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Usury rates in salary-backed loans

Usury rates in salary-backed loans

Marco Leonardi, Daniela Runggaldier

Case law (judgment no. 1370/2022 of the Court of Appeal of Ancona) has recently confirmed that the costs of an insurance policy - although mandatory under the applicable laws - related to salary-backed loans in the form of the loans secured on one fifth of workers’ salaries must be taken into account when calculating the effective global rate (“TEG”) and, thus, the applicable maximum interest rate for usury purposes. In contrast to other relevant case law - according to which, in line with the Bank of Italy’s Instructions of 2006, the cost of the insurance policy must be excluded from the TEG calculation on the grounds that such cost may be considered as a cost imposed by law - the recent ruling is consistent with both the Bank of Italy’s Instructions of 2009 and the Supreme Court’s position, according to which regulatory provisions cannot exclude the relevance of costs inherent to the granting of credit from a criminal law perspective, and therefore the insurance costs at issue must always be taken into account for the TEG calculation.