 52 of 1996 introduced rules into the Italian legal system to protect the consumer in his contractual relations with professionals.

In order to rationalize regulations which have been complicated by a long sequence of amendments, a Consumer Code was recently published (Legislative Decree no. 206 of 6 September 2005), which contains a thorough reworking of most of the consumer-protection rules.

Article 3 of the Consumer Code defines a "consumer" as a physical individual who acts for reasons other than his business or professional activity; while a "professional" is a physical person or company acting in the exercise of a business or professional activity, or the agent of such a person or company.

The relationship typically formed between the lending bank and a physical individual who takes out a loan for the purchase of a home is of the “consumer” type.

To recount the changes that have taken place in Italy in consumer contracts would be a long story; but it has frequently been noted how many interventions there have been to rebalance contracts either by way of court decisions or as a result of initiatives by consumer associations.
Despite this, bank contracts sometimes still contain clauses that at least give the impression of being improper and which for various reasons it has so far been impossible to remove.

In regulating the relationship, there may be strong doubts as to the legitimacy, for example, of clauses:

1. that establish the exclusive jurisdiction, in case of dispute, of a court where the bank has its offices and not where the consumer resides; 
   
2. whereby bank statements are always valid proof against the mortgagor; 
   
3. that unconditionally prevent the borrower from having the mortgage guarantee cancelled even after the loan has been fully repaid; 
   
4. that absolutely forbid the transfer of the mortgage debt; 
   
5. that strongly condition the use that may be made of the mortgaged property; 
   
6. that override the commonality and subsidiarity stipulated by the law regarding property rights between spouses; 
   
7. that allow the bank to cancel the contract for non-compliance with obligations that are too generic or not particularly significant or do not relate to an interest worthy of protection;
   
8. that transfer to the borrower the bank's own tax obligations.

On the economic front, clauses would also seem to be improper that would allow the bank to modify unilaterally and without just cause the economic conditions of the contract, including the interest rate. Article 10 Paragraph 1 of Law 248/2006 now declares illegitimate any unilateral change to conditions in the absence of just cause.